Kuzbass Fuel Company might reduce 2012 coal production to 2011 level
KEMEROVO. July 3. (Interfax) - Coal producer OJSC Kuzbass Fuel Company (KTK) has revised its 2012 production forecast downwards by 600,000 tonnes due to a drop in demand and falling coal prices on the global market.
"In 2012, KTK plans to produce 8.7 million tonnes of coal," the company's First Deputy General Director Eduard Alexeenko told analysts at a meeting on Tuesday. KTK produced the same amount of coal last year.
The coal producer had previously announced plans to boost production to 9.3 million tonnes this year.
Alexeenko said that 60% of KTK's supplies were contracted last year at November 2011 prices. "As of today, spot prices for coal exports do not allow us to generate income," he said.
KTK will cut production at the Cheremshansky open pit mine, since the cost of producing coal there is the highest among the company's enterprises, he said.
However, KTK will not abandon its previously announced investment projects. As planned, the Kaskad-2 enrichment plant with a capacity of 4 million tonnes of coal a year will be commissioned at the Vinogradovsky open pit mine in the fourth quarter of 2012.
KTK's Deputy General Director for Sales Ivan Gepting said that the launch of the enrichment plant will help transfer export coal production to the Vinogradovsky open-pit mine, where it will be much cheaper to operate. "Today, all of the coal supplied for export is coal produced at Cheremshansky, coal with the highest production cost," he said. Therefore, Kaskad-2's launch will provide an opportunity to cut costs, produce higher quality product (coal concentrate with calorific value of 5,500-5,750 kkal/kg) and, accordingly, sell it at a higher price.
In addition, Kaskad-2's launch will help KTK secure new sales markets in Northern and Western Europe and Japan. "The Japanese consumer is planning to strengthen its energy capacities to a maximum volume of generation, which is why it is rejecting low-quality coal today," Gepting said, adding that several test deliveries have already been made to Japan this year.
KTK includes coal-producing enterprises (the Vinogradovsky, Karakansky-South and Cheremshansky open-pit mines), a distribution network (OJSC Kuzbasstoplivosbyt, LLC Transugol, OJSC Altay Fuel Company, LLC Novosibirsk Fuel Corporation) and infrastructure enterprises (OJSC Kaskad-Energo, Anzhero-Sudzhenskaya Combined Heat and Power Plant, LLC TEKM).
KTK's General Director Igor Prokudin controls 50.001% of the company's shares through Haver Holding Limited, Laycraft Ltd (wholly owned by the chairman of KTK's board of directors Vadim Danilov) owns 15.61%, Genesis Asset Managers LLP owns 5.39% and TD Investments Limited owns 13.06%.