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Mining and metals sector professionals urge government not to restrict imports of vitriol

Source : 112 Ukraine

Introduction of restrictions would create a monopoly on the vitriol market and lower make Ukrainian metallurgy and coke chemistry enterprises less competitive.
14:35, 19 April 2018

112 Agency

Representatives of enterprises of the mining and metals sector urge the Ukrainian government and the interagency committee at the Ministry of Economic Development and Trade not to introduce duties, quotas or any other restrictive measures on imports of vitriol, as such measures would cause an increase in the price of vitriol, a rise in production costs for metallurgical and coke chemistry enterprises, which would make them less competitive on the international markets. Olexandr Kalenkov, the chairman of the Ukrmetalurgprom association, which unites Ukraine’s mining and metals businesses, said at the round table on “The vitriol market in Ukraine: current state and duture development”, UNIAN reports.

Related: Economy Ministry’s investigation into imports of vitriol may lead to introduction of special duty

“We hope that the interagency committee is going to meet in the nearest future, and a decision is going to be made not to introduce any restrictions (duties or quotas), to leave it competitive... We, as an association of miners and metallurgists, are going to petition of the Prime Minister and Deputy Prime Minister Kubiv, who is presiding over the commission, to accept our arguments and to abstain from introducing such restrictive measures”, - Malenkov said.

According to him, the introduction of restrictions would cause the price of vitriol to rise, followed by increased production costs for metallurgical goods, which require vitriol.

„The international competition is very tough. 85% of our produce is exported, we compete, for instance, because of production costs. Every dollar counts, every cent counts. Hence, any increase in production costs would restrict the volume of our goods sold“, - Kalenkov said adding that the mining and metals sector account for a third of Ukraine‘s manufacturing and the declined volume of production would impact on such metrics as the gross domestic product.

Related: Ukraine petitions USA to remove Ukrainian metallurgical goods from the application of US tariffs

The head of the association also pointed out the infrastructure problem that emerges as the result of restricted vitriol imports into Ukraine. According to him, nowadays, there are only 142 tankers for the transportation of vitriol in Ukraine. That number is only sufficient for transporting 40 thousand tons of vitriol, while the annual consumption is around 110,000. Kalenkov claims that the absence of imported vitriol would lead to a shortage of foreign tankers, hence, disruptions to deliveries of the particle to enterprises.

According to the director of the state analytical enterprise Ukrpromzovnishekspertyza Volodymyr Vlasyuk, the vitriol market nowadays depends heavily on imported vitriol.

“We require approximately 100,000-110,000 tons of vitriol annually. Around 20,000-30,000 tons are produced domestically. Therefore, a deficit of around 70,000-80,000 tons emerges, which is covered by imports. Belarus, Russia, Austria and other EU member states are among the primary country of origin of such imports”, - Vlasyuk said. He then added that vitriol shortage creates a difficult situation of consuming enterprises, which require vitriol constantly for their business operations.

 

Related: Ukraine petitions USA to remove Ukrainian metallurgical goods from the application of US tariffs

As the deputy director of Ukrpromzovnishekspertyza Sergiy Povazhnyuk, vitriol is used by metallurgical, coke chemistry, pharmaceutical enterprises, fertilizer manufacturers, as well as by thermal power plants and nuclear power plants of Ukraine.

According to Anzhela Makhinova, a partner at the Sayenko Kharenko law firm, the restriction of vitriol imports in Ukraine should be considered an extraordinary measure, which violates the principles and norms put forward by the World Trade Organization.

“These measures hurt the transparent and law-abiding imports. The introduction of quotas would inevitably lead to Ukraine having to explain its position in the WTO’s dispute institution”, Makhinova said adding that should the quotas be introduced, a number of Ukraine’s trade partners would see it as a sign of disrespect to the international trade law and would dispute such measures.

Olexandr Gaydayenko, the head of engineering at Zaporizhkoks, said that the introduction of restrictions would disrupt vitriol deliveries to the plant, which would then lead to more harmful emissions and multi-million fines for the enterprise.

 

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“This would lead to a monopolized market and a price increase”, - said Sergiy Sereda, the director of Zakhid, a distributor of vitriol produced in Belarus by the Naftan plant. Earlier, a number of domestic vitriol producers (for example, Sumykhimprom, Skhidny GOK) have requested the interagency committee to investigate the imports of vitriol and to introduce restrictive measures (duties, quotas). The goal of these measures, according to those who called for the investigation, is to protect the domestic producer.

It should be noted the the issue of vitriol deficit and increased volumes of its imports appeared in 2014 as the result of Crimea annexation and occupation of parts of Donbas. As the result of the Russian agression, Ukraine lost two of its largest vitriol producers – Krymsky titan and the Kostyantynivsky chemical plant (Donetsk region). Since then, a significant portion of the market was made up by imports, which are nowadays crucial for the operations of the metallurgical, coke chemistry and a number of other sectors of Ukraine’s industries.

 

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