NLMK freezes coal projects in connection with the expected drop in prices

If prices remain such as now, then NLMK will postpone the implementation of long -term investment coal projects. In particular, work will stop at the Usinsky coal deposit and the Zhernovskoye deposit of coking coal. This was reported by the Vedomosti correspondent Vice President of NLMK Alexander Saprykin.

As noted in NLMK, a drop in coal prices in the domestic market of Russia reached 50 percent over the year, on the world 27 percent. The company intended to invest about $ 2 billion in coal projects, and this amount was not included renting autocrans in St. Petersburg .

The correctness of the decision to freeze coal projects was confirmed by the vice president of Moody’s Investor Service Denis Perevezentsev. “There is no point in building coal assets now-the domestic market is full, and it is unprofitable to bring coal abroad due to high transportation costs,” said Perevyentsev.

Meanwhile, the Deutsche Bank analyst George Buzhenitsa believes that NLMK can benefit from a rapid drop in coal prices, as it is the largest manufacturer in Russia, which does not have its own raw material base. “So, in the short term, NLMK will benefit from reducing coal costs,” Buzhenitsa says.

As reported, in the first quarter of 2013, NLMK reduced profits by tax by 18 percent, and the profitability of metallurgical production decreased by another 11 percent. At the same time, the forecast for the development of the enterprise in the second quarter of 2013 does not differ in optimism: “The increase in demand in foreign markets has changed a decrease, and the loading of capacities in the world is still high, which exacerbates an imbalance,” the NLMK said.

The company is forced to reduce expenses and cut the volume of investments planned for 2013 by one and a half times - up to 1 billion rubles against 1 billion 470 million last year.