The price of discussion: will the Ukrainian government help metallurgists and power engineers find common ground?
29 September 2025 15:58
Ukrainian metallurgical enterprises are becoming less and less competitive and increasingly losing out to Chinese and Turkish producers. Komersant found out why it is so difficult for Ukrainian steelmakers to compete with them even in the domestic market.
The high cost of electricity for industry is something that critically affects the cost of production and significantly reduces its ability to compete.
“If the price of electricity for a Ukrainian enterprise is higher than the same price for enterprises abroad, we will lose competitiveness” – the Ukrainian government recognizes this interdependence.
As well as the fact that the issue of the cost of electricity for industry requires discussion both within the government and in the expert and business community. At least, this was the statement made by Prime Minister Yulia Svyrydenko at a meeting with business representatives last week. In fact, representatives of the steel industry have already started this discussion.
Metallurgists are counting losses
“A realistic price for electricity is a key prerequisite for the sustainable development of the industry,” Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, said at the United by Mining conference last week.
He noted that Ukraine has seen a significant increase in electricity prices in recent years, and in the first half of 2025 it was the most expensive in Europe. As a result, the share of electricity in ArcelorMittal Kryvyi Rih’s production costs has tripled. Mauro Longobardo also expressed his vision of why this is happening.
“Currently, the regulatory environment in Ukraine is not conducive to the development of the steel and mining industry. We are surrounded by natural monopolies that pass on their losses to businesses by raising tariffs. We cannot pass them on to our customers, as we sell goods whose prices are regulated by the global market. As a result, our production has been unprofitable for the fourth year in a row,” Longobardo emphasized.
He said that “the total net loss in 2022-2024 amounted to almost USD 2.1 billion” and explained that the plant continues to operate thanks to the financial support of the parent company, which has already invested more than USD 1 billion.
“The main reason for the losses in recent years is a sharp increase in electricity tariffs set by the state-owned generating company, which holds a monopoly position in the Ukrainian market,” said Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih.
High electricity prices are affecting many mining and metals companies. Another example is that Ingulets Mining and Processing Plant, part of Metinvest Group, stopped working more than a year ago and is still idle. The reason for this is the rise in electricity prices and the consequent inability to ensure competitive production costs in foreign markets.
Electricity prices in Ukraine are rising
In August, the price of electricity for industry in Ukraine reached EUR 111 per MWh, which was higher than in Central and Eastern Europe. There, the price of electricity fluctuated at around 90 euros per MWh. This data was recently shared by Oleksandr Kalenkov, President of Ukrmetallurgprom, an association of enterprises.
This price imbalance has not always affected the operations of Ukrainian steelmakers. There was a time when the cost of electricity was one of Ukraine’s competitive advantages. But, as Stanislav Zinchenko, Director of GMK Center, states, electricity has been rising in price since April last year.
“In Europe, it is possible to buy 80% of electricity from producers under long-term contracts. And at a low price. In Ukraine, we don’t have such an opportunity because the energy market was not ready for this even before the war, and now it is not physically possible. We have specifically calculated that 95% of steel in Europe is produced in countries with cheaper electricity than in Ukraine. That is, we have lost this particular advantage, and it turns out that 65% of our products are exported to the EU market,” the expert notes.
It is noteworthy that with current electricity prices, Ukrainian companies are losing ground even in the domestic market. Stanislav Zinchenko continues.
“The Ukrainian market saw record imports of long and flat products from Turkey and China in 2014. This year, it continues to grow. Why? Because Turkish and Chinese rolled steel products are cheaper than Ukrainian ones. They have cheaper electricity, cheaper logistics, staff, and assistance. So we are already losing even the domestic Ukrainian market to the Turks, Chinese and other importers. And this is a very big problem. According to our estimates, this year, half of Ukraine’s steel consumption may be imported. It’s a paradox, because Ukraine has never had such a situation before,” the expert emphasizes.
Unfortunately, it is not only the management of ArcelorMittal Kryvyi Rih that has to admit that production is unprofitable and that the plant continues to operate thanks to the financial support of the parent company. According to Stanislav Zinchenko, Director of GMK Center, almost all Ukrainian steel mills have been operating at a loss or in the red since about October-November last year.
“The reason is not just electricity, it’s everything. Logistics has doubled since the start of the war. It has become more expensive. Electricity has risen in price. There is no staff. Mobilization, emigration, because these are the regions where the fighting is going on. Tariffs of state monopolies have increased. Even for some kind of sewage, gas transmission – for everything. They have already grown and continue to grow. VAT is not refunded. And then there’s electricity, which is systemically expensive, not just for a short period of time,” the expert states.
Stanislav Zinchenko emphasizes that the very high cost of electricity is now in the foreground.
There is a subject for discussion
Those representing and protecting the interests of mining and metals companies have suggestions on how to reduce the cost of electricity for industrialists.
For example, Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, who has already been mentioned, calls on the Ukrainian government to introduce a price cap system for energy-intensive enterprises, create a competitive environment in the Ukrainian market for state-owned generating companies, and ensure conditions for long-term contracts.
During a recent conference on Energy of Ukraine: Recovery and Development Strategies, Oleksandr Kalenkov, President of Ukrmetallurgprom, stated the importance of ensuring access to electricity imports, creating conditions for long-term contracts with Energoatom, and introducing working compensation mechanisms for energy-intensive industries following the example of European countries. In this regard, France was mentioned, for example, where 25% of electricity produced by nuclear generation is sold at a fixed reduced tariff, which helps to reduce the overall price level in the market.
Stanislav Zinchenko, Director of GMK Center, also believes that the topic of signing long-term contracts with Energoatom is worthy of attention and discussion.
“We organized a large roundtable in early August with energy experts, metallurgists, and representatives of business associations, and a very interesting topic was raised there: long-term contracts with Energoatom and the possibility of a normal, special price for energy-intensive industries. That is, long-term contracts with fixed rates for large consumers. A model like in France, where the industry buys directly from nuclear generation. In some countries, such as Germany and Italy, there are some tax benefits and energy tariffs. There are many ways, but the main thing is that we need to make a decision very quickly, as budgets for the next year and production plans are being planned. We need to make sure that all companies understand that we can operate with this price of electricity and that the government gives us a tool to support us,” the expert emphasizes.
The discussion will not be easy
There is a willingness on the part of those involved in the energy market to join the discussion. However, they also have counter questions for the steelmakers. Says Oleksiy Kucherenko, First Deputy Chairman of the Parliamentary Committee on Energy, Housing and Utilities.
“The issue here is that everyone complains about high prices. Ask any builder, and he will tell you how the price of rebar has gone up. That’s why you need to clearly state what you don’t like. If it’s about non-market prices or some kind of market violation, then this should be investigated under special procedures, please. If it is just high prices, and they are not ready for them because they have not modernized their ovens and other equipment, then this is probably a question for them, because they sell their products at market prices in the same way. I know that they want to sign contracts with Energoatom, but today no one is preventing them from signing such contracts. “Energoatom is entering into long-term contracts, and it is going to the stock exchange, and they also have these opportunities. Once again, I want to emphasize that I understand their dissatisfaction, I take part in their discussions, but it is necessary to formulate clear proposals,” the parliamentarian said.
Oleksandr Kharchenko, Director of the Energy Research Center, is also not averse to discussions.
“I am ready to talk to the metallurgists at any time, showing them where they are, to put it politely, manipulating the figures. Look, when people compare the full price of electricity with the market price, they don’t show the cost of transportation in Europe, but they do in Ukraine. The cost of electricity transportation in Europe is high. Therefore, this dialog has its own nuances,” the expert notes.
Oleksandr Kharchenko is also quite critical of the idea of long-term contracts with Energoatom.
“If Energoatom is forced to sign such contracts for some reason, we will have another distortion in the market. It’s objective, either we have a market or a long-term contract that is beneficial for both participants. It can’t be that a steel plant is profitable and Energoatom is not. “Energoatom will simply not sign it. Or it will have to be forced to sign it in some way. And it already has enough obligations and needs money for a huge number of things,” the expert reminds.
Oleksandr Kharchenko, Director of the Energy Research Center, has his own proposal on how to reduce the cost of electricity for producers.
“I urge all consumers to prepare for the fact that in the next 10 years we should not expect cheap electricity in Ukraine. In order to reduce electricity costs, we need to build our own generation – gas piston, gas turbine, solar, install batteries, i.e. our own grid. This will reduce electricity costs. Therefore, I would urge our steelmakers to approach the business process in a normal way and reduce their own electricity prices by installing facilities that pay off in 3-4 years. And then it is a net profit,” the expert concludes.
There is a subject for discussion on how to help industrialists withstand the pressure of high electricity prices. There is a feeling that this discussion will not be easy, both within the government and among experts and business representatives. But the price of the issue is also high – the competitiveness of Ukrainian products and the stability of many enterprises in the mining and metals sector of Ukraine.
Author: Sergey Vasilevich
