According to recent information released by Agerpres, Romania’s official press agency, Arcelor Mittal has decided to move its bulk raw material transportation and handling activities to the Bulgarian port of Bourgas, bypassing Constanta and thus damaging the economic interests of Romania.

According to one such contract (excerpts follow below), dated July 13th 2009, Arcelor Mittal negotiated for the shipment of a full cargo of iron ore from Bourgas to Galati via Bystroye Channel for the freight rate of EUR 7.80 pmt FIOT.

The facts speak for themselves: the commodity is iron ore (as shown at no. 12), the charterer is Arcelor Mittal (no. 4), the loading port is Bourgas (no. 11), the discharging port is Galati (no. 11), the vessel sails under Bulgarian flag and is named Sozopol 1 (no. 5), has a carrying capacity of DWT 3.261 (no. 7) and the freight rate pmt it charges is EUR 7.80 FIOT, to which adjacent costs will be added.

This is happening while the terminals in the port of Constanta can operate ships of up to DWT 220.000 (which would significantly decrease the shipment costs), while the unloading rate at these terminals is at least twice the unloading rate of the terminals in Bourgas (which would again cut costs). These advantages of Constanta as compared to Bourgas lead to a total cost of shipment of EUR 5.77 pmt in Constanta for commodities like iron ore, while in Bourgas the cost could climb up to EUR 16-19 pmt.

It is still unclear why Arcelor Mittal has chosen for the past several months to use the slower and more expensive route of Bourgas – Bystroye Channel – Galati in order to import the raw material it needs, instead of using the traditional and more cost-efficient route of Constanta – Danube–Black Sea Canal – Galati. Whatever the reason, the consequences are dire: lack of activity in the port of Constanta and on the Danube–Black Sea Canal, loss of income for the state budget, lower wages and lay-offs for the workforce in Constanta.

It is thus obvious that Arcelor Mittal is developing a totally hostile behaviour towards Romania, a country which offered massive incentives to this group and still helps the company throughout the current economic crisis.

Arcelor Mittal has therefore the obligation to immediately reconsider its position and return to fair competitive practices, stopping the current attacks on the National Company “Maritime Port Administration” Constanta, the National Company “Administration of the Navigable Canals” and other Romanian companies involved in activities of handling bulk raw material.

The arrogance of Arcelor Mittal does not benefit anyone and will surely be amended following the investigation started by the Competition Council. Should a company be found guilty of anticompetitive practices in Romania, the fine it must pay is up to 10% of last year’s turnover, which in the case of Arcelor Mittal can be estimated at several hundred million euros.