Yuzhny Kuzbass (a subsidiary of Mechel) suspended operations at the Olzherasskaya-Novaya mine, following worsening export opportunities caused by sanctions, falling coal prices, high costs and a shortage of railway infrastructure capacity in the Eastern range.
Further pressure on the performance of coal exports was exerted by the abolition of lowering coefficients for thermal coal from June 1, 2022. Moreover, in 2022-2023, railway tariffs jumped by a record 44.6%, and another increase of 13.8% is expected from December 2024. In 1H 2024, Mechel’s loss skyrocketed almost five-fold to 0.17 billion USD compared to 34 mio USD a year earlier.
Yuzhny Kuzbass is a large coal mining company, which includes three underground mines, four open-pit mines, four coal washing plants, and a number of supporting facilities. The design capacity of the Olzherasskaya-Novaya mine, where coking coal was mined, is 1.8 mio t per year, with balance reserves estimated at about 200 mio t.
Year-to-date, total PCI coal sales of Mechel, sanctioned since February 2024, plunged by 25% to 0.8 mio t.
In January-October 2024, Mechel’s output in Kuzbass dropped to 4.7 mio t (-0.6 mio t or -11% y-o-y).
Source: CCA Analysis
