Severstal's updated Q2 and H1 2014 production of coal and iron ore

Sales of iron ore pellets remained broadly flat in the second quarter, declining only 2 percent QoQ. The sales volume amounted to 2,539,568 tons. At the same time, sales of iron ore concentrate increased by 10 percent compared to seasonally weak production and sales in the first quarter. The sales volume amounted to 1 211 144 tons. In addition, export deliveries increased in the second quarter.

Sales of coking coal concentrate experienced a further decline due to prolonged repositioning, which also boosted production in Q1. Coal sales totaled 1,712,435 tons, including 1,220,431 tons of coal concentrate. In 2014, Vorkutaugol will commission 11 new facilities at all five of its mines. A new facility was recently commissioned at the Zapolyarnaya mine, and production at the Severnaya mine was launched in July.

In May, Severstal commissioned a gas-fueled power plant operating on methane, a by-product of coal mining at the Severnaya mine (Vorkutaugol). The power plant will supply about 80 percent of the electricity consumed at the Severnaya mine and about half of the required thermal capacity of the mine. The launch of the project will increase energy savings at Vorkutaugol up to 12 percent.

Iron ore pellet prices declined 17 percent to $ 89 per tonne from $ 107 per tonne in the previous quarter, reflecting a decline in prices in the global iron ore product market in the second quarter of 2014. At the same time, coking coal prices were more stable and decreased by only 3 percent compared to the first quarter from $ 96 to $ 93 per ton.