The draft law №1210 regarding the new taxation rulers, introduced to the Parliament of Ukraine, may significantly impact the country’s steel industry, market players worry. In particular, the initiative implies the increase of the rent for the iron ore output from 8 to 10 percent and the increase of the lower profit margin from 14-25 percent to the doubled National Bank interest rate, which is 33 percent today. In addition, it is suggested to use the value of the merchant product (i.e. concentrate, agglomerate, pellets) with 62-67 percent Fe content as a tax base instead of the raw iron ore with 16-30 percent Fe content.
According to the experts, if the taxation changes are approved, the ratio of the rental payments to the profits for the Ukrainian integrated mills may reach 22 percent, which is significantly higher than in other countries. As a result, market players, including the mills, are worried that Ukraine’s competitiveness in exports might decrease and the production will be reduced. In particular, ArcelorMittal Kryvyi Rih has already made a statement, that the company will most probably halt the iron ore output at one of the key mines if the law is approved, SteelOrbis has learned.