Coal Mining Sector Russia November 2013
Produced by:
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-1-
Unauthorized Distribution Prohibited.
Table of Contents I. Sector Overview
III. Coal Market
1. Sector Highlights 2. Economic Importance 3. Main Sector Indicators 4. Main Coal Basins 5. PPI 6. Average Producer Prices 7. CPI 8. IPI 9. Foreign Trade 10.Employment and Wages 11.Government Policy
1. 2. 3. 4.
II. Coal Production and Consumption
1. Coal Output by Region 2. Regional Distribution (2012)
1. 2. 3. 4. 5. 6. 7. 8. 9.
Coal Reserves Worldwide Biggest Coal Producing Countries and Companies Biggest Russian Producers and Exporters Best Performing Russian Coal Producers
IV. Main Players 1. 2. 3. 4. 5.
SUEK Mechel Evraz Ruscoal Severstal
V. Regional Distribution
Coal Production Highlights Coal Output Coal Consumption and Supply Highlights Coal Consumption Thermal (Steam) Coal Coking Coal and Metallurgical Coal Highlights Biggest Coking Coal Producing Countries and Companies Coking Coal and Metallurgical Coal Production Lignite and Brown Coal
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-2-
Unauthorized Distribution Prohibited.
I. Sector Overview
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-3-
Unauthorized Distribution Prohibited.
Reserves The biggest coal reserves in the world can be found in the U.S., Russia, China and India. China, whose reserves according to PWC will run out in 35 years at the current production levels, might lose its position as a major producer, but Russia is estimated to have 500 years of remaining reserves, and the U.S. – 250 years. Russia has 193.3 bn tonnes proven reserves of coal and 4.451 bn tonnes of prognosed coal reserves, which on a global scale corresponds to 12% and 30%, respectively. Its proven reserves include brown coal (101.2 bn tonnes), bituminous coal (85.3 bn tonnes, of which 39.8bn tonnes are coking coal) and anthracite coal (6.8 bn tonnes). The country’s coal reserves are widely dispersed and coal mining is now carried out in 25 regions and 16 coal basins. The bulk of coal deposits is in Siberia (64%) and the Far East (30%). The European part of the country and Urals account for 6% of the coal deposits.
Production Coal mining is carried out in 121 open-pit and 85 underground mines with a total annual production capacity of about 383 mn tonnes. Coal in Russia is currently mined primarily by open-pit mining (65%) due to its relatively lower production costs. The 2012, coal output amounted to 353 mn tonnes, up by 4.7% on the year. The coal supplies increased by 3.1% to 316 mn tonnes, of which 127 mn tonnes in exports (up by 19%). As a result of restructuring in the coal industry and the privatisation of coal assets, the entire sector is in private hands. As much as 78% of the sector is controlled by the 11 biggest mining companies and 5 steel smelters.
Consumption The main consumers of coal in Russia are the utilities and the metal processing industry. Coal is one of the major energy resources with a 14% share of the nation's energy consumption. This figure is projected to rise in line with the government’s intentions to shift power production towards coal-fired plants and thus free up natural gas for exports. Russia relies on domestic steel production to meet the internal demand, and therefore, the self-supply with ore and coke is extremely important. Also, most of the Russian coke is being produced directly with its direct consumers, the steel mills.
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-4-
Unauthorized Distribution Prohibited.
Economic Importance Economic importance of coal mining sector 2007
2008
2009
2010
2011
2012
PPI
125.1
93.0
113.9
116.7
112.0
105.1
PPI of mining and quarrying
152.3
61.6
149.2
117.1
126.3
109.3
PPI of energy producing material mining
158.1
57.8
161.0
116.1
128.1
110.5
Coal exports, USD mn
5,354.7
7,751.8
7,367.1
9,180.5
11,373.3
13,015.1
Coal imports, USD mn
466.7
885.3
465.7
483.4
402.2
818.5
FDI total, USD mn
27,797.0
27,027.0
15,906.0
13,810.0
18,415.0
18,666.0
FDI in mining and quarrying, USD mn
13,933.2
4,978.7
3,174.8
2,034.9
4,627.0
3,529.1
FDI in energy producing materials, USD mn
13,669.7
4,644.8
2,798.7
1,755.2
3,896.9
2,740.5
Gross domestic product , RUB bn
33,247.5
41,276.8
38,807.2
46,308.5
55,799.6
62,599.1
GDP: gross value added (GVA) , RUB bn
28,484.5
35,182.7
33,831.3
40,040.1
47,505.5
53,284.5
2,865.5
3,284.6
2,885.4
3,842.8
5,157.3
5,801.4
GDP: annual: GVA: mining and quarrying , RUB bn Source: Statistics office, Federal Customs Office, CEIC
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-5-
Unauthorized Distribution Prohibited.
Main Sector Indicators Mining and quarrying value, RUB bn Energy producing materials Mining, excl nergy producing materials Total 5,119
7,714 7,720
2007
4,882 4,356
525
595
489
6,746 5,246
4,524
3,886
Mining except energy producing materials 11.5%
8,723
5,995
4,374
Revenue breakdown per subsector
2008
2009
749
2010
969
2011
Energy producing materials 88.5%
1,003
2012
Main sector indicators, mn tonnes 1988
2000
2008
2009
2010
2011
2012
425.4
257.9
328.9
3026
323.4
334.7
352.7
- open-pit mining
178.7
167
224
195.2
220.9
235.8
255.1
- underground mining
246.7
90.9
104.9
107.4
102.1
100.9
99.6
Stocks
-
190.4
191.4
176
790.6
188.3
194.2
Domestic power demand
-
103.3
98.8
91.6
95.9
95.8
96.3
Total mining
Source: Statistics office, CEIC, Coal Age Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-6-
Unauthorized Distribution Prohibited.
Main Coal Basins Coal production, mn tonnes Resources (bn tonnes) A+B+ C1*
C2*
Mining in 2012 (mn tonnes)
Kansk-Achinsk (Krasnoyarsk brown and 79.4 Territory, black Kemerovo region)
38.8
41.1
6-15
0.3-1
12.6-17.7
Kuznetsk or Kuzbass (Kemerovo area)
brown and 51.5 black
1.7
201.5
10-16
0.3-0.8
22.8-29.8
Irkutsk (Irkutsk region)
brown and 7.6 black
4.6
14.2
7-15
1.5-5
17.6-22.6
Pechora (Komi Republic)
brown and 7.2 black
0.48
13.6
8.5-25
0.5-1
18.1-26.7
Donetsk (Rostov region)
brown and 6.6 black
3.1
4.7
10.5-29 1.8-4.2
Coal basin
Coal types
South Yakutia (Republic of Sakha)
black
4.5
2.8
9.2
MINUSA (Republic of Khakassia)
black
5
0.35
12.3
Ash Heating Sulfur content capacity (%) (%) (micro joule/kg)
10-18
0.3-0.5
6.6-29.7 0.5-0.6
18.5-20.1
22-37.4
18-32
*Note: Russia divides mineral concentrations into seven categories, in three major groups, based on the level of exploration performed: fully explored reserves or resources (A, B, C1), evaluated reserves or resources (C2) and prognostic resources (P1, P2, P3).
Coal mining development is concentrated in the main coal basins – Kuznetsk and Kansko-Achinsk. New deposits that will be subject to further development are located in Eastern Siberia and the Far East (Urgalskoye, Elegestskoye, Elginskoye, Apsatskoye deposits) alongside with the main coal basins. If economically feasible, coal mining can be developed at Seidinskoye (the Republic of Komi) and Sosvinskoye (the Khanty-Mansi Autonomous Area – Yugra) deposits, as well as in the Bering coal basin (the Chukot Autonomous Area). The energy strategy also envisages the construction of required port infrastructure (the ports of Vostochny, Vanino and Ust-Luga, the Murmansk deep-water port) and construction of new ports with high-capacity coal terminals, including ports on the Black Sea coast, and, should the economic efficiency be proved, on the North Pacific coast. The Pechora basin spans over an area of some 90 thousand sq km near the northern Ural Mountains in a region with severe climate, which results in 85% of the basin being under permafrost. It is being developed as an underground mine. In addition to being a significant reserve, the basin is also close to markets. The Kuznetsk Basin has an area of 26.7 thousand sq km and is located near Novosibirsk. There are both open-pit and underground mines, from which a variety of coals with variable ash content and low sulphur content are being extracted. The Kansk-Achinsk Basin contains significant deposits of brown (sub-bituminous) coal with medium-to-low ash content and generally low sulphur content. Some of the mines ate connected with power stations and carbo-chemical plants.
Source: Coal Age, Energy Strategy 2030, World Energy Council Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-7-
Unauthorized Distribution Prohibited.
PPI PPI, prev month=100
PPI, same month, prev year=100 250
125 115
200
105
150
95
100
85
50
75
0
Mining and quarrying
Total
Energy producing materials
Mining and quarrying
Energy producing materials
PPI, prev Dec=100 155.0 135.0 115.0
158 152 125 116
95.0
161 149 136 114 93
75.0
133 128 126
127 117 117 116
112
89
110 109 105 94
2007
2008
Mining and quarrying Energy producing materials Coal
62 58
55.0
Total
2009
2010
2011
2012
Source: Statistics office, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-8-
Unauthorized Distribution Prohibited.
Average Producer Prices Coal, RUB/tonne
Bituminous coal, RUB/tonne
1,200
1,800 1,600 1,400 1,200 1,000 800 600 400 200 0
1,000 800 600 400 200 0
Coking coal, RUB/tonne
Brown coal, RUB/tonne 800 700 600 500 400 300 200 100 0
3,500 3,000 2,500 2,000
1,500 1,000 500 0
Source: Statistics office, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
-9-
Unauthorized Distribution Prohibited.
CPI CPI for coal, prev month=100 108 106 104 102 100 98 96
CPI for coal, same month prev year=100 130 125 120 115 110
105 100
Source: Statistics office, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 10 -
Unauthorized Distribution Prohibited.
IPI IPI in mining and quarrying, prev month=100 115 110 105 100 95 90
IPI, 1991=100
121.7 117.4
117.6
105.6
123.3
103.6 103.1
103.3
124.8
102.7
118.0
101.9 108.8
105.2
IPI, prev year=100
110.8
101.3
112.0 100.4 100.1
105.0
101.2 101.1
100.4 99.4
2007
2008 2009 Mining and quarrying
2007
2010 2011 2012 Energy producing materials
2008 2009 Mining and quarrying
Source: Statistics office, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 11 -
Unauthorized Distribution Prohibited.
2010 2011 2012 Energy producing materials
Foreign Trade Coal exports volume and value
Coal imports volume and value 13,015.1 885.3
11,373.3
818.5
9,180.5
5,354.7 98.0
7,751.8
7,367.1
97.4
105.1
115.7
30.9
466.7 23.4
130.4
110.5
483.4
465.7 23.8
402.2
21.4
14.8 1.7
2007
2008
2009
2010
Volume, mn tonnes
2011
2012
2007
2008
Value, USD mn
2010
Volume, mn tonnes
Exports by destination
thou tonnes
2009
2011
2012
Value, USD mn
Imports by destination
2007
2008
2009
2010
2011
2012
11,169
13,869
8,342
13,084
10,462
11,565
2007
2008
2009
2010
2011
2012
23,249
29,917
23,762
14,063
117
20,361
USD mn
436
656
450
332
18
590
thou tonnes
192
998
51
707
1,568
1,007
31
230
16
151
384
229
thou tonnes
CIS
CIS USD mn thou tonnes
787
1,428
86,824
83,571
593
1,150
1,407
1,411
96,801 102,602 100,010 118,844
Non-CIS
Non-CIS USD mn
4,567
6,324
6,774
8,031
9,966
USD mn
11,604
Source: Federal Customs Agency, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 12 -
Unauthorized Distribution Prohibited.
Employment and Wages Number of employees 2007
2008
2009
2010
2011
2012
Mining and quarrying
974,526
975,753
914,739
897,873
917,314
935,110
Energy producing materials
619,418
621,799
590,477
579,210
588,442
598,975
Coal and Peat
197,552
190,802
173,238
166,524
168,111
168,276
193,276
186,570
169,217
162,728
164,984
165,176
166,412
161,887
147,396
142,124
144,820
145,537
26,864
24,683
21,821
20,604
20,164
19,639
4,277
4,232
4,024
3,796
3,129
3,103
- Coal - Bituminous - Brown - Peat
Average monthly wage, RUB 2007
2008
2009
2010
2011
2012
Mining and quarrying
28,108
33,206
35,363
39,895
45,132
50,401
Energy producing materials
33,276
39,051
41,568
46,271
51,588
57,210
Coal and Peat
18,397
22,574
23,172
27,067
32,251
35,697
18,628
22,866
23,486
27,415
32,611
36,094
- Bituminous
19,301
23,584
23,945
28,018
33,365
36,943
- Brown
14,456
18,157
20,386
23,254
27,196
29,803
7,959
9,706
9,964
12,149
13,224
14,564
- Coal
- Peat Source: Statistics office, CEIC
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 13 -
Unauthorized Distribution Prohibited.
2030 development programme
Transportation
Modernisation
In January 2012 , the government adopted a long-term programme for development of coal industry until 2030. The document, which was prepared by the energy ministry, consists of eight sub-programmes and encompasses the related existing federal programmes and sectoral strategies into one complex strategy. The implementation of the programme relies heavily on public-private partnerships, as the state’s participation in its RUB 3.7tn budget is less than 9 % or RUB 251.8bm. The programme suggests that by 2030 coal production will increase to 430 mn tonnes as a result of the increase in productivity and new coal extraction equipment. The programme also tackles one of the main price factors in a country with a vast geography such as Russia, planning measures to reduce transportation costs and improve the efficiency of coal supplies. As a result, the average of coal transportation is projected to decrease 1.2 times, including in the domestic market – by 1.4 times. Some of the measures include boosting the local use of mined coal, the construction of power plants with integrated utilisation of energy resources, especially coal and methane. Considering the trends in the formation of new centers of coal mining , coal production will shift towards the eastern part of the country, especially Eastern Siberia, whose share in coal share in coal mining is expected to increase from 25.8 % to 32% and the Far East – from 9.7% to 15.2 %. With China slowly turning into a net importer of China, Russia will also secure supplies to this potentially significant market.
Another major goal of the programme is putting an end to the use of obsolete equipment and technologies. The government will demand from new coal production facilities to have modern enrichment equipment in order to boost enrichment level in coal to 60% from the current 40%. The programme also sets as a goal that 80% of the mined coal pass through some sort of processing.
Source: Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 14 -
Unauthorized Distribution Prohibited.
Stages of implementation: 1st stage – 2011-2015 2nd stage – 2016-2020 3rd stage – 2021-2030
II. Coal Production and Consumption
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 15 -
Unauthorized Distribution Prohibited.
Coal Production Highlights
Soviet heritage
Following the collapse of the Soviet Union, Russian coal production narrowed 425 mn tonnes in 1988 to 232 mn tonnes in 1998. A recovery occurred in no earlier than 2003, when the output stood at 329 mn tonnes, which were followed by output dynamics in both directions.
Current situation
Currently, coal mining is carried out in 25 regions of the Russian Federation and 16 coal basins. Regardless of its sizeable reserves, Russia produces a relatively low amount of coal. In 2012, it amounted to 353 mn tonnes, up by 4.7% on the year. The coal supplies increased by 3.1% to 316 mn tonnes, of which 127 mn tonnes in exports (up by 19%).
Producers
As a result of restructuring in the coal industry and the privatisation of coal assets, the entire sector is being controlled by joint stock companies with private ownership. These changes resulted in the formation of a number of large corporations and holding companies, in ownership of coal assets. Also, all coking coal producers are integrated in metallurgical producers. Regarding the sector’s consolidation, the largest 16 mining coal mining companies account for 78 % of the total coal output in the country, including five steel smelters.
Risks
The country’s energy strategy singles out the following trends in the coal sector: depletion of the potential for development of existing coal basins in the European part of the country and in the Urals; slowing down of the rates of new coal deposits development; increase in coal mining and transportation costs; reduction in domestic demand for thermal coal; dependence of coal companies on the amount of export revenues; high share of transport costs in the price of coal products; low quality of coal products as compared with the world level; insufficient rates of fixed assets renovation and investment for large-scale infrastructure projects.
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 16 -
Unauthorized Distribution Prohibited.
Coal Output Coal production, mn tonnes 321.7 313.8
328.6
301.2
6.8%
4.7%
Coal production, mtoe 354.3
334.8
1.9% 153.4
148.0
2009
142.1
151.1
158.0
168.1
2010
2011
2012
-7.4%
-8.3%
2008
4.6%
3.7%
4.1%
1.3%
2007
6.4%
6.3%
5.8%
2010
Coal production, mn tonnes
2011
2007
2012
2008
2009
Coal production, mtoe
Change y/y, %
Change y/y, %
Coal production by type, mn tonnes 2007
2008
2009
2010
2011
2012
Hard coal*
240.1
245.2
267.7
275.0
282.4
n/a
- Bituminous coal
238.6
240.3
229.2
240.8
257.3
275.8
n/a
n/a
n/a
6.8
10.1
11.2
Lignite coal**
n/a
82.5
68.8
76.4
76.9
77.8
Enriched coal
n/a
n/a
n/a
n/a
140.6
121.1
Coking coal
69.1
64.7
60.6
67.0
64.7
71.5
Metallurgical coke
33.9
32.0
27.4
27.0
27.0
27.1
- Anthracite coal
Source: Statistics office, CEIC, Coal Age, BP Statistical Review of World Energy June 2013, *EIA, **D&B Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 17 -
Unauthorized Distribution Prohibited.
Coal Consumption and Supply Highlights
Power generation
Coal is one of the major energy resources in Russia’s power generation sector with about 14% share of the nation's energy consumption. Its role is expected to increase with the support of the government, whose strategy for the coal sector development until 2030 envisages an increase in coal production and the construction of coal-fired plants, which will free up natural gas for exports. Russia’s energy matrix varies between regions. Siberia and the Far East rely heavily on coal-fired power utilities (about half of electricity production), while in the European part and the Urals, electricity and heating come mostly from gas. In addition to the energy sector, the other main consumer of coal is the metal processing sector.
Transportation
Russia intends to upgrade its port and railway infrastructure in the Far East in order to boost coal exports to Asia. The uneven distribution of coal deposits and the location of many of them far from markets resulted in transportation making up 60% of the cost of coal. This burden makes the otherwise cheaper to produce Russian coal, a more expensive and, therefore, a less competitive export item. In order to deal with this issue, the country is undertaking measures to encourage the local use of coal at its production location and also plans to expand its transportation infrastructure to support exports, particularly to the east.
Exports
Russian coal is mainly exported via two terminals: Nakhodka (Eastern port) and Saint-Petersburg (port Ust-Luga). According to senior analyst with the Veles Capital investment company, Ayrat Khalikov, the main bottlenecks for Russian coal exports to Asia are the capacities of the railway transportation and of the ports.
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 18 -
Unauthorized Distribution Prohibited.
Coal Consumption Coal consumption, mn tonnes 8.8%
7.7%
190.5 -1.6%
205.2
Coal consumption, mtoe 100.4
93.4
200.3
184.1
198.3 -1.0%
7.4%
91.9
90.2
93.7
93.9
3.8%
188.2
0.2%
-5.1%
-1.8%
-3.3%
-10.3%
-8.4%
2007
2008
2009
2010
Coal consumption, mn tonnes
2011
2012
2007
2008 2009 2010 Coal consumption, mtoe
Change, %
Coal consumption breakdown by users
12.7%
13.1%
12.5%
12.0%
19.2%
20.9%
19.5%
19.6%
48.6%
48.0%
51.4%
48.6%
12.9%
2009
2010
2011
18.9%
17.9%
16.7%
Others 177,889
Households and agriculture
169,128
16.5%
16.0%
15.5%
163,651
165,603
163,659
196,286
Metallurgy Power utilities
2008
2012
Electricity production from coal sources
19.8%
51.4%
2011 Change y/y, %
2006
2012
2007 2008 2009 Electricity production, GWh
Source: Dun & Bradstreet, EIA, BP Statistical Review of World Energy June 2013, World Bank, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 19 -
Unauthorized Distribution Prohibited.
2010 % of total
2011
Thermal (Steam) Coal Top 10 steam coal producing countries, mn tonnes (2012e) China USA India Indonesia South Africa Russia Russia Australia Kazakhstan Colombia Poland
Thermal coal production in Russia in 2012 Sibuglmet 1% RusskiyUgol SDS Coal 8% 3% Evraz 1%
3,039
782 504
Mechel 3%
440 258 200 108
85 68
SUEK 34%
Thermal coal consumption, mn metric tonnes 293 259 224 191
Others 36%
Kuzbassrazrez ugol 14%
201
189
4 4
3
4
25
30
26
23
137
132
2008
2010
6
36
37 18
38
201
Thermal coal accounts for the bigger portion of Russia’s coal reserves – 3,641.9bn tonnes or 89%, Promishlenie Vedomosti estimated. According to Russia’s biggest coal producer SUEK, the domestic market of thermal coal in 2012 was determined by the soaring exports and the weaker domestic demand. The favourable situation on the foreign markets, the exports of thermal coal increased by 12.1 mn tonnes, or 12%. However, the unusually warm winter in 2011/2012 resulted in a lower demand from the domestic utilities.
312 11 40
16
14
232
247
2025f
2030f
Other Industry Utilities
20 164
Comments
Power
Total 2015f
2020f
Source: World Coal Association, SUEK, Russian Coal Market Research Institute INCRU Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 20 -
Unauthorized Distribution Prohibited.
Coking Coal and Metallurgical Coal Highlights
Internal demand
As much as 447.1bn tonnes or 11% of Russia’s prognosed coal reserves are coking coal. The country exports less than 30% of the output with its largest foreign consumer being Ukraine. The reasons for the low exports volumes are the deficit in Russia’s own coking coal production – it suffered from a temporary decline in steel production during the crisis, caused by a serious fall in the demand for steel producers from the construction, automotive and machine building industries, according to Alexander Ignatov, president of market researcher Ignatov & Company Group.
Steel industry demands
Russia relies on domestic steel production to meet the internal demand, and therefore, the self-supply with ore and coke is extremely important. Also, most of the Russian coke is being produced directly with its direct consumers, the steel mills.
Main producers
Capacities
The Russian market of metallurgical coke has more than a dozen manufacturers. The market leaders are: CMI, Mechel, NLMK, Severstal MC Industrial Metallurgical Holding and Eurasia. The six biggest steel producers in the country currently control ¾ of the coking coal output and almost 100% of iron ore output, Ignatov said.
The major coking coal exporting countries expanded their new capacities in 2012. Russia raised its capacities by 13% to 16 mn tonnes, coal miner Evraz said in its annual report. Other major expansions took place in Australia (up by 8% to 144 mn tonnes) and North America (up by 5% to 95 mn tonnes).
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 21 -
Unauthorized Distribution Prohibited.
Biggest Coking Coal Producing Countries and Companies Top 10 coking coal producers, mn tonnes (2012e) China Australia USA Russia Russia India Canada Mongolia Ukraine Kazakhstan Poland
Share of coking coal exports (2012 )
510
Mongolia 5%
147
Russia 6%
81 75
Australia 49%
Others 8%
47
31 21 18 13
North America 32%
12
Share of coking coal imports, mn tonnes (2012)
Top 10 coking coal exporters, mn tonnes (2012)
China 18%
BMA Teck Alpha Natural Resources Anglo American Mechel BHP Billiton Peabody Walter Energy Rio Tinto Xstrata
EU-27 14% Others 22%
India 13%
Japan, S.Korea and Taiwan 29%
Total exports: 294mn tonnes
Total imports: 278mn tonnes
Source: World Coal Association, Evraz Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 22 -
Unauthorized Distribution Prohibited.
38 25 18 18 15 13 13 12 11
11
Coking Coal and Metallurgical Coal Production Coking coal output in Russia, mn tonnes
Top 10 metallurgical coke producers by reserves, mn metric tonnes BMA Mechel Evraz Vale Alpha Natural Resources Rio Tinto Teck JSW Anglo American Peabody
71.5
69.1 67.0 64.7
64.7 60.6
2007
2008
2009
2010
2011
2012
Biggest coking coal producers in Russia
2,541 1,938 1,602 1,361 1,271 1,034 896 895
526
Top 10 metallurgical coke producers by output, mn metric tonnes (2012) BMA Teck Alpha Natural Resources Anglo American Mechel BHP Billiton Peabody Walter Energy Rio Tinto Xstrata
Severstal 9% Kuzbassrazrez Yakutugol 9% ugol 8% Yuzhny Sibuglmet 10% Kuzbass 8% Yuzhkuzbassu gol 7%
Others 42%
3,357
Raspadskya 7%
Source: Statistics office, CEIC, Evraz, World Coal Association, Ignatov & Company Group, MetCoke Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 23 -
Unauthorized Distribution Prohibited.
38
25 18 18 15 13 13 12 11 11
Lignite and Brown Coal Lignite coal production, mn tonnes
Share of electricity from brown coal by company (May 2012) Others, 22.5%
82.5 76.9
76.4
Siberian Generating Co, 12.7%
77.8
Ogk-2, 12.7%
68.8
E.ON Russia, 13.8%
2008
2009
2010
2011
2012
Brown coal producers, mn tonnes Germany Russia Australia USA Turkey Poland Greece India Czech Republic Serbia
Gazprom, 14.2%
Fortum (formerly Energopromsbyt TGC-10), 5.7% , 4.8% Kuzbassenergo (TGC-12), 4.60% En+ Group, 3.7% Ogk-3 (third Generation Co), 2.20% Inter RAO UES, 0.80% RAO Energy Quadra-PGC, Systems of the 0.60% East, 24.1%
Comments 185
78
According to the U.S. government’s Energy Information Agency, Russia's power sector includes over 440 thermal power plants, of which 77 are coal-fired.T here are o official statistics about the number of power plants in Russia that run on brown coal, but researches show they are about 25.
73 72 66 64 62 43 43 38
Total production: 905mn tonnes
Source: D&B, World Coal Association, TU Delft Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 24 -
Unauthorized Distribution Prohibited.
III. Coal Market
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 25 -
Unauthorized Distribution Prohibited.
Coal Reserves Worldwide Proven recoverable coal reserves according to International Energy Agency
Proven recoverable reserves according to World Energy Council, mn tonnes (end-2011)
Bituminous including anthracite
Subbituminous
Lignite
Total
37,100
2,100
37,200
76,400
n/a
6,630
n/a
6,630
3,474
872
2,236
6,582
62,200
33,700
18,600
114,500
Colombia
6,746
n/a
n/a
6,746
Germany
48
n/a
40,500
40,548
Greece
n/a
n/a
3,020
3,020
56,100
n/a
4,500
60,600
n/a
28,017
n/a
28,017
21,500
n/a
12,100
33,600
Poland
4,178
n/a
1,287
5,465
Russia
49,088
97,472
10,450
157,010
1
10
13,400
13,411
30,156
n/a
n/a
30,156
322
n/a
8,380
8,702
15,351
16,577
1,945
33,873
USA
108,501
98,618
30,176
237,295
Total world
403,197
287,333
201,000
891,530
Australia Brazil Canada China
India Indonesia Kazakhstan
Serbia South Africa Turkey Ukraine
Hard Coal
Brown Coal
Total Coal
18,322
54,820
73,142
218,818
35,614
254,432
OECD Pacific
41,477
38,033
79,510
Russia
69,946
91,607
161,553
China
167,000
25,000
192,000
India
95,399
467
95,866
Rest of Asia
10,283
10,664
20,947
South America
19,769
124
19,893
Africa / Middle East
52,846
202
53,048
736,112
283,184
1,019,296
OECD Europe OECD North America
Total world
Source: World Energy Council, IEA Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 26 -
Unauthorized Distribution Prohibited.
Biggest Coal Producing Countries and Companies Top 10 coal producing countries, mn tonnes (2012e) China USA India Indonesia Australia Russia Russia South Africa Germany Poland Kazakhstan
Biggest coal producers worldwide, mn tonnes Shenhua Coal India Peabody Energy Chin Coal Arch Coal Datong Alpha BHP Billiton Anglo American SUEK
3,549 935 595 443 421 359 259 197 144
Total coal production worldwide: 7,830 mn tones
126
Top coal exporters (2012e) Coking
Total
Indonesia
380
3
383
Australia
159
142
301
Russia
116
18
134
USA
51
63
114
Colombia
82
0
82
South Africa
74
0
74
4
436.0 248.5 176.0 140.7
133.0 110.5 106.9 99.3 97.5
Biggest companies by sales worldwide, mn tonnes
Steam
Canada
470.0
31
Xstrata BHP Billiton Bumi Resources Glencore Anglo American Rio Tinto Peabody Energy SUEK Adaro Banpu
35
Source: World Coal Association, SUEK Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 27 -
Unauthorized Distribution Prohibited.
76.0 72.7 69.3 61.0 52.4 50.6 41.0 38.8 36.5 32.8
Biggest Russian Producers and Exporters Biggest Russian companies by output, mn tonnes
Coal production in Russia in 2012
Kuzbassrazrez ugol 45.4
Sibuglmet 3% Evraz 5%
SDS Coal 23.4
Ruscoal 3% Severstal 3%
SDS Coal 6% Others 33%
Mechel 7%
Mechel 24.2 SUEK 97.5
Kuzbassrazrez ugol 13% Others 130.8
SUEK 27%
Market shares of Russian companies by exports volume
Comments
Kuzbassrazrez ugol 20%
SDS Coal 13%
SUEK 29%
Russia’s biggest coal producer is SUEK with 27.5% of coal output. It is also the country’s biggest coal exporter with 38.8mn tonnes sold abroad, which corresponds to a 27.6% market share.
Mechel 8%
Others 30%
Source: SUEK Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 28 -
Unauthorized Distribution Prohibited.
Best Performing Russian Coal Producers Top 15 coal producers by sales revenue in 2012, USD mn IFRS or RAS
2011
2012
2012/ 2011
1 SUEK
RAS
2,074
2,217
68.7%
2 Kuzbassrazrezugol
RAS
1,135
1,764
3 SUEK-Kuzbass
RAS
1,324
4 Sibuglemet
RAS
5 Southern Kuzbass (Mechel)
Top 15 coal producers by net income in 2012, USD mn IFRS or RAS
2011
2012
2012/ 2011
1 SUEK
RAS
579
581
100.4%
106.9%
2 Kuzbassrazrezugol
RAS
281
324
115.5%
1,083
155.5%
3 Yakutugol (Mechel)
RAS
447
222
49.6%
1,480
1,052
81.8%
4 SUEK-Krasnoyarsk
IFRS
8
172
2257.6%
RAS
1,198
983
71.1%
5 Mezhdurechye (Sibuglemet)
RAS
197
142
72.1%
6 Vorkutaugol (Severstal)
RAS
1,153
955
82.0%
6 SUEK-Kuzbass
RAS
172
122
70.9%
7 Yuzhkuzbassugol (Evraz)
RAS
812
768
82.9%
7 Vorkutaugol (Severstal)
RAS
378
94
24.9%
8 Kuzbass Fuel Company
IFRS
1,177
742
94.7%
8 Southern Kuzbass (Mechel)
RAS
479
94
19.5%
9 Yakutugol (Mechel)
RAS
788
584
63.0%
9 Kuzbass Fuel Company
IFRS
69
60
87.5%
10 Belon (MMK)
RAS
354
567
74.1%
10 Sibuglemet
RAS
283
37
13.1%
11 SUEK-Krasnoyarsk
IFRS
723
542
160.3%
11 Yuzhkuzbassugol (Evraz)
RAS
343
13
3.8%
12 Raspadskaya
IFRS
638
531
75.0%
12 Russian Coal
RAS
35
9
24.5%
13 Zarechnaya Mine
RAS
528
468
83.2%
13 Belon (MMK)
RAS
62
0.3
0.4%
14 Russian Coal
RAS
415
375
88.7%
14 Zarechnaya Mine
RAS
4
-13
-
15 Mezhdurechye (Sibuglemet)
RAS
2,074
2,217
90.3%
15 Raspadskaya (Evraz)
IFRS
136
-31
-
Company
Company
Source: Dun & Bradstreet, The SPARK Database, Interfax-CNA’s analysis Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 29 -
Unauthorized Distribution Prohibited.
IV. Main Players
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 30 -
Unauthorized Distribution Prohibited.
SUEK Financial performance (RUB bn)
-10.64
2008
2009
Siberian Coal Energy Company (SUEK) is Russia's largest coal company (among top 10 worldwide) with a 27.5% share (92.2 mn tonnes) in Russian total coal production, covers 41% of thermal coal demand from the domestic energy generation industry and a 28% share in Russian thermal coal exports in 2011.
24.87
2010 Revenue
30.02
131.20
3.63
115.96
175.21
167.01
9.05
148.98
Highlights
2011
SUEK runs 29 mines (17 open-pit and 12 underground mines), 7 preparation plants, a bulk terminal at the Vanino port, and other industrial transportation and maintenance facilities. The company has 30,000 employees.
2012
Net profit
SUEK enterprises produced 97.5 mn tonnes of coal in 2012, which represented an increase of 5.3 mn tonnes (6%) compared to 2011. A substantial part of SUEK’s production in 2012 (approximately 62%) was hard coal; while the production of brown coal accounted for 38%.
Key operating indicators, tonnes 2010
2011
2012
Sales
90.4
88.9
91.7
Domestic sales
61.3
55.2
52.9
Export sales
29.1
33.7
38.8
Production
89.1
92.2
97.5
Hard coal
49.6
53.9
60.2
Brown coal
39.5
38.3
37.3
8.0
10.1
12.0
Transhipment in Vanino Bulk Terminal
In the next five years, the company intends to increase its production of high-quality coal for both domestic and export markets through boosting the capacity of existing mines and open-pits, and with the concurrent development of transportation infrastructure. Total investments in coal production and preparation and in transportation infrastructure are expected to average USD 650mn per year in the 2013-2017 period.
Source: Company data Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 31 -
Unauthorized Distribution Prohibited.
Mechel Financial performance (USD bn)
Highlights
12.541
11.275
9.951
9.747
Mechel OAO, founded in 2003, is a mining and metallurgy company, operating in Russia, the U.S., Kazakhstan and Lithuania. The company comprised some 30 production enterprises, producing coal, iron ore, steel, rolled products, ferroalloys, heat and electric power. The holding company also owns three trade ports, transport operators and international sales and service networks. The company has a staff of over 80,000 persons. Mechel’s mining segment (Mechel Mining) includes production and sales of coking coal concentrate, iron ore concentrate and coke, which are chief raw material for production of steel and steam coal. Apart from providing for the needs of the steel and power segments, it also sells raw materials to third-parties. The Group controls 25% of Russia’s coking coal washing facilities. In 2012 the company produced 27.8 mn tonnes of coal.
2009
2010
1.229
0.076 2011
2012
-1.665
2008
0.692
0.803
5.754
Net revenues
Net income
Key operating indicators, thou tonnes FY 2011
FY 2012
27,625
27,763
Pig iron
3,728
4,161
Steel
6,118
6,532
Coal (run-of-mine)
Source: Company data Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 32 -
Unauthorized Distribution Prohibited.
Evraz Financial performance (USD bn)
Highlights
19.990 16.400 13.394
14.726
2009
2010 Revenues
2011
2012
-0.335
2008
Evraz, established in 1992 under the name Evrazmetall, is a vertically integrated steel, mining and vanadium business with operations in Russia, Ukraine, the U.S., Canada, the Czech Republic, Italy and South Africa. It employs about 110,000 persons. A significant portion of the company's internal consumption of iron ore and coking coal is covered by its mining operations. Raw coking coal production increased to 8.5 mn tonnes (up by 35%) as a result of operational efficiencies, while steam coal output declined to 2.3 mn tonnes (down by 23%). The group is listed on the London Stock Exchange and is a constituent of the FTSE 250.
0.453
0.470
0.195
3.632
9.505
Net profit
Coal products sales volumes, kt
Intersegment
8,595 203 1,215
652
3,163
External
Coking coal concentrate Coking coal
3,285
1,560
Steam coal concentrate Steam coal
1,439 597 729 702
1,209 222 987 2011
Steam coal concentrate Steam coal
7,566
36
2012
Coking coal concentrate Coking coal 162
Total
Source: Company data Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 33 -
Unauthorized Distribution Prohibited.
Ruscoal Financial performance (RUS bn) 15.503
Highlights 14.088
Anthracite producer Russian Coal, established in 2002, operates 6 open-cut mines and а coal enriching facility, and is also active in the fields of energy supply, transport enterprises and repair services. Its main producing assets are located in Kemerovo, Amur and the Republic of Khakassia. The company’s payroll numbers 4 thousand persons. In the beginning of 2013, the company estimated its total reserves – at 444.3 mn tonnes and its ultimate reserves at 313.8 mn tonnes. Russian Coal, which says it ranked 11th among Russia’s coal producers in 2012, mined 10 mn tonnes of coal that year, mostly anthracite. As much as 8.1 mn tonnes of them were extracted through the opencut method and the company plans to boost this amount by 4% on the year in 2013. The exports amounted to 1.3 mn tonnes.
2010
-0.213
2009
2011
Revenues
0.261
0.197
1.038
5.937
4.951
2012
Net profit
Revenue breakdown, RUS bn 2011 Rostov
3.37
Coal
2.51
2012
2011
2012
2.05
Domestic market
1.17
1.35
1.68
Exports
0.75
0.22
Domestic market
1.41
1.24
Inventories
0.22
0.29
Exports
1.11
0.44
Khakassia
6.58
6.54
Inventories
0.86
0.36
Coal
6.23
6.21
Amur
3.38
3.48
Domestic market
3.16
2.70
Coal
2.85
3.01
Exports
3.07
3.52
Domestic market
2.85
3.01
Inventories
0.35
0.33 0.07
Inventories
0.54
0.47
Krassnoyarsk
Kuzbass
2.13
1.86
Coal
0.07
1.57
Domestic market
0.07
Coal
1.92
Source: Company data, e-disclosure.ru Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 34 -
Unauthorized Distribution Prohibited.
Severstal Financial performance – consolidated (USD bn)
14.104
Highlights Severstal is one of the world’s leading vertically integrated steel and steel related mining companies. The company has assets in Russia, the U.S., Ukraine, Latvia, Poland, Italy, Liberia as well as investments in Brazil. The company has about 63 thousand employees. Severstal has 3 divisions: Severstal Russian Steel, Severstal International and Severstal Resources. Severstal’s Russian steel operations are almost all self-sufficient in iron ore and coking coal, respectively. Severstal Resources is the group’s producer of iron ore and coal. Severstal’s mining division was formed by acquisitions made over the last 12 years. It comprises two iron ore integrated works (Karelian Pellet and Olkon), coal companies located in the North-West of Russia (Vorkutaugol) and in the U.S. (PBS Coals), an iron ore exploration project in Liberia (Severstal Liberia Iron Ore), and a research institute (SPb-Giproshakht). Severstal’s key asset is Cherepovets Steel Mill, an integrated steel plant with coking coal, agglomeration, blast furnaces, steel-smelting and rolling facilities. Severstal is listed on MICEX/RTS and its GDRs are traded on the LSE
16.066
15.812 12.819
2008
2009
2010 Revenues
2011
2.062
-1.100
-0.515
0.820
2.174
9.076
2012
Net profit
Coal resources and sales 2011
2012
Crude steel Hot metal Sales volumes, tonnes
15,293,407 10,543,687
15,140,185 10,256,881
Severstal Resources Coal:
Production, tonnes
10,634,866
10,479,136
Coking coal concentrate, including:
7,591,670
7,513,436
Vorkutaugol PBS Coals Raw coking coal, Vorkutaugol Steam coal, including:
5,127,440 2,464,229 289,556 2,753,640
5,267,442 2,245,993 622,318 2,343,382
Vorkutaugol
2,028,358
2,191,132
725,283
152,251
PBS Coals
Source: Company data Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 35 -
Unauthorized Distribution Prohibited.
V. Regional Distribution
Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 36 -
Unauthorized Distribution Prohibited.
Coal Output by Region Coal mining breakdown by regions, thou tonnes Coal mining - Central Federal District (CF) - North Western Federal District (NW) - Southern Federal District from 2010 (SF) - Volga Region Federal District (VR) - Ural Federal District (UF) - Siberian Federal District (SB) - Far East Federal District (FE) Bituminous coal - North Western Federal District (NW) - Southern Federal District from 2010 (SF) - Far East Federal District (FE) Anthracite coal - Southern Federal District from 2010 (SF) - Siberian Federal District (SB) - Far East Federal District (FE) Coking coal - North Western Federal District (NW) - Siberian Federal District (SB) - Far East Federal District (FE) Brown coal - Central Federal District (CF) - Volga Region Federal District (VR) - Ural Federal District (UF) - Siberian Federal District (SB) - Far East Federal District (FE) Enriched coal - North Western Federal District (NW) - Southern Federal District from 2010 (SF) - Ural Federal District (UF) - Siberian Federal District (SB) - Far East Federal District (FE) Metallurgical coke - Central Federal District (CF) - North Western Federal District (NW) - Volga Region Federal District (VR) - Ural Federal District (UF) - Siberian Federal District (SB)
2007 313,787 299 12,956 7,398 534 3,459 256,953 32,188 238,561 12,956 0 17,695
2008 328,554 360 12,929 7,081 515 3,354 271,982 32,333 240,256 12,953 0 17,930
2009 301,227 201 11,799 4,938 312 2,023 254,134 27,820 229,154 11,800 0 12,979
2010 321,701 235 13,625 4,725 387 2,154 268,902 31,673 240,787 13,626 4,721 16,694
2011 334,831 259 13,494 5,281 318 2,401 280,865 32,213 257,266 13,340 5,282 16,727
2012 354,330 226 13,631 5,633 492 2,328 297,126 34,894 275,795 13,640 5,633 20,655
n/a n/a n/a
n/a n/a n/a
n/a n/a n/a
4,721 2,086 n/a
5,282 4,803 n/a
5,633 5,684 334
10,032 53,445 6,647 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 33,910 5,255 4,631 2,347 10,946 10,732
9,891 47,987 7,821 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 32,017 4,889 4,227 2,345 9,985 10,571
9,338 48,245 3,150 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 27,424 3,361 3,884 1,976 9,024 9,179
10,820 48,669 7,524 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 27,042 3,191 3,396 2,127 9,050 9,198
10,698 47,602 6,448 n/a n/a n/a n/a n/a n/a 140,613 7,623 4,099 863 119,768 8,260 27,011 3,159 3,427 2,163 9,156 9,105
11,562 51,928 9,093 35,928 203 385 1,930 48,140 12,111 121,098 5,114 4,228 730 98,860 9,127 27,101 2,985 3,501 1,775 9,513 9,233
Source: Statistics office, CEIC Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 37 -
Unauthorized Distribution Prohibited.
Regional Distribution (2012)
Central District Coal mining – 226 thou tonnes Brown coal – 203 thou tonnes Metallurgical coke – 2,985 thou tonnes
Northwestern District Coal mining - 13,631 thou tonnes Bituminous coal - 13,640 thou tonnes Coking coal - 11,562 thou tonnes Enriched coal - 5,114 thou tonnes Metallurgical coke - 3,501 thou tonnes
Siberian District Coal mining - 297,126 thou tonnes Anthracite - 5,684 thou tonnes Coking coal - 51,928 thou tonnes Brown coal - 48,140 thou tonnes Enriched coal - 98,860 thou tonnes Metallurgical coke - 9,233 thou tonnes
Southern District Coal mining - 5,633 thou tonnes Bituminous coal - 5,633 thou tonnes Anthracite - 5,633 thou tonnes Enriched coal - 4,228 thou tonnes
Far Eastern District Coal mining - 34,894 thou tonnes Bituminous coal - 20,655 thou tonnes Anthracite - 334 thou tonnes Coking coal - 9,093 thou tonnes Brown coal - 12,111 thou tonnes Enriched coal - 9,127 thou tonnes
North Caucasian District -
Volga District Coal mining – 492 thou tonnes Brown coal - 385 thou tonnes Metallurgical coke - 1,775 thou tonnes
Urals District Coal mining - 2,328 thou tonnes Brown coal - 1,930 thou tonnes Enriched coal - 730 thou tonnes Metallurgical coke - 9,513 thou tonnes
Source: Statistics office, CEIC (data), Wikipedia (map) Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 38 -
Unauthorized Distribution Prohibited.
Contact: Corporate Headquarters Internet Securities, Inc 225 Park Avenue South New York, New York 10003 US Voice: +1 212 610 2933 Fax: +1 212 610 2950
Asian Headquarters Internet Data Services (I) Pvt. Ltd Eucharistic Congress Bldg. No. III 4th Floor, 5 Convent Street Mumbai 400 001 India Voice: +91 22 2 2881123 Fax: +91 22 2 2881137
Central & Eastern European Headquarters Euromoney Polska S.A. Ul. Prosta 69 00-838 Warsaw Poland Voice: +48 22 444 10 90 Fax: +48 22 444 10 91
Latin American Headquarters ISI Emerging Markets S.A.S. Street 93 N 15-27 7th Floor Bogota Cundinamarca 11001 Colombia Voice: +571 616 68 88 Fax: +571 616 93 11
Middle East & Africa Headquarters Internet Securities Istanbul Bilgi Merkezi Ltd.Sti Esentepe Mahallesi Kelebek Cikmazi Bil
Western European Headquarters Internet Securities, Ltd. Nestor House Playhouse Yard London EC4V 5EX UK Voice: +44 207 779 8471 Fax: +44 207 779 8224
Apt. No: 3 D: 5 34394 Esentepe Sisli Istanbul Turkey Voice: +90 212 267 04 41 Fax: +90 212 267 04 42
Disclaimer: The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. Internet Securities Inc. and Euromoney Institutional Investor PLC take no responsibility for decisions made on the basis of these opinions. Any redistribution of this information is strictly prohibited. Copyright © 2013 Internet Securities, Inc.(trading as ISI Emerging Markets), all rights reserved. A Euromoney Institutional Investor company.
About Emerging Markets Insight Emerging Markets Insight is a unit of Emerging Markets Information Service (EMIS) that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation and profiles of the leading sector companies provided by locally-based analysts. About Emerging Markets Information Service (EMIS) Emerging Markets Information Service (EMIS) delivers deep, rich company and industry information, alongside the relevant news, research and analytics that allow professionals to make profitable decisions faster. Any redistribution of this information is strictly prohibited. ISIEmergingMarketsPDF us-pwc-site from 164.143.240.34 on 2014-06-27 11:55:44 EDT. DownloadPDF. Copyright © 2013 Internet Securities, Inc. (trading as ISI Emerging Markets), all rights reserved. Downloaded by us-pwc-site from 164.143.240.34 at 2014-06-27 11:55:44 EDT. ISI Emerging Markets.
- 39 -
Unauthorized Distribution Prohibited.