Severstal-Resurs will stock up on raw materials in Kuzbass

Severstal-Resource, the manager of the Kuzbassugol coal company in the Kemerovo region, intends to participate in all auctions for the sale of attractive coal deposits. Roman Deniskin, General Director of Severstal-Resource, announced this in Belov yesterday. He explained the need for active participation in auctions by the fact that the company's coal enterprises have reserves of raw materials for only 20–25 years of operation.

OAO Coal Company Kuzbassugol, part of the Severstal Group, increased coal production in 2004 by 7% to 4 million tons. The company includes four mines in Anzhero-Sudzhensk, Berezovsky and Belov, as well as a coal preparation plant under construction in Berezovsky.

The leaders of Severstal-Resource and Kuzbassugol came to Belovo to sign an agreement on social and economic cooperation with the administration of the Kemerovo region. Initially, this ceremony was scheduled for February 9, when the Belovskaya Novaya-2 mine was opened, but on that day an accident occurred at the Esaulskaya mine, killing 25 people, and the signing was postponed. Novaya-2 was built on the site of the Novaya mine, which was closed a couple of years ago as part of Kuzbassugol, when it ran out of coal seams suitable for profitable mining. Instead, a new enterprise was created, in which Severstal-Resource invested about 400 million rubles. This year, Novaya-2 should reach the production level of 550 thousand tons per year. For the first time in Russia, it is planned to use the technology of plow mining on thin (less than 1 m thick) seams.

Yesterday, the management of Severstal-Resource announced that in 2005 investments in coal assets in Kuzbass would grow 3.2 times to 3.9 billion rubles. (last year, 1.2 billion rubles were disbursed). The main object of investment will be the Severnaya coal preparation plant in Berezovsky, for the construction of which 1.3 billion rubles will be allocated. In addition, it is planned to modernize the existing mines of Kuzbassugol. It is planned to increase investment in safety measures at mines three times, 67 million rubles. will go to prepare a project for the construction of a mine at the Konyukhtinsky Zapadny site (coal reserves of 35 million tons) near Berezovsky, the license for which the Berezovskaya mine, part of Kuzbassugol, acquired in December last year.

According to Roman Deniskin, Severstal-Resource will participate in other auctions for the sale of new blocks of coal deposits in Kuzbass. “We, as a raw material company, must have reserves, our coal enterprises have them for only 20–25 years, while other companies have them for 100 years,” he explained. In particular, the mines of Kuzbassugol sent bids for three sections of the “Erunakovskaya mine field” 1, 2 and 3, which are “interesting in their reserves” (the total reserves of the three sites are about 350 million tons of GZhO coking coal). However, the final decision whether to participate in the auction or not, the company will be on the eve of the auctions, once again specifying the reserves and risks. But even in case of winning the auctions, Severstal-Resource, according to Roman Deniskin, will not stop there and will also participate in the auctions for the Zhernovsky block (reserves of coking coal grade Zh about 240 million tons), scheduled for this year, and in others not yet announced.

At the same time, the head of Severstal-Resource did not rule out that, having gained a lot of new reserves and built new enterprises on them, Kuzbass coal miners could “quickly enter an overproduction crisis”, which would cause a drop in profitability and a reduction in investment. A similar fear was expressed by the governor of the Kemerovo region Aman Tuleev. In his opinion, "the more licenses issued, the more unnecessary competition between coal miners within Kuzbass."