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Pulse of Coal - August 7

Coal industry - actual figures and facts. Partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Mining, logistics, prices, export - all that the coal industry in Russia and in the world lives on is concise and to the point - in a new partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Pulse of Coal - August 7
Photo: JSC "Siberian Anthracite"
Special project Coal of the East of Russia

A brief overview of the global coal market

Last week, a gas shortage caused by maintenance at a Norwegian gas field, as well as a reduction in Gazprom's supplies from Russia to the EU, supported energy coal indices in Europe above $ 140 / t. Gas quotes on the European TTF trading floor increased to 41.3 euros / MWh (+0.7 euros / MWh to 28.07.2021). The decrease in the volume of wind generation in European countries to 383 GWh (-607 GWh by 28.07.2021) provided additional support to coal quotations. Coal reserves at ARA terminals were at the level of 4.5 million tons (-0.2 million tons to 28.07.2021).

South African material quotes renewed 13-year highs, exceeding $ 130 / t. The rise in prices is due to problems on the railway line connecting the coal-mining provinces of South Africa and the port of Richards Bay. According to experts, in the short term, the indices will continue to grow due to additional supply restrictions caused by the plans of the railway operator Transnet to resume repairs in August 2021.

Coal prices of 5500 kcal / kg NAR of domestic production in the port of Qinhuangdao exceeded $ 163 / t. due to the increase in COVID-19 diseases in China amid the announcement by the authorities of Shaanxi province about the temporary closure of a number of mines. Also, the PRC government introduced a requirement according to which ships with coal coming from Indonesia must be at sea for at least 14 days before arriving at Chinese ports.

Australian coal prices continue to be below the $ 160 / t mark. The decline in prices for thermal coal from Australia is due to the downturn in trading activity of Asian buyers, who took a wait and see attitude due to the high price of Australian coal, which is at the level of all-time highs in 2008.

The reduction in coal supplies from Indonesia, caused by the worsening epidemiological situation in the country, supported the coal quotations of the 5900 GAR material above 120 USD / t.

On August 04.08.2021, 2021, the Indonesian government adopted a decree on the application of sanctions against coal companies that will not be able to fulfill their obligations to supply coal to the domestic market in XNUMX. The new decree was adopted in connection with critically low coal reserves at power plants. These suppliers face a coal export ban and / or heavy fines.

Australian metallurgical coal prices continued to hold above $ 215 / t. A shortage of Australian-sourced coking material remains due to strong demand and planned maintenance at a number of mines in Australia, which has a positive effect on the indices.

Russian Railways proposes to index tariffs for the transportation of coal and ore

Russian Railways proposed to index railway tariffs for the transportation of coal and ore to compensate for the rise in prices for building materials necessary for the development of infrastructure and the implementation of projects for the modernization of the railway, including the Baikal-Amur Mainline (BAM) and the Trans-Siberian Railway.

According to the expert opinion, if the proposal of Russian Railways on the indexation of tariffs is implemented, the cost of railway transportation of coal for export may increase by 10-15%, and railway transportation of anthracite by a large amount, taking into account the intention of Russian Railways to bring tariffs for anthracite to the level the cost of transportation of coking coal.

Due to the rise in metal prices and the introduction of export duties, Russian Railways may face additional costs for the construction and reconstruction of railway facilities. In this regard, Russian Railways requested state support in the amount of 17 billion rubles. ($ 230 million). As an alternative measure, the carrier proposed to approve a new principle of indexation of tariffs for the carriage of goods.

The Ministry of Transport of the Russian Federation supported the proposal of Russian Railways to compensate for the growth in prices for building materials by indexing tariffs for export coal transportation to the ports of the Far East and for the transportation of raw materials for the needs of the metallurgical industry on domestic routes. The size of the investment premium will need to be agreed with the Federal Antimonopoly Service, authorities and shippers at a meeting of the government commission on transport.

At the same time, the FAS believes that the long-term railway tariffs for the carriage of goods established until 2025 are maximum and their excess is unacceptable. At the same time, the FAS proposed to consider the proposals of Russian Railways on state support or changes in freight rates based on the analysis of the carrier's work for 2021.

RZD has repeatedly tried to increase railway tariffs for coal transportation, but the railway operator's proposals did not receive support from the FAS.

Siban Holding may become the new owner of Sibanthracite

Albert Avdolyan's Siban Holding filed a petition with the Federal Antimonopoly Service (FAS) for the purchase of 100% of the shares of Sibanthracite PLC (Cyprus), which owns the Sibanthracite group. The completion of the transaction is expected in September-October 2021.

Photo: JSC "Siberian Anthracite"

Siban Holding was established on May 26, 2021 to transfer the assets of the Sibanthracite Group to the ownership of A-Property, which owns 70% of the holding. The remaining 30% of the company's shares are controlled by Maxim Barskiy, who has been appointed CEO of Siban Holding. Maxim Barsky is the former CEO of Sibanthracite Group and partner of Dmitry Bosov, who died in May 2020. In 2018, Barsky became CEO of Sibanthracite, resigned in 2020, but retained his place on the company's board of directors.

100% of Sibanthracite PLC shares belong to Alltek Group, in which Dmitry Bosov owned 86.57%. The specified share is distributed equally (10.82% each) between his parents and four sons from the first two marriages, another 21.64% should go to his widow Katerina and her daughter. Alltek's minority shareholders are Bosov's former partners - Dmitry Aga (7.9%), Igor Makarov (3.16%) and Oleg Shemshuk (2.37%).

According to the latest data from open sources, all eight heirs can receive about $ 600 million ($ 75 million each). Nevertheless, Katerina Bosov continues litigation with representatives of Alltek in Russia and Cyprus. She also intends to appeal against the sale of Sibanthracite. Bosov's parents and sons, as members of Alltek, decided not to provide the widow and her daughter with a share in the company. Despite this, Katerina and her daughter are still legally contenders for a share of the sale of Sibanthracite.

In February 2021, A-Property signed an agreement with the Alltek Group, owned by Dmitry Bosov's heirs, on the basic conditions for the acquisition of Sibanthracite for $ 1 billion (including the company's debts). Under the terms of the deal, Sibanthracite retains its independence as a company. The agreement involves the signing of long-term contracts with top managers of Sibanthracite, as well as their participation in the authorized capital of the company (see CAA Russian Coal Weekly dated February 12, 2021). In January 2021, the state corporation Rostec and structures owned by A-Property received full control over the port of Vera and the Ogodzhinsky coal deposit, two enterprises previously owned by the heirs of Dmitry Bosov (see Russian Coal Weekly, January 29, 2021).

Sibanthracite is the world's leading producer and exporter of high quality anthracite with a total annual production of more than 20 million tons of anthracite and T coal.

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