Ukraine is on the brink of all the metal companies halt, after that currency revenues will fall, while unemployment will increase. This is stated in the letter to Prime Minister Arseny Yatsenyuk, signed by directors of the 12 major metal and mining companies.
The reason of the collapse is the Ministry of infrastructure decision to increase railroad transportation tariffs in March. In case the tariffs increase, metal products will become uncompetitive on world markets. Even now transport expenditures of Ukrainian producers exceed those of their Australian, Brazilian and other competitors.
“Logistics expenses of Australian manufacturers with delivery to Quingdao now equal $9 per ton, those of Brazilian – $12. While our expenses reach $22 per ton”, said the letter. Low ore prices and considerable transportation expenses have made most of the Ukrainian exporters work with losses.
“Tariff increase will make metal and mining companies decrease their output, until they stop altogether. Ore industry employs some 50 thousand people, for whom this job is in most cases the only source of income”, added the directors.
Under falling iron ore prices other countries support their manufacturers: they decrease transportation tariffs to lower prime cost and save producers. In particular, Russian railways were allowed to increase discounts from 12.8% to 25%. Ukrainian officials act contrariwise, raising tariffs by 15%.
Metal makers point out that there is no real economical basis for railroad tariffs increase. Fuel price, in particular, has fallen. They call unto the Prime Minister to apply moratorium on the railroad transportation tariff rise until the situation on world metal and ore markets stabilizes. Otherwise Ukraine will have to cope with extremely negative consequences. (Ukrainian metal)