OREANDA-NEWS  On 23 October was announced, that Industrial Union of Donbas Corporation announced about termination of all its investment projects in Ukraine.

Sergei Taruta, IUD board chair, specified that investment projects for production modernization and development at Alchevsk Iron and Steel (PFTS: ALMK) had provided for investments amounting to USD 2 bln, and at Dniprovsk Dzerzhinskiy Iron and Steel (PFTS: DMKD) – USD 1.2-1.5 bn. Besides, IUD will abandon its plans to invest jointly with Arcelor Mittal Kryvy Rih (PFTS: KSTL) USD 500 mn into development of Velikotokmak manganese ore deposits and to participate in privatization or Kryvy Rih Oxidized Ore Mining.

Mr Taryta also stressed that presently almost all companies of the industry in Ukraine are about to suspend their operations. He said the steelmakers that launched their investment programs to develop their production are in the worse position than those that did not start their implementation.

Sergei Taruta also announced that his company plans to cut the jobs by one-third. “It is not our fault, we just unable to pay wages to these people,” he acknowledged.

Other steel companies are also planning to cut their personnel or wages. According to Vladimir Boiko, the board chair of Mariupol Illich Iron and Steel (PFTS: MMKI), this September the company cut its staff wages by 5-10%, and it is not excluded that the wages will be cut even further. The possibility to cut wages of jobs is also considered at Zaporizhstal (PFTS: ZPST), while at Arcelor Mittal Kryvy Rih they suggest their employees to take vacations due to suspended production.

The steelmaking companies are forced to cut their costs, dismiss their employees or cut their wages because of the large-scale crisis in the industry. We would like to remind the reader that due to weakening demand in the global markets the Ukrainian steel producers suspended 17 out of 36 blast furnaces, while in the companies' warehouses they accumulated almost a month's stock of finished products.

According to the Blast Furnace Operators Association, the wages represent not less than 20-22% of the Ukrainian steel products cost. Amid suspending production by steel companies, the wages became the key expenditures borne by steelmakers. Vladimir Tereshenko, the Association director, estimates that cutting of jobs by one-third by all steel companies will allow them to reduce their costs by USD 120-135 mn by the end of the year.