Mordashov's Severstal will sell Vorkutaugol to Trotsenko's Russian Energy

Severstal announced that it is selling Vorkutaugol, one of the main coking coal producers in Russia, to Russkaya Energia. The transaction amount is 15 billion rubles, it is subject to approval by regulators.

Severstal writes that it is reducing the consumption of raw coal, and the proceeds from the sale of Vorkutaugol will be used, among other things, for decarbonization.

Due to the deal, Severstal expects to reduce greenhouse gas emissions ( scopes 1 and 2 ) by 14.3%. At the same time, the company will remain "the key consumer of Vorkuta coals" by signing a long-term contract with Russian Energy.

• Severstal, as an exporter of high-carbon products, falls under the cross-border carbon tax of the European Union, on the market of which it earns about a quarter of its revenue. According to the Ministry of Economic Development, the EU carbon tax could cost Russian suppliers of ferrous metals 655 million euros per year. Reducing the carbon footprint should allow Severstal to lower its tax.
• Vorkutaugol develops the deposits of the Pechora coal basin mainly by mining and in recent years produces about 5 million tons of coal concentrate per year. The last major accident at the Severnaya mine occurred in 2016, when 36 people died.
• Russian Energy is controlled by billionaire Roman Trotsenko, a former adviser to Igor Sechin at Rosneft and owner of the Aeon investment group. His group already has a metallurgical coal project - "Northern Star" in Taimyr.
• The main shareholder and chairman of the board of directors of Severstal, billionaire Alexei Mordashov, has 77% of the company. In 2020, Severstal produced 11.3 million tons of steel, with revenue of $6.87 billion and EBITDA of $2.4 billion.