ZALK May Halt Operations
6 June 2008
Zaporizhzhya Aluminum Mill (ZALK) is suffering from a high cost of electricity after the government cancelled its preferential electricity tariffs earlier this year. Specifically, tariffs for ZALK rose two fold from USD 0.02 to USD 0.04 per 1KWh. Electricity comprises about one third of all costs in aluminum industry. Russian aluminum smelters enjoy electricity tariffs at around USD 0.015 per 1KWh. Globally, aluminum producers buy electricity at tariffs of USD 0.02 ? 0.05 per 1KWh, on average. Concorde Capital: ZALK?s management reports that the company was forced to freeze its investment projects and that one tenth of its employees had to take an unpaid leave. It has been a loss-making operation over the last two months. Eventually, this may result in the mill?s stoppage, unless the government sets lower electricity tariffs for the company.
