Management of the major Ukrainian mining and metal companies has addressed the government asking it to impose a moratorium on the railroad cargo transportation tariffs increase.
They say Ukraine earns over $2 billion per year on iron ore raw materials exports. At the same time, it could lose some 50 thousand jobs. Beginning with 2014 the world ore prices have fallen two times, while the competition increased. They also forecast that in 2016 ore prices would further decrease by 15-20%.
Thus the planned increase in railroad tariffs will make companies profitless, foreign investors will stop working with them, and the overall investment attractiveness of Ukraine will decrease. Output will fall by 50%, while exports will drop by 75%.
The Ministry of infrastructure plans to increase tariffs by 30%, but taking all other matters into consideration (like empty cars transportation tariff increase) the actual increase in 2016 will reached almost 50%. And for ore tariffs will rise by 65%.
Ukraine’s neighbors (Russia and Turkey) have much lower transportation expenses. Next year Russian railroads plan to increase its discount to clients from 12.8% to 25%. Thus Russian companies will get advantages over Ukrainian ones and could possibly drive them from the market. (Ukrainian metal)
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