Zaporozhye Ferro
Alloys Plant (ZZF), one of the largest Ukrainian ferroalloy producers, has been forced to close 15 of its 21 furnaces and currently operates at just 30 percent of its capacities, due to the increase in electricity costs.
According to ZZF chairman Pavel Kravchenko, following the decision of
Ukraine's National Electricity Regulatory Commission to switch the plant from first to second class in terms of power consumption, and the refusal of the Zaporozhye regional energy supplier to renew the plant's lease of a power substation as of January 2011 citing ZZF's failure to meet its contracted minimum 150 million kWh in power consumption last year, ZZF's monthly electricity costs significantly increased by UAH 15 million (about $1.9 million), making its ferroalloys
production activity unprofitable.
In February this year, ZZF expects to further decrease its ferroalloys
production to 13,000 mt from 20,300 mt produced in January, while in mid-March the plant is likely to completely halt ferrosilicon
production at its shop No. 4. "If the issue with the lease of the power substation is not resolved, shop No. 4 will stay idle up to the end of the first half, after which the administration will be forced to cut back on staff," Mr. Kravchenko said.
Due to this situation, ZZF has also been forced to suspend the implementation of some projects for the upgrade of facilities and overhaul of equipment.