Raspadskaya Drops Prices And Output

Raspadskaya said Wednesday that both output and pricing for its coking coal dropped sharply in the fourth quarter as demand from steelmakers slumped in the wake of the global financial crisis.

The miner, part-owned by steelmaker Evraz Group, said in a statement that raw coal production totaled 1.39 million tons, down 57 percent from 3.26 million tons a year earlier.

Average coal concentrate prices in the period were $120 per ton, up 29 percent from $94 in the fourth quarter of 2007. Coal concentrate prices were off by 46 percent, however, compared with the third quarter of 2008.

"Having all necessary technological means, Raspadskaya had planned to significantly increase its production volume from October 2008," the company said.

"But the global financial crisis and its impact on Russian metallurgical industry led to a considerable decrease in sales volume as well as in sales prices."

The company said in November that fourth-quarter sales would reach only one-third of planned volumes after steelmakers slashed orders.

It also only received payment for 21 percent of shipments because of clients' liquidity woes.

As a result, Raspadskaya is struggling to preserve cash. Last month, it said it would pay out no more than 25 percent of consolidated net profit for its final 2008 dividend.

Previously, the company's policy was to pay out not less than 25 percent of consolidated net profit, and in the first half of the year its payout ratio was 70 percent.

Wednesday's statement did not provide a detailed outlook for 2009, although CEO Gennady Kozovoi said his company believed in the "gradual recovery of demand from steelmakers."

Raspadskaya, which floated shares in Moscow in November 2006, operates one open-cast and two underground mines in the western Siberian region of Kemerovo. Another underground mine is under construction.