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Coking coal needs at least $6 bln in investment- experts

27.10.2006


KEMEROVO. OCT 27 (Interfax) - Russian coal companies need at least 160 billion rubles to develop their coking coal production capacities in 2006-2010.

According to a report from the Coal Market Institute, prepared based on materials from Rosinformugol, the Industry and Energy Ministry and production programs announced by coal companies earlier, the construction of new production companies will require at least 104 billion rubles, the maintenance of existing capacities - at least 53 billion rubles, and the construction of new enrichment plants - about 2 billion rubles.

The launch of new capacities for coking coals in short supply - coking, coking-mearge, coking-caking, etc. is forecast to amount to 1.47 million tonnes in 2007, 2.67 million tonnes in 2008, 5.87 million tonnes in 2009 and 7.57 million tonnes in 2010; and for fat grades - fat, gas- fat, gas-fat-mearge and gas - 2.75 million tonnes, 8.65 million tonnes, 12.95 million tonnes and 15.95 million tonnes respectively. This will involve the construction of new companies, and also the reconstruction of existing capacities.

Among the main factors influencing the development of the sector, the experts note a continued shortage in hard coals - coking and coking- mearge grades; a lack of capacity reserves at existing companies and the significant volume of investment required both to maintain existing production and to build new capacity. In addition, there is a high risk of schedule overruns for the construction of new mines due to a shortage of specialized shaft-construction companies. The experts also noted the likelihood of changes in declared plans due to a recent correction in coal prices on the Russian market.

Despite the fact that the companies Raspadskaya, Kuzbassugol and Yuzhkuzbassugol have announced projects that will increase production of coking, coking-mearge grade coals by 2010 by a total of 7 million tonnes, the shortage in these grades will not be eradicated and will amount to an estimated 10.3 million tonnes, the experts said.

The following companies were named as those that may build new capacities by 2010: Kuzbassugol (Konyukhtinskaya-Zapadnaya), Novolipetsky Steel (Zhernovskaya-1), Belon (Kostromovskaya), Yuzhkuzbassugol (Yerunakovskaya-8), Raspadskaya (Raspadskaya-Koksovaya), Yuzhny Kuzbass (RTS: UKUZ) (Yerunakovskaya-1) and Koks (Butovskaya and Nikitinskaya).

Yuzhkuzbassugol (Tomusinskaya 5-6), Raspadskaya (MUK-96 and Raspadsky open face mine) and Anzherskaya-Yuzhnaya plan to expand existing capacity. Yuzhkuzbassugol (Yubileinaya, Ulyanovskaya and Abashevskaya) SUEK (Kirov and Komsomolets) and Sibuglemet (Bolshevik) will expand capacity as a result of technical upgrades and reconstruction.

The development of new and expansion of existing fields will mainly take place in Kemerovo region. The most capital-intensive fields to be developed (based on preliminary feasibility studies - from $500 million to $1 billion each) are located in this region - Zhernovskoye-1 and Zhernovskoye-3. Novolipetsk Steel and Kuzbassugol respectively received the right to develop these fields at auctions in 2005. The launch of Zhernovskoye-1 is planned for 2009, and Zhernovskoye-3 - in 2011.

Only Yuzhkuzbassugol's Yesaulskaya mine, with annual production of 2.6 million tonnes, will close due to exhaustion of reserves - the mine is slated for closure in 2009.

Industry experts also said that Russia's export potential might increase by 6 million tonnes by 2010 - that is, by 2% of forecast world trade of 250 million - 260 million tonnes. This estimate was made based on the execution of plans by coal companies and the planned significant expansion of Far East port capacities from 2008.



Source: Interfax
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