Mechel's coal output falls 9% in 2018 to 18.8 mln tonnes, below forecast
MOSCOW. March 21 (Interfax) - Mechel saw its coal production decline 9% in Q4 2018 compared to Q3 to 4.3 million tonnes, the company said in reporting.
Production in the year also fell 9%, to 18.8 million tonnes, below management's latest forecast of 19.5 million - 20 million tonnes.
Production at the Elga field grew 19% in 2018 to 4.9 million tonnes and sales rose 14% to 3.2 million tonnes.
Coking coal concentrate sales fell 7% in Q4 2018 to 1.75 million tonnes and were down 10% in the year to 7.15 million tonnes.
"In response to circumstances caused by an overall shortage of gondola railcars and thus stock accumulation, as well as the necessity of conducting stripping works at an accelerated rate to catch up with the lag of the past few years, operations at our mining facilities in the second half of 2018 and early 2019 were planned to yield best results in mid-term perspective. In this accounting period our stripping volumes greatly exceeded 2017 results as mining and sales somewhat declined," Mechel said.
"At the same time we took advantage of a favorable market situation and redirected our coal sales to more profitable markets. For example, in Q4 2018 we diverted our coking coal concentrate in favor of more marginal consumers - Japan and South Korea, increasing our quarter-on-quarter sales to each country by 15%. We also redirected our thermal coal exports to Vietnam, South Korea, India and Thailand. Our sales to Vietnam in particular went up by record 400%. In Q4 2018 we also increased anthracite sales to France by 84% and Germany by 110%," it said.
"By early 2019, the railcar situation stabilized, which enabled us to start decreasing our accumulated coal product stocks. Our technical upgrade program continues which helps revamp our mining fleet and replace aged mining machines, to ensure efficient operations at our mining assets," the company said.
"In the past year, the division focused on overcome the underrun of resource preparation for mining in order to restore our production and sales volumes," said Mechel Mining Management LLC's Chief Executive Officer Pavel Shtark.
"Stripping works on all the Group's coal-mining assets went up by 25% year-on-year and more than 1.5-fold at Korshunov Mining Plant. We achieved this due to the technical upgrade program as well as bringing in contractors. Several of the division's assets corrected their plans and decreased mining in late 2018 and early 2019 due to massive accumulated undistributed stock as a consequence of limitations in railcars supply. On one hand, it led to a decline in mining, but on the other enabled us to unload storages and optimize production and equipment repair costs, which are traditionally high in winter due to extremely low temperatures," he said.
Mechel sales, '000 tonnes:
| Product | Q4 2018 | Q3 2018 | Q4 2018/Q3 2018 | 2018 | 2017 | 2018/2017 |
| Coking coal concentrate | 1 747 | 1 881 | -7% | 7 149 | 7 942 | -10% |
| Including coking coal concentrate supplied to third parties | 990 | 1 207 | -18% | 4 258 | 4 797 | -11% |
| PCI | 245 | 312 | -22% | 1 237 | 1 465 | -16% |
| PCI supplied to third parties | 245 | 312 | -22% | 1 237 | 1 465 | -16% |
| Anthracites | 291 | 230 | +26% | 1 169 | 1 613 | -28% |
| Including anthracites supplied to third parties | 244 | 183 | +33% | 968 | 1 400 | -31% |
| Thermal coal | 971 | 1 298 | -25% | 5290 | 6 141 | -14% |
| Including thermal coal supplied to third parties | 819 | 1 144 | -28% | 4 538 | 5 404 | -16% |
| Iron ore concentrate | 574 | 551 | +4% | 1 972 | 2 510 | -21% |
| Including iron ore concentrate supplied to third parties | 98 | 24 | +301% | 140 | 30 | +362% |
| Coke | 609 | 616 | -1% | 2 440 | 2 686 | -9% |
| Including coke supplied to third parties | 195 | 196 | -1% | 697 | 771 | -10% |
| Ferrosilicon | 20 | 17 | +18% | 74 | 67 | +11% |
| Long rolls | 621 | 699 | -11% | 2 731 | 2 919 | -6% |
| Flat rolls | 91 | 119 | -24% | 481 | 581 | -17% |
| Hardware | 143 | 165 | -13% | 622 | 651 | -5% |
| Forgings | 11 | 11 | +6% | 44 | 45 | -3% |
| Stampings | 33 | 38 | -13% | 143 | 96 | +48% |