A-Property acquires Sibanthracite

A-Property, owned by Albert Avdolyan, signed an agreement with Alltech Group on the main terms of acquisition of Sibanthracite Group, belonging to the heirs of Dmitry Bosov, for 1 billion USD. Under the terms of the deal, Sibanthracite retains its independence as a company. The agreement implies signing of long-term contracts with top managers of Sibanthracite, as well as their participation in the company’s share capital. Sibanthracite is the last and the most lucrative coal asset in the business of Dmitry Bosov, the founder of Allech Group, who died in May 2020.

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Sibanthracite is a world leader in the production and exports of high-quality anthracite, with total output of 17.3 mio t in 2020 (-5.7 mio t or -25% to 2019). In January 2021, Rostec State Corporation and structures, belonging to A-Property, also gained full control over Port Vera and Ogodzhinsky coal deposit, two enterprises, previously owned by the heirs of Dmitry Bosov and his widow Katerina Bosov (see CAA Russian Coal Weekly dated January 29, 2021).

Considering the plans of Elga to increase coal mining to 18 mio t, acquisition of Sibanthracite may ramp-up overall A-Property’s extraction volumes to 40-44 mio t in 2021 and make A-Property one of the three largest Russian coal producing companies after Andrey Melnichenko’s SUEK, extracting 101.21 mio t (-4.95 mio t or -4.7% to 2019) and KRU, owned by UMMC group, with overall production volumes in 2020 reaching 43.22 mio t (-3.9 mio t or -8.1% to 2019).

In December 2020, A-Property announced a 100% consolidation of its key coal asset in portfolio – Elga project in Yakutia. The company exercised the option ahead of schedule by purchasing 49% in the project from Gazprombank. The transaction amounted to 45 billion RUR (615.9 mio USD). In April 2020, A-Property, acquired 51% in Elga from Igor Zyuzin’s Mechel for 89 billion RUR (1.17 billion USD). Elga coking coal deposit is one of the largest coking coal deposits in the world with overall reserves of 2.2 billion t (according to JORC classification). In Jan-Dec 2020 Elga coal production amounted to 6.73 mio t (+2.41 mio t or +56% to Jan-Dec 2019).

On 30 July 2020 Katerina Bosov sent a letter to the Chairman of the State Duma Tamara Pletneva, accusing Alexander Isaev and new Elga investors of trying to capture assets of VostokCoal (see CAA Russian Coal Weekly dated August 07, 2020). Due to a conflict with other heirs, Katerina had to leave the post of the chairman of the board of directors of Sibanthracite in October 2020, remaining an ordinary member of the board. This decision was made by the board of directors in order to distance the company and its management from the dispute between the shareholders of Alltech Group, founded by Dmitry Bosov. In January 2021, Katerina Bosov completely left the board of directors.

Isaev is a former co-owner and ex-CEO of VostokCoal. Shortly before the suicide, Dmitry Bosov dismissed Alexander Isaev from all positions in Sibanthracite Group and VostokCoal. In late May 2020, Alexander Isaev became the CEO of the managing company Elga Coal, established by A-Property (owned by Albert Avdolyan). Elga intends to lift the volume of coal production up to 45 mio t in 2023. The growth will also be achieved by increasing the capacity of the Elga-Ulak railway to 24 mio t per year.

Source: CAA Analytics

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