4 Mar 2010 11:01

Belon Group decides against coal exports in favor of supplies to MMK

CHELYABINSK. March 4 (Interfax) - Belon Group, the main owner in which is OOO Magnitogorsk Metallurgical Works (MMK), has decided against exporting its coal production and instead will supply it to MMK, MMK said in a statement quoting the CEO of Belon, Vitaly Bakhmetev.

The statement said that this decision had been made in the framework of changes in the group's sales policy. In time, Belon will be able to meet 70% of MMK's demand for coking coal.

The statement said that the changes to Belon's development strategy foresee reductions to its expenditures through selling off non-core assets, lowering costs and increasing total production. The production increases will be possible owing to investment.

MMK in October 2009 consolidated 100% of a company called Onarbay Enterprises Ltd, which owns 82.6% of Belon, which operates in the coal- rich Kuznetsk basin (Kuzbass), Kemerovo region. MMK, which originally owned 43.1% of Belon, bought Andrei Dobrov, Belon's general director, out of the company in a deal estimated at $309 million, which is about 10%-15% below the company's capitalization at the time of the transaction.

Belon raised coal production 7% to 5.91 million tonnes in 2009. Coking coal production grew 19.3% to 3.448 million tonnes but steam coal fell to 2.494 million tonnes, from 2.643 million tonnes in 2008.

In 2010, the group plans to produce 8.21 million tonnes of coal including 5.11 million tonnes of coking coal.

Belon's investment program targets coal production to rise to 9.79 million tonnes in 2013, including 6.79 million tonnes of coking coal.

The Belon group's enterprises include the Chertinskaya-Koksovaya, Listvyazhnaya, Novaya-2, and Kostromovskaya deep mines, Novobochatsky strip mine, the Belovskaya and Listvyazhnaya enrichment plants and various service and transport companies.