24 Aug 2010 14:01

Indian concern ready to buy coal mine being shut down in Rostov region

ROSTOV-ON-DON. Aug 24 (Interfax) - An Indian firm is interested in acquiring Russian Coal's Zapadnaya coal mine in Rostov region, the regional industry and energy minister, Sergei Mikhalev, told journalists on Tuesday.

"A project is being drawn up for Zapadnaya in the city of Donetsk. The Indian company announced its interest in acquiring the mine literally two weeks ago. I cannot tell you the name of the company right now," he said.

The Indian company already has coal and metal assets in Ukraine. "I believe that they want to mine a substantial portion of reserves from the Ukrainian side of the deposit," he said.

It was reported earlier that Zapadnaya halted coal production at the end of 2008. Russian Coal made the decision to abandon the mine after its coking coal resource was depleted. Ukraine, whose territory contains a substantial portion of the mine's reserves, refused to review the technical border of the deposit.

The highest quality coal reserves in the mine are located in Ukraine, Mikhalev said.

"Zapadnaya has reserves, but the horizons are steeply slanted. I don't think the time has come yet to get at those reserves. Costs and prices are mismatched. Apparently, that doesn't frighten [the Indian company]," he said.

There are no plans to continue producing coal at Zapadnaya in Russian Coal's growth strategy to 2020.

Russian coal, which began operations on the Russian coal market in 2002, is one of the five biggest coal producers in Russia. It has coalmining enterprises in Rostov, Kemerovo and Amur regions and in Khakassia.