Mechel Reports 2012 Operational Results
01/31/2013 - Russian mining and steel company Mechel said the launch of blast furnace #5 at its Chelyabinsk Metallurgical Plant after capital maintenance and the commissioning of a new EAF at Izhstal had a positive impact on production volumes as it reported its 2012 operation results.
Mechel OAO's CEO Evgeny Mikhel commented on the company's 2012 operational results, which are available for review here:
"Despite market volatility, Mechel on the whole demonstrated positive dynamics in the Group's key business areas over 2012.
"In the mining segment, production of run-of-mine coal increased by 1% compared to last year's figures. The temporary suspension of mining activities at Mechel Bluestone in late 2012, as well as difficult weather conditions and current maintenance of mining equipment at Russian coal facilities had a negative impact on the coal mining volumes in the fourth quarter.
"Nevertheless, Mechel continued to successfully pursue its strategy of increasing the share of metallurgical coals in the mining division's overall sales. For all of 2012, PCI sales were up by 23% and anthracites by 2%. A 23-percent decrease in anthracite sales in the fourth quarter was mostly due to major European consumers reducing inventories at the end of the year.
"In 2012, iron ore concentrate sales remained on the level of 2011. During the year, Korshunov Mining Plant's sales structure changed. It significantly increased sales to external consumers, mostly Chinese steelmakers, and reduced sales to Mechel's own enterprises. As a result, in 2012 intragroup sales decreased while third-party sales increased by half.
"In the steel division, production of steel increased by 7% and pig iron by 12% as compared to last year's figures. The launch of blast furnace #5 at Chelyabinsk Metallurgical Plant after capital maintenance and the commissioning of a new electric furnace at Izhstal had a positive impact on production volumes.
"Sales of long and flat rolls in 2012 went up by 7% and 6% respectively, largely due to the sales and service network Mechel Service Global's Russian and Kazakh subsidiaries optimizing work with the client base.
"One of Mechel's strategic priorities is increasing output of high-margin metallurgical products. In line with this strategy, the Group, which has for several years been the leader among Russian hardware producers, continues to increase the production and sale of these products. In 2012 hardware and mesh sales amounted to some 978,000 tonnes, which is 2% higher than last year. A small decrease in hardware production in the fourth quarter was due to the suspension of production at the company's Romanian assets due to unfavorable prices on European steel markets.
"In the ferroalloys division, ferrochrome sales were up by 20% compared to last year's figures. The 32-percent decrease in nickel sales was caused by the halting of Southern Urals Nickel Plant following a weaker nickel market. Ferrosilicon production stayed stable, and the small difference between its sales in 2012 and 2011 are due to longer ownership transfer periods for volumes sold in late 2012.
"In 2012 the Group's power division enterprises increased generation of heat to 7,945,674 Gcal and electricity to 4,272,610 KWh, which means a 11% and 9% increase, respectively. That was due not only to increased demand for energy resources, but also a successful 2012 maintenance campaign, as well as renovation of key facilities as part of implementing an investment program for Mechel-Energo OOO and the Group's other power assets."
Mechel is a leading Russian company. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, nickel, ferrochrome, ferrosilicon, steel, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.
