FAS opened a case against “Kovdor Mining and Processing Works”

FAS suspects that the company abused its market dominance

The antimonopoly investigation was opened upon a petition from “Severstal” PJSC with regard to increasing the costs of iron-ore concentrate made by “Kovdor Mining and Processing Works” JSC at the beginning of 2017.

An analysis of the state of competition on the iron-ore concentrate market showed that “Kovdor Mining and Processing Works” JSC is the only producer in Russia of iron-ore concentrate, containing 6% magnesium (magnesia iron-ore concentrate).

According to “Severstal” PJSC, magnesia iron-ore concentrate is not a substitute with iron-ore concentrate from other producers, since it contains magnesia and, therefore, has unique properties to be used in technological processes.

FAS analysis of ex-works prices of “Kovdor Mining and Processing Works” JSC for sale of magnesia iron-ore concentrate on the domestic market showed that its costs in January 2017 vs December 2016 increased by 48%, and in comparison with January 2016 - by 128%, whole the primary production costs did not increase significantly.

Selling prices for magnesia iron-ore concentrate of “Kovdor Mining and Processing Works” JSC for “Severstal” PJSC in the period in question exceeded Russian and world quotations (IODEX 62% Fe CFR China). The antimonopoly body also established that a considerable part of its products “Kovdor Mining and Processing Works” JSC sells for export at the prices below the domestic ones.

Thus, FAS suspects that the company has abused its dominance (Clause 1 Part 1 Article 10 of the Federal Law “On Protection of Competition”).