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Russian giant's met coal sales slide

MECHEL, Russia's biggest producer of coking coal, says its sales of the steel-making commodity have fallen 11% in the March quarter.

Staff Reporter
Russian giant's met coal sales slide

The company’s coking coal sales dropped from 3.2 million tonnes in Q1 2012 to 2.8 million tonnes this past quarter.

Steam coal sales increased 3% on the same period last year, while the company’s developing PCI division increased sales by 62%.

Run-of-mine coal production was on par with Q1 2012 production, but down 8% from the last three months of 2012.

However, all of Mechel’s coal divisions increased their sales from Q4 2012, a growth due to an improvement in the global metallurgical coal markets, according to Mechel’s chief executive officer Evgeny Mikhe.

“In Q1 2013, we have had an expected decrease in coal production compared to Q4 2012 due to less favorable conditions of open pit mining in cold winter months,” Mikhe commented.

“At the same time, a certain improvement in the metallurgical coal market, which we could see since the beginning of this year, and our company’s efforts aimed at expanding its client base enabled us to significantly boost our sales of coking coal, anthracites and PCI both internationally, primarily to Asia Pacific, and domestically, including supplies from Mechel Bluestone, which resumed operations early this year, to North America’s market.

“As a whole, coking coal sales in Q1 2013 increased by 13% compared to 4Q 2012, anthracite sales increased by 19% and PCI sales by 13%. Steam coal sales also went up by 9% compared to the previous quarter, which is primarily due to increased supplies to the group’s power enterprises, especially Southern Kuzbass Power Plant, which increased electricity generation due to seasonal factors.”

Mechel’s electric power generation was up 2% on Q4 2012, but down 2% on Q1 2012 and heat generation was up 7% and down 15% respectively.

Mechel announced last month that that three of its West Virginia mines which were idled last year on market weakness have resumed operations to help it rebuild inventories.

In its 2012 annual report, in which it confirmed a 10% drop in net revenue to $11.3 billion and a mostly flat year of run of mine production at 27.76 million tons, Mechel said underground operations restarted at the Keystone Mine 65 in March.

It also resumed mining at Pocahontas No 11 Contour and the Augur No 2 mines this month.

“The complexes are due to produce some 135,000t a month,” officials said in the report.

The reboots are not the first for the miner. In January it called back crews to its Justice Energy and Dynamic Energy mines.

Mechel’s Frontier mine in Wyoming County, part of Dynamic Energy, as well as the K-2, Red Fox and Coal Mountain washing plants, were not idled.

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