Russia Metals and Mining

In January – March, the largest metal combines considerably reduced scrap metal purchase

In January – March, the largest metal combines considerably reduced their scrap metal purchases to 2.14 million tons according to the railway statistics, by 2.8% less than in Q1 2013, and the lowest result for Q1 within the last 5 years. MMK reduced purchase by 23%, compared to the first place in 2013. The Cherepovets metal works of Severstal reduced purchase by 38.5%, compared to the third place in 2013. NLMK reduced purchase by 12%, compared to the fifth place in 2013.

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By the beginning of 2014, 50 mini-mills are operating in the CIS sort steel market

A. Bayev, the director of Metal Expert Consulting has analyzed the changes at the sort steel markets in connection with appearance of the new production entities, at the conference ‘Reinforcement and sort steel: the Russian market configuration 2014’ in Moscow. By the beginning of 2014, 50 mini-mills are operating in the CIS market. Their total capacity is 35 million tons, and the total capacity of sort steel producers is over 140 million tons. The presuppositions for the construction of the new steel mini-mills were the need in the creation of the enterprises oriented to the production of special purpose steel, rolled steel made of special sorts, re-orientation of martin to electric steel, the provision with semi-finished rolled stock of own rolling capacities, regional disbalance – discordance of active capacities and the production volumes, the need for the utilization of available scrap metal to products with added value sold locally.

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UC Rusal increased its net loss under IAS in 2013 after publication of Norilsk Nickel’s accounting

UC Rusal increased its net loss under IAS in 2013 by $100 million after publication of Norilsk Nickel’s accounting, the company reported..

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Russia increased ferrous metals exports

In January – February, Russia increased ferrous metals exports by 3.3% to 5.681 million tons, the Federal Customs Service reports. Steel pipes imports from far abroad increased by 23.7% to 58,000 tons for $115.4 million.
Ferrous metals exports reduced in profit by 0.2% to $3.042 billion. Russia increased supplies to far abroad by 4% to 4.86 million tons for $2.55 billion, and exports to far abroad remained 823.3 million tons for $492.4 million (-16%).

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Russian FES maintains leading positions on global markets

The Russian Fuel and Energy Sector intends to maintain its leading positions on world markets under the Energy Development Strategy though until 2035, Energy Minister Alexander Novak said.
 
The Minister emphasized that maintaining a high level of competitiveness, the Russian FES should provide the demand for innovations, high-tech production, as well as provide high-paying jobs and participate in the development of infrastructure.
Novak reported that last year the Russian FES maintained its leading position on the global energy markets: "We are consistently ranked first in the world in export of gas, we share the first or second place in the oil export, we are the third largest exporter of coal. In general, Russia takes the third place in the world for the production of energy sources, and this largely explains the high proportion of the fuel and energy sector in the Russian economy. Energy sources provide 30 % of the gross domestic product, 39% of all investments in the economy and more than two thirds of export

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Mechel and Binder sign a contract within the project of the Elginsk deposit exploration.

"Mechel" has signed a contract with the Austrian company Binder on the first stage of Elga coal complex development project, the Russian company stated. Under the contract until late 2014 the Binder has to provide the engineering services for the drying line design process for the first stage of the Elginsk coal complex.

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Russia plans to move the centre of coal mining from Kuzbass to the east of the country.

Russia plans to move the centre of coal mining from Kuzbass to the east of the country.
The important adjustments to long-term program of development of coal industry till 2030 were made at the regular meeting of the Russian government. It is about shifting the centre of the coal mining from Kuzbass to the eastern regions of the country.
The first reason for this decision – is geographic. The Kemerovo region, where two-thirds of the Russian coal is mined is far from the main markets. The distance of four to five thousand kilometers from the export ports, the high railroad rates and the limited capacity of the railway make Kuzbass’ coal uncompetitive on the world market. With the significant decrease in prices the region is becoming increasingly difficult to export their goods and compete with the suppliers from Australia and Indonesia, which benefit from the coal mines close to the ports.

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Metalloinvest announces changes in its Board

The following persons were elected in the new Board of Directors:
• Streshinskiy Ivan, chairman of the Board;
• Aglyamova Galina, independent non-executive director;
• Kazikaev Valery, independent non-executive director;
• Levin Vadim, independent non-executive director;
• Lupicheva Irina, non-executive director;
• Soldatenkov Sergey, non-executive director;
• Chumatchenko Natalia, non-executive director;
• Varichev Andrey, executive director;
• Tarasov Dmitry, executive director.

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"UC Rusal" gets a reprieve.

~~The company will continue negotiations on refinancing of its loans to mid-summer.
"UC Rusal" froze payments on syndicated loans of $ 5.15 billion for the three months until July 7th. Thus, the aluminum company received additional time for negotiations to refinance these loans with the transfer of payments for at least two years. At this point almost all lenders have agreed to the terms of refinancing, except the Chinese China Development Bank and one of the investment funds.
At the end of last year "UC Rusal" received a loss of $ 3.2 billion; on Wednesday it announced the freezing of payments on syndicated loans until July 7th. According to the report, the company published on the website of the Hong Kong Stock Exchange, the freeze mode, which the company is able to resort to during the negotiations on the terms of the refinancing, came into effect on April 8th. At the moment, "UC Rusal" has two syndicated loans - pre-export financing (PXF) for $ 4.75 billion and a loan of $ 400 million. PXF in two tranches on current conditions is repaid in two stages - in 2016 and 2018, a loan of $ 400 million - in 2018. $ 3.68 billion is left to repay on both loans.
As "UC Rusal" remembers the crisis.
In 2013 "Rusal"’s loss was $ 3.2 billion, of which $ 2 billion were paid to write-off of investment projects and the costs of closure of inefficient plants. The company expects the best performance in 2014, but the analysts say it will largely depend on the new LME rules and the convertion of rate not lower than 35 rubles for $ 1.

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Evraz operates without profit the second year in a row

In 2013, Evraz made a loss in the amount of $572 million because of bad market conditions. The company plans to reduce capital investments, to decrease costs and not to pay regular dividends till 2016 at least to remedy the situation. Last year was difficult for all companies in ferrous metallurgy, but some competitors of Evraz were profitable in spite of this.
Evraz of Roman Abramovich, Alexander Abramov and Alexander Frolov (together they have 67.13%) disclosed its financial accounting under IAS today. On the results of 2013, the company proved to be unprofitable - $572 million (against the loss in the amount of $425 million in 2012). The proceeds of Evraz fell by 2.1% to $14.4 billion and EBITDA by 10.2% to $1.8 billion (the EBITDA margin reduced by 12%). Other steel-smelting and mining companies in the country, which reported their results for the previous year, also significantly deteriorated their performances, but made the profit: Severstal made $83 million, NLMK - $189 million and Metalloinvest - $1.08 billion. However, Mechel, which, as analysts expect, will show the loss (in the first 9 months of 2013, the loss was $2.2 billion), and MMK haven’t disclosed their results yet.
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