ArcelorMittal Kryvyi Rih petitions US, Germany for help as bank accounts remain frozen

10 January, 06:27 PM
Square billets being produced at ArcelorMittal Kryvyi Rih. (Photo:Artem Ilyin / NV)

Square billets being produced at ArcelorMittal Kryvyi Rih. (Photo:Artem Ilyin / NV)

The bank accounts of ArcelorMittal Kryvyi Rih (AMKR), Ukraine's largest integrated steel company, remain frozen at the request of the Ukrainian Prosecutor General's Office, AMKR told Ukrainian news agency Interfax-Ukraine on Jan. 10.

On Jan. 5, AMKR said its bank accounts had been frozen in connection to a dispute over resource rent payments.

AMKR’s parent company ArcelorMittal had to step in and pay the wages of AMKR’s employees, the company said.

“We’re working together with ArcelorMittal, trying to find other means of making crucial transactions, in order to avoid halting production and breaching agreements with our domestic and overseas clients,” read a company press release.

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The company is using every legal and even diplomatic tool at its disposal to unfreeze its accounts and resume nominal operations, the release said.

Besides trying to unfreeze its account by going through the courts, AMKR contacted the governments of Luxembourg, Germany, the United States, as well as the investment watchdog UkraineInvest, hoping to gain their support.

“Our parent company helped to ensure AMKR employees’ wages were paid by Jan. 6, thus avoiding social tensions in our city,” AMKR said.

“(Our) accounts will remain frozen until a court decision says otherwise,” the company said. “We hope our legal system will act swiftly and fairly, protecting the property rights of Ukraine’s largest foreign investor.”

In a comment to NV.Business, an AMKR spokesperson commented on claims that the company had paid a lower resource rent for mining iron ore than its competitors.

By the end of 2018, AMKR had a net positive balance of UAH 734 million ($26 million) on its resource rent payments, the company said.

“This was due to changes in how resource rent is calculated, and a carryover from previous rent payments,” AMKR said.

“The company carried over the net positive balance of its resource rent payments to reduce its rent and tax payments in 2019 and 2020, in strict adherence to our laws,” the company said. “So, it was solely due to the carryover effect that our rent payments in 2019 were nominally lower than those of other companies in our sector.”

“Analyzing and comparing resource rent payment over a longer period is hardly rigorous, considering the formula for resource rent rates has changed frequently, the same as the effective tax rate and the fluctuating currency exchange rates,” AMKR said.

Meanwhile the Prosecutor General’s office claims none of the frozen accounts were used to pay employees’ wages or taxes. AMKR refutes this claim, maintain that its ability to pay the wages of some 20,000 workers has been “paralyzed.”

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