SSPU confirms deliveries to Magnitogorsk on mutually beneficial terms

/INTERFAX-KAZAKHSTAN, Almaty, May 17, 05/ - Sokolvsko-Sarbaiskoe production unit JSC (SSPU, in northern Kostnai oblast) intends to resume deliveries to Russian Magnitogorski metallurgical combine OAO (MMK) only after setting up an appropriate price, Eurasian Industrial Association (EIA) said in a statement released today. The announcement states that Kazakh enterprise suspended deliveries to Russian sites on May 9 of the current year. This said the main reason it named was disagreements with MMK over pricing. "Until recently SSPU JSC delivered produce to MMK at market price, and the latter disagrees with that. MMK requires price reduction by at least 40% versus existing level. At the same time a suggestion on the part of SSPU about conclusion of long-term contact has been rejected", the announcement states. In this connection SSPU announces that it disagrees with MMK's statement about SSPU's act of collusion with other Russian suppliers aimed to hold MMK under pressure. SSPU states that there was no price collusion. Kazakh company acted independently and suspended deliveries on May 9", the announcement states. As informed MMK was forced to suspend its 3 blast - furnace due to inventory shortage. MMK links this to suspension of deliveries on the part of SSPU, MMK's main supplier (up to 70% of needs) beginning from May 9 as well as to disputes with Mikhailovskyi GOK (MGOK). In this connection EIA notes that SSPU does not have any connection to a dispute between MMK and Mikhailovsky GOK. According to EIA during April - May MMK management was in talks wit alternate ore suppliers in order to replace SSPU. SSPU claims MMK wants to earn extra profits by cutting materials costs and stated that the enterprise would not At the same time SSPU hopes the dispute would be resolved. SSPU is the largest in Kazakhstan of iron ore and iron products. In 2004 SSPU produced 35.8 m tons of iron ore and 14.8 of refined ore. In 2005 the enterprises targets up to 40 m and 16 m tons of crude and refined ore respectively. SSPU main customers include Magnitogorski metallurgical combine OAO, Tchelyabinsk metallurgical combine JSC, Kazakhstan-based Mittal Steel Temirtau as well Chinese enterprises. Apart from SSPU EIA has also Aluminum Kazakhstan JSC, Eurasian Energy corporation and Kazchrome among its members. [2005-05-17]