29 Sep 2009 18:22

Severstal's Vorkutaugol coal producer could break even in Q1 2010

SYKTYVKAR. Sept 29 (Interfax) - OJSC Vorkutaugol, a coal producer from the Komi Republic that is controlled by the Severstal steel group's Severstal Resource division, plans to break even during the first quarter of 2010, the coal company said in a press release, quoting Severstal CEO Alexei Mordashov.

Vorkutaugol's management briefed Mordashov on progress with its anti-crisis measures during the latter's visit to Vorkuta last week. They said costs had been cut by 13% in H1 2009, despite inflation. "This is certainly a positive result," Mordashov was quoted as saying.

Vorkutaugol ran into difficulties at the end of last year when demand for coking coal concentrate and prices became volatile. Production costs per tonne of concentrate at Vorkutaugol are among the world's highest.

"The company should be able to service its own costs in 2010, even if the current situation in the coal market persists," Mordashov said.

Vorkutaugol ships most of its coal to Severstal itself. It produced 6.8 million tonnes of marketable coal in 2008.