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ArcelorMittal's Ukraine Steel Mill To Move $400 Million Out Of Country Amid Probes

The domestic steel plant has called the new tax bill "premature."
The domestic steel plant has called the new tax bill "premature."

Europe's largest steel mill, owned by top investor ArcelorMittal and located in Ukraine, is planning to move $433 million out of the country to pay dividends to its parent company.

In a filing to the National Securities and Stock Market Commission dated September 6, the steel mill, based in Kryviy Rih in southern Ukraine -- President Volodymyr Zelenskiy's hometown -- announced that it will hold an extraordinary shareholders' meeting on October 10 to vote on the payout.

The mill is ultimately owned by Luxembourg-based ArcelorMittal, one of the world's biggest steelmakers and Ukraine's biggest national investor.

The decision comes as the company faces two probes that were started in July after Zelenskiy was elected president. One relates to alleged pollution issues that the company denies and $360 million in unpaid taxes.

During this year's parliamentary election campaign, Zelenskiy accused the mill of polluting his hometown.

The Ukrainian Security Service (SBU), run by Zelenskiy's childhood friend Ivan Bakanov, is investigating the pollution case. Fiscal authorities are probing for back taxes for the period December 2014-March 2019.

The domestic steel plant has called the new tax bill "premature" since it says the fiscal service hasn't given the mill findings of its audit, saying the announcement "doesn't contribute to the improvement of the country's investment attractiveness."

In a news release this month, the mill's chief operating officer, Oleksandr Ivanov, called the pollution case "nonsense," saying that the company is in compliance with regulation and legislation. He furthermore said other plants in Ukraine emit far more pollution.

He said in late July that company officials met with Zelenskiy where they outlined a set of actions to improve emissions at the plant.

SBU inspections of the plant continued in August and took place earlier this month as well, the company said.

Yet in April, the company planned to reinvest its yearly profit back into the plant, following a shareholders' meeting, the usual period when corporations hold them instead of later in the year.

In previous statements, ArcelorMitttal's domestic mill has stated it spent $9 billion over the years since acquiring the plant in 2005 in what is still Ukraine's biggest privatization of a state-owned company.

It paid $350 million last year and $190 million in the first six months of this year in taxes.

In 2018, the mill reported $380 million in earnings.

With reporting by Financial Club
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