Mechel in Media

Core messages of Oleg Korzhovs introductory speech at 9M2015 financial results conference call


This year was rather difficult for Mechel, the same as for other mining and steelmaking companies. Global contract prices for coking coal concentrate have fallen by 30% since last year. Iron ore prices have slumped even worse. The domestic market for steel products also fell prey to the negative impact of supply outstripping demand.

Demand on the global coking coal market remains weak mostly due to a slump in demand from China, a major coal consumer on the spot market. This has inevitably put pressure on global prices.

Operational revenue and EBITDA topped the results from the same period last year and quarter-on-quarter. In both production and sales we managed to cross into the green zone on most of our key products.

Tomorrow, December 17, Elga’s open pit will fulfill our mining pledge for 2015 by mining 3.8 million tonnes. We expect that by the year’s end Elga will yield some 4 million tonnes of coal. Next year the complex will mine some 5 million tonnes.

We are currently in the final stage of our debt restructuring negotiations with Sberbank. We are also actively discussing the possibility of our partner banks entering the Elga deposit project, which would enable the Group to significantly cut our debt burden, resolve the issue of underfinancing and go into stable operating mode, while the banks will gain shares in one of the world’s most efficient coal projects. We believe that this difficult and drawn-out process will be successfully completed in the near future.

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