Ukraine's ArcelorMittal Kryviy Rih to suspend iron ore production for three months

Ukraine's largest producer of steel ArcelorMittal Kryviy Rih will suspend production of iron ore for three months starting Aug. 1 amid concerns over a recession in Europe, the company said July 28.

The company, whose main iron ore and steel production assets in Ukraine are located less than 150 km from the war front-line, has produced iron ore continuously since Russia invaded on Feb. 24.

However, Kryviy Rih is now concerned that recession in Europe, its main market, and escalating logistics costs may start to bite, forcing the company to "temporarily" suspend production.

"Starting in August the company will suspend operation of the mining and processing assets for the next three months," Kryviy Rih said in a statement.

"The temporary shutdown of the mining and processing operation is caused by serious economic factors," it said. "This is a decline in economic activity in Europe amid the risk of a recession and a significant increase in the cost of transporting iron ore."

Kryviy Rih suspended steel production on March 3, but kept iron ore output going, saying robust demand had sustained it.

The company then resumed partial steel production April 12.

"The timely reorientation of the company to the export of iron ore concentrate helped keep the entire plant afloat," Kryviy Rih said. "However, now demand for concentrate and metal products has sharply decreased in European markets, while traditional markets are still unattainable for ArcelorMittal Kryvyi Rih."

The war has also increased logistics costs, which, coupled with weak demand, can make the operation unprofitable.

"Logistics costs have increased by a factor of five," Kryviy Rih said. "These circumstances do not leave the company a chance to survive without a significant reduction in costs."