According to Mr Anton Bazulev NLMK head of investor relations, the Russian steelmaker Novolipetsk Steel is considering the acquisition of one or several coking coal producers in order to achieve self-sufficiency in raw materials.
NLMK's annual coal consumption is currently estimated at 9 million tonnes to 10 million tonnes while in Russia the company plans by 2014 to increase its steel output capacity from the current 12 million tonnes to 17 million tonnes per year ie by 40%.
NLMK's main focus for growth will be the long product division at its steel producing subsidiary Maxi-Group, the capacities of which are planned to be increased to up to 4 million tonnes of steel per year. In addition, NLMK intends to increase its flat steel product output at its main production site in Lipetsk by 500,000 tonnes and, as SteelOrbis previously reported, the company is also constructing a new 3.4 million tonnes capacity blast furnace which is scheduled to be commissioned in late 2012.
Currently, NLMK does not possess its own assets for the supply of coal concentrate, and, in the event of new price increases for raw materials, this situation would negatively affect the company, market analysts state. As SteelOrbis previously reported, since the beginning of October this year, coking coal producers in Russia have started to increase their prices. The Russian coal mining company Belon Group, currently owned by MMK, was the first domestic company to announce an increase in its coking coal price up by 62% to RUB 3,000 compared to the price level of the H1 of the year. According to the analysts due to the rise of coal prices, the increase in production costs of steelmakers without their own raw material units, would amount to eight percent.
Accordingly, NLMK is considering buying assets in Russia or Ukraine, as during the crisis the value of coal companies has declined.
NLMK owns a coal asset in Russia's Kemerovo region, namely, the Zhernovskaya-1 coal mine with a capacity of 3 million tonnes of coking coal per year, however its development is planned for 2010 and the mine will take three or four years to build and is expected to achieve full capacity in 2016. NLMK is also to construct a coal enrichment plant at the site as it needs coal concentrate.
Board of Directors considers Gazprom readiness for peak load period of late 2009 to early 2010.
(Sourced from SteelOrbis)
Visit www.steelorbis.com for more
