PJSC ArcelorMittal Kryvyi Rih Reports Ungrounded Pressure from the Tax Authorities

January 2025. PJSC ArcelorMittal Kryvyi Rih is concerned about the unlawful (in the company's opinion) inspection in November 2024 regarding compliance with the requirements of the tax legislation of Ukraine on rent for the use of subsoil for the extraction of mineral resources for the period that has essentially already been inspected twice.

Moreover, the result of the previous re-inspection was successfully challenged by ArcelorMittal Kryvyi Rih in court, and the courts of three instances ruled in favour of the company.

The company's tax payment procedures are carried out in accordance with the applicable law and court practice, in full compliance with the approach used by other mining companies.

The company filed an objection to the tax inspection report, as we consider the conclusions of the tax authority, as well as the inspection itself, to be unlawful. It is also worth noting that similar disputes between our colleagues in the industry and the tax authorities regarding the procedure for calculating rent for similar periods have already been considered, and court decisions in favour of rent payers have come into force.

Currently, the company has received a tax notice-decision (for a total amount of UAH 1 349 874 073.26) and will use all possible legal means to appeal it, as such a decision made by the tax authority as a result of the inspection just confirmed our assumptions about the existing pressure on our business from the tax authorities.

Mauro Longobardo, Chief Executive Officer of ArcelorMittal Kryvyi Rih: ‘It is a pity to realise that in these difficult times we are once again forced to defend our position in a case that we had already considered resolved, including in court. We are talking about the allegations against ArcelorMittal Kryvyi Rih of allegedly evading subsoil rent payments for the period of 2015-2019. We consider the claims of the tax authority to be unfounded. The company, which operates as part of a global corporation, is appealing to the state and demanding a civilised approach to resolving the dispute, transparent and equal conditions for all participants in our industry.’

For reference: The dispute concerns the approach to the calculation of rent. Rent is a national tax levied for the use of subsoil for the extraction of minerals (in this case, ore). ArcelorMittal Kryvyi Rih extracts relatively poor iron ore from its open pit with an iron content of 34-35%. It goes through four stages of crushing. Then, to produce iron ore concentrate, the crushed ore has to go through a long process of advanced beneficiation (magnetic separation, hydrocyclones, and desliming). The final product has a double iron content of 65-68%. The difference between primary processing of raw materials and their qualitative change is well understood by all miners and metallurgists, which is why the entire industry used the method of rent charging for ore. It was generally accepted in the industry. And this principle of rent calculation is in line with the requirements of the Tax Code of Ukraine (in the version in force during the period under review), which has been repeatedly proved in courts. Instead, the Tax authorities continues to apply pressure to our company by means of ungrounded audits and repeated accrual of rent payments.

For 19 years, since 2005, ArcelorMittal Kryvyi Rih has been and remains the biggest foreign investor in Ukraine, its partner and friend. This is evidenced by USD 10.7 billion of total investment and more than UAH 103.2 billion of taxes and fees. Today ArcelorMittal Kryvyi Rih is the biggest mining and metallurgical company in Ukraine and makes its important contribution to the economy despite the military realities. We continue to provide jobs, produce goods, reorient ourselves and restructure our operations as we understand our responsibility to the country, the city, all our employees and their families.