EVRAZ PLC 
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EVRAZ Q4 2013 and FY2013 PRODUCTION REPORT
17 January 2014- EVRAZ plc (LSE: EVR) today releases its operational results for the fourth quarter of 2013 and full year of 2013.
FY 2013 OPERATIONAL HIGHLIGHTS:
· Consolidated crude steel production and gross output of steel products increased by 1% and 2% respectively, despite suspensions in Europe and North America with Russian, Ukrainian and South African operations contributing to the overall growth
· EVRAZ NTMK implemented the PCI project allowing for the sustainable reduction of operating costs
· Production at EVRAZ ZSMK rail mill recommenced following the successful completion of the major modernisation project and the Company obtained all necessary approvals for commercial production of head-hardened rails
· EVRAZ suspended operations at EVRAZ Claymont and EVRAZ Palini e Bertoli as part of the group wide optimisation plan
· Production of saleable iron ore products decreased by 1% in 2013 as a result oftheongoing restructuring programme within the iron ore business which resulted in the disposal of EVRAZ VGOK and certain mines of Evrazruda
· The coking coal business of the Group increased the output of of raw coking coal in 2013 by 22% (on a pro-forma basis) with both key assets Yuzhkuzbassugol andthe Raspadskaya coal company contributing significantly to the growth
· EVRAZ commissioned a new coking coal mine - Yerunakovskaya VIII, which will be a large scale and low cost operation
· EVRAZ continued the integration of the Raspaskaya coal company following its acquisition in January 2013
· Although underlying demand for most steel product groups in Russia and North America was strong, average selling prices for all key product groups continued to soften over the year in line with global benchmarks
Q4 2013 OPERATIONAL HIGHLIGHTS and RECENT DEVELOPMENTS:
· Consolidated crude steel production was broadly flat in Q4 2013 vs. Q3 2013
· Output of gross steel products remained unchanged vs. Q3 2013 supportedby export demand for Russian made semi-finished products and a strong order book for tubular products in North America while the output of construction products showed seasonal decline
· Share of finished steel products decreased to 69% in Q4 2013 vs. 75% in Q3 2013 due to seasonal factors and redistribution of production at the Russian steel mills towards semi-finished products
· Output of iron ore products decreased by 10% in Q4 2013 as a result of the disposal of EVRAZ VGOK in October 2013
· Consolidated raw coking coal output grew 5% driven by increased mining volumes at Yuzhkuzbassugol, and despite two of the mines of the Raspadskaya coal company being closed for repositioning of longwalls
· In October 2013, EVRAZ sold the Gramoteinskaya steam coal mine, which was adjudged to be a non-core operation for EVRAZ's coking coal business
· In November 2013, EVRAZ was awarded with a compliance certificate for head-hardened rails with lengths of up to 100 meters, allowing the Company to launch commercial production. The first batch of 10 thousand tonnes of 25-meter head-hardened rails was shipped to the Russian Railways in December 2013
· In December 2013, EVRAZannounced the completion of construction works and commencement of hot tests at the light-section rolling mill in Kostanay, Kazakhstan, with a nominal capacity of 450 thousand tonnes of construction products, which are currently in strong demand in the Central Asian markets
· In December 2013, the Raspadskaya coal company launched a new longwall at its flagship Raspadskaya underground mine, being an important milestone in the programme of mining volume growth for 2014
· In December 2013, EVRAZ announced the saleof a number of Evrazruda's loss making iron ore assets and utilities companies located in the Republic of Khakassiaand the Kemerovo region as part of its iron ore asset portfolio optimisation programme
· Average selling prices for EVRAZ's key steel product groups changed responding to global steel and local market demand, changes in product mix and seasonal factors
· Prices for iron ore products slightly increased in line with global benchmarks
· Average quarterly prices for Russian-produced coking coal concentrate are more resilient to price movements globally and remained broadly at the level of Q3 2013
STEEL
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Coke (saleable) | 1,380 | 1,416 | -2.6% | 283 | 342 | -17.2% | |
Pig iron | 12,553 | 12,031 | 4.3% | 3,158 | 3,137 | 0.7% | |
Pig iron (saleable) | 341 | 261 | 30.4% | 119 | 131 | -9.1% | |
Crude steel | 16,109 | 15,932 | 1.1% | 3,989 | 3,962 | 0.7% | |
Steel products, gross | 15,972 | 15,701 | 1.7% | 3,924 | 3,933 | -0.2% | |
Steel products, net of re-rolled volumes | 14,673 | 14,195 | 3.4% | 3,728 | 3,649 | 2.2% | |
Semi-finished products ** | 3,843 | 3,153 | 21.9% | 1,155 | 918 | 25.8% | |
Finished products | 10,830 | 11,042 | -1.9% | 2,574 | 2,731 | -5.8% | |
Construction products | 5,186 | 5,207 | -0.4% | 1,250 | 1,363 | -8.3% | |
Railway products | 1,903 | 1,801 | 5.7% | 510 | 515 | -0.9% | |
Flat-rolled products | 2,108 | 2,465 | -14.5% | 365 | 460 | -20.6% | |
Tubular products | 927 | 872 | 6.4% | 273 | 229 | 18.9% | |
Other steel products | 706 | 697 | 1.3% | 175 | 163 | 7.3% |
Note. Numbers in this table and the tables below may not add to totals due to rounding.
* Gross volume of steel products in the tables includes those re-rolled at otherEVRAZ'smills. However, such volumes are eliminated as intercompany sales for purposes ofEVRAZ's consolidated operating results.
** Consolidated production volumes of semi-finished products are preliminary as intra-group re-rolling volumes are yet to be finalised.
RUSSIA
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Coke (saleable) | 592 | 504 | 17.5% | 117 | 141 | -17.3% | |
Pig iron | 10,936 | 10,554 | 3.6% | 2,760 | 2,735 | 0.9% | |
Pig iron (saleable) | 303 | 185 | 64.2% | 110 | 110 | 0.8% | |
Crude steel | 11,904 | 11,675 | 2.0% | 2,986 | 2,967 | 0.6% | |
Steel products, gross | 11,056 | 10,821 | 2.2% | 2,780 | 2,753 | 1.0% | |
Steel products, net of re-rolled volumes | 10,799 | 10,556 | 2.3% | 2,754 | 2,661 | 3.5% | |
Semi-finished products | 4,517 | 4,091 | 10.4% | 1,214 | 1,024 | 18.6% | |
Finished products | 6,282 | 6,465 | -2.8% | 1,540 | 1,637 | -5.9% | |
Construction products | 4,185 | 4,281 | -2.2% | 1,016 | 1,109 | -8.4% | |
Railway products | 1,409 | 1,310 | 7.6% |
In 2013, the production of pig iron increased by 4% vs. 2012 to 10.9 million tonnes due to implementation of the PCI project at EVRAZ NTMK and related operational improvements as well as more efficient operation of the blast furnaces at both Russian steel mills. The PCI project at NTMK also decreased the internal requirements in coke and led to increased production of saleable coke to third parties.
The output of crude steel and gross steel products tracked the increased output of pig iron and each grew by 2% in 2013. At the same time the share of finished products in 2013 vs. 2012 decreased from 61% to 58% largerly explained by the growth in volumes of semi-finished products by 10%, while the output of finished products declined by 3%.
The higher output of semi-finished products in 2013 was due to increased availability of crude steel and stable underlying demand in EVRAZ's key export markets.
The production of finished products decreased by 3% year-on-year due to lower output of flat-rolled products following the shutdown of the plate rolling mill at EVRAZ ZSMK in June 2013 and the reduced output of construction products, which were partially offset by growth in production of railway products after the completion of modernisation at the EVRAZ ZSMK rail mill in January 2013.
In Q4 2013, both pig iron and crude steel production were broadly flat vs. Q3 2013. The production of coke saleable to third parties decreased in the reporting quarter by 17% as output was adjusted to the prevailing market demand.
In Q4 2013, production of gross steel productsincreasedby 1% compared to Q3 2013, with the volume of semi-finished goods growing by 19% and the output of finished products declining by 6% driven by low seasonal demand in the domestic market.
In November 2013, EVRAZ was awarded with a compliance certificate for head-hardened rails with lengths of up to 100 meters, allowing the Company to launch the commercial production of these products. The first batch of 10 thousand tonnes of 25-meter head-hardened rails was shipped to the Russian Railways in December 2013.
In Q1 2014, there will be held 9-day scheduled maintenance works at the EVRAZ ZSMK's blast furnace number 3 and one of the converters, as well as 15-day scheduled maintenance works at EVRAZ NTMK's blast furnace number 5 with simultaneous maintenance works of converters.
In Q4 2013, selling prices for semi-finished steel products increased reflecting slightly improving trends in the global steel market. Prices for construction products decreased reflecting seasonal demand, whilst prices for railway products increased with the commencement of commercial sales of head-hardened rails produced at the modenised ZSMK rail mill.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Coke | 160 | 191 | 137 | 150 | |
Pig iron | 301 | 353 | 317 | 292 | |
Steel products | |||||
Semi-finished products | 401 | 457 | 399 | 374 | |
Construction products | 649 | 677 | 632 | 639 | |
Railway products | 852 | 891 | 847 | 829 | |
Flat-rolled products | 560 | 607 | 296 | 393 | |
Other steel products | 658 | 729 | 645 | 634 |
NORTH AMERICA
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Crude steel | 2,180 | 2,411 | -9.6% | 499 | 558 | -10.7% | |
Steel products, net of re-rolled volumes | 2,760 | 2,662 | 3.7% | 691 | 673 | 2.6% | |
Construction products | 348 | 331 | 5.1% | 78 | 81 | -3.9% | |
Railway products | 494 | 491 | 0.6% | 130 | 126 | 3.7% | |
Flat-rolled products | 990 | 968 | 2.3% | 210 | 237 | -11.4% | |
Tubular products |
In 2013, crude steel output decreased by 10% to 2.2 million tonnes due to outages at EVRAZ Pueblo and EVRAZ Regina during 2013, and suspension of the EVRAZ Claymont mill in Q4 2013. Meanwhile, the volume of output of finished products increased by 3.7% to 2.8 million tonnes, with a growth in production recorded across all product groups.
The 5% increase in production of construction products was driven by higher demand for structural tubing and rod & bar, including new products launched in H2 2012-2013. However, the capacity for construction products was negatively impacted by crude steel availability at the EVRAZ Pueblo steel mill.
The rail mill operated close to the full capacity in 2013 and the output remained broadly flat at 494 thousand tonnes of railway products.
In 2013, the production of flat-rolled products remained largerly unchanged at 990 thousand tonnes despite the suspension of the EVRAZ Claymont mill in Q4 2013.
The annual output of tubular products increased by 6% compared to 2012 driven by the relaunch of the pipe mill at EVRAZ Portland Spiral (+32 thousand tonnes) and Camrose Long Seam Welded (+73 thousand tonnes) mills, and improved productivity and orders at EVRAZ Regina Spiral (+113 thousand tonnes), which were partially offset by lower OCTG demand, and an initiative to reduce finished goods on-hand in the yard, as well as unplanned downtime at Pueblo seamless.
In Q4 2013, crude steel volumes at EVRAZ's North American operations decreased by 11% compared to Q3 2013 primarily due to the suspension of EVRAZ Claymont and output decrease at Pueblo. The output reduction at Pueblo was mainly due to additional downtime to install investment upgrades and to resolve electrical issues.
The output of construction and railway products was flat quarter-on-quarter, while the utilisation rates remained high.
The suspension of EVRAZ Claymont and scheduled maintenance works at EVRAZ Regina's steel shop in October-November 2013 led to a 11% decrease in production of flat-rolled products vs. Q3 2013.
In Q4 2013, production of tubular products increased by 43 thousand tonnes, or 19%, mostly driven by the stronger order book.
In Q4 2013, prices for all major product groups remained largely unchanged vs. Q3 2013 as a result of robust demand and satisfactory product mix.
In Q1 2014, production of long products is expected to remain at the high level achieved in Q4 2013, supported by the solid market demand. The order book for tubular products is strong with planned record high shipments subject to the availability of rail cars in January.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Construction products | 764 | 843 | 744 | 747 | |
Railway products | 932 | 987 | 919 | 930 | |
Flat-rolled products | 860 | 1,019 | 847 | 840 | |
Tubular products | 1,318 | 1,497 | 1,301 | 1,299 |
UKRAINE
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Coke (saleable) | 788 | 913 | -13.7% | 166 | 201 | -17.2% | |
Pig iron | 978 | 857 | 14.1% | 237 | 257 | -7.7% | |
Pig iron (saleable) | 38 | 77 | -50.8% | 9 | 21 | -59.8% | |
Crude steel | 995 | 820 | 21.4% | 239 |
EVRAZ's Ukrainian operations demonstrated solid performance in 2013 with output of pig iron rising by 14% to 978 thousand tonnes and crude steel production increasing by 21% to 995 thousand tonnes, as a result of increased efficiency of blast furnaces after a number of operational improvements in the melting process, coke quality and less downtime for repairs.
The lower output of coke saleable to third parties in 2013 was driven by the increased in-house requirements for this product for the blast furnace's process.
In 2013, the output of semi-finished products grew by 47% due to strong demand for export billets. The Company also increased the output of construction products, mostly channels, by 8%.
In Q4 2013, pig iron production decreased by 8% quarter-on-quarter due to scheduled maintenance works at blast furnaces in December 2013.
The crude steel output decreased by 3% quarter-on-quarter due to lower volumes of output of pig iron. Despite this, the output of steel products increased by 8% in Q4 2013 supported by the feedstock of ingots built up in anticipation of maintenance works at blast furnaces.
Maintenance works will be held in Q1 2014 to optimise the blast furnaces' productivity.
Selling prices in Ukraine demonstrated diverging trends in Q4 2013 - while prices for semi-finished products moved in line with FOB Black Sea benchmarks, the demand for construction products was strong and resulted in 5% growth of average selling prices.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Coke (saleable) | 213 | 214 | 199 | 211 | |
Pig iron | 356 | 337 | 352 | 348 | |
Steel products | |||||
Semi-finished products | 465 | 524 | 452 | 462 | |
Construction products | 600 | 646 | 611 | 581 | |
EUROPE
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Crude steel | 388 | 454 | -14.6% | 102 | 46 | 119.4% | |
Steel products, gross | 801 | 1,055 | -24.0% | 114 | 174 | -34.3% | |
Steel products, net of re-rolled volumes | 792 | 1,028 | -22.9% | 114 | 174 | -34.3% | |
Construction products | 80 | 69 | 17.1% | 28 | 22 | 29.6% | |
Flat-rolled products | 693 | 920 | -24.7% | 83 | 147 | -43.8% | |
Other steel products | 19 | 39 | -51.2% | 3 | 5 | -32.5% |
The 2013 production results of the European operations of EVRAZ totalled 792 thousand tonnes of steel products net of re-rolled volumes vs. 1,028 thousand tonnes in 2012 and were primarily impacted by the temporary suspension of works at EVRAZ Palini e Bertoli in Italy from 21 August 2013 onwards (-187 thousand tonnes of rolled products) as a result of subdued market demand in Europe, and interrupted production at EVRAZ Vitkovice Steel (-67 thousand tonnes of rolled products) driven by the level of slab stocks, pig iron prices and market demand.
In Q4 2013, crude steel production increased by 119% compared to Q3 2013 as a result of the EVRAZ Vitkovice Steel steel shop being in operation for two months in Q4 compared to less than a month in the previous quarter.
The volume of steel products in Q4 2013 declined by 34% compared to Q3 2013, as the Italian mill remained idle andmaintenance works were carried out atEVRAZVitkovice's rolling facilities.
In Q1 2014, volumes are expected to return to Q3 2013 levels. However, currently the market information does not indicate sufficiently positive conditions to re-start Palini e Bertoli's operations in Q1 2014.
The prices for steel products, both flat-rolled and construction, rose in Q4 2013 compared to Q3 2013 on the back of improved macroeconomic outlook for the European economy for 2014.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Construction products | 873 | 876 | 892 | 842 | |
Flat-rolled products | 675 | 744 | 707 | 661 |
SOUTH AFRICA
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Pig iron | 639 | 620 | 3.0% | 161 | 145 | 11.1% | |
Crude steel | 642 | 572 | 12.3% | 164 | 144 | 13.6% | |
Steel products | 502 | 461 | 8.8% | 116 | 127 | -8.1% | |
Semi-finished products | 0 | 15 | n/a | 0 | 0 | n/a | |
Finished products | 502 | 446 | 12.4% | 116 | 127 | -8.1% | |
Construction products | 166 | 169 | -2.3% | 37 | 50 | -25.4% | |
Flat-rolled products | 305 | 243 | 25.4% | 72 | 72 | 0.3% | |
Other steel products | 31 | 34 | -7.4% | 8 | 6 | 38.2% |
In 2013, the output of crude steel and steel products increased by 12% and 9% respectively compared to 2012, due to the effect of a low base in 2012, as a result of the operations of EVRAZ Highveld Steel and Vanadium being affected by labour action.
In Q4 2013, the output of pig iron and crude steel at EVRAZ Highveld Steel and Vanadium increased by 11% and 14% respectively, as a results of the operations being temporarily scaled back in Q3 2013 to avoid the negative effect of peak electricity tariffs.
Q4 2013 hot metal production increased compared to Q3 2013 due to the absence of measures to reduce electricity consumption during expensive winter peak demand periods. Finished goods production reduced in Q4 2013 compared to Q3 2013 as a result of a two-week structural mill maintenance in December and customers' closures during the festive season.
Prices of finished goods decreased in 2013 as a result of a market mix change related to weaker local demand and higher export sales. Prices in the domestic market increased in Q4 2013 vs Q3 2013, but due to the weakening of the Rand, the US dollar price decreased.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Steel products | |||||
Semi-finished products | 436 | 489 | 156* | 595 | |
Construction products | 717 | 737 | 632 | 689 | |
Flat-rolled products | 689 | 765 | 609 | 674 | |
Other steel products | 660 | 604 | 497 | 698 |
*The calculation includes a year-end adjustment to the selling expenses. The price excluding the adjustment would be $357/t
MINING
IRON ORE
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Concentrate, saleable (Russia) | 4,692 | 5,615 | -16.4% | 982 | 1,264 | -22.3% | |
Sinter (Russia) | 4,396 | 4,698 | -6.4% | 904 | 1,124 | -19.6% | |
Pellets (Russia) |
In 2013, the overall production of saleable iron ore products by the Company decreased by 1% and amounted to 20.4 million tonnes compared with 20.8 million tonnes in 2012. The primary driver of the decreased production was the performance of the Russian operations where the output of saleable iron ore products declined by 6% from 16.4 million tonnes to 15.4 million tonnes largely driven by the disposal of the high cost operation EVRAZ VGOK in October 2013 (EVRAZ VGOK produced 1.7 million tonnes of saleable iron ore products in 2013) and the shutdown of the uneconomic Irba mine from July 2013 (approx. 0.2 million tonnes of iron ore concentrate was produced out of the Irba mine's iron ore in 2013). At the same time the performance of the low cost large scale open pit mine EVRAZ KGOK was stronger in 2013 vs. 2012 by 2%, or 195 thousand tonnes, and amounted to 9.8 million tonnes.
In the reporting year the Ukrainian and South African iron ore mines also increased their output by 0.7 million tonnes as a result of the successful implementation of programmes designed to debottleneck and improve productivity.
In Q4 2013, the Company produced in Russia 3.5 million tonnes of iron ore products compared to 4 million tonnes in Q3 2013, largely due to the abovementioned disposal of EVRAZ VGOK. In addition, on 27 December 2013 the Company announced the sale of the Abakan and Teya mines of Evrazruda which accounted formined volumes of iron ore for production of 1.7 million tonnes of iron ore concentrate in 2013. EVRAZ concludedshort-term agreements with the purchaser for primary iron ore concentrate produced by the Abakan and Teya mines.The loss of volumes will be partially off-set in 2014 by the ramp-up of production at other lower cost mines of Evrazruda, including the Sheregesh mine, which are expected to add 0.5-0.6 million tonnes of iron ore concentrate in 2014.
Production of lumpy ore by EVRAZ Sukha Balka increased by 11% in Q4 2013 compared to Q3 2013 due to improved productivity at the Yubileynaya mine after the launch of a new loading complex.
The prices for the key iron ore product groups slightly increased in Q4 2013 compared to the previous quarter in line with the global price trends.
Average selling prices
USD/tonne (ex works) | 2013 | 2012 | Q4 2013 | Q3 2013 | |
Concentrate, saleable (Russia) | 87 | 84 | 84 | 82 | |
Sinter (Russia) | 76 | 91 | 76 | 71 | |
Pellets (Russia) | 86 | 91 | 88 | 82 | |
Lumpy ore (Ukraine) | 66 | 61 | 68 | 66 | |
Fines ore (South Africa) | 23 | 12 | 14 | 14 |
COAL*
Product, '000 tonnes | 2013 | 2012 | 2013/ 2012, change | Q4 2013 | Q3 2013 | Q4 2013/ Q3 2013, change | |
Raw coking coal (mined) | 18,933 | 15,509 | 22.1% | 5,048 | 4,802 | 5.1% | |
Yuzhkuzbassugol | 11,110 | 8,506 | 30.6% | 3,193 | 2,794 | 14.3% | |
Raspadskaya | 7,824 | 7,002 | 11.7% | 1,855 | 2,008 | -7.6% | |
Coking coal concentrate (production) | 13,664 | 10,983 | 24.4% | 3,348 | 3,464 | -3.3% | |
Produced at Yuzhkuzbassugol coal washing plants | 5,821 | 4,102 | 41.9% | 1,579 | 1,502 | 5.2% | |
Produced at EVRAZ ZSMK coal washing plant | 2,591 | 2,375 | 9.1% | 657 | 632 | 4.0% | |
Produced at Raspadskaya coal washing plant | 5,252 | 4,506 | 16.6% | 1,112 | 1,330 | -16.4% | |
Raw steam coal (mined) | 1,432 | 2,283 | -37.3% | 456 | 482 | -5.4% | |
Steam coal concentrate (production) | 99 | 421 | -76.5% | 16 | 21 | -25.5% |
* 2012 data for Raspadskaya is on a pro-forma basis, as Raspadskaya is consolidated in the results of EVRAZ from 16 January 2013
Coking coal
Both key assets of the Group in the coking coal business - Yuzhkuzbassugol andthe Raspadskaya coal company increased their output of raw coking coal in 2013 with the consolidated output reaching 18.9 million tonnes compared to 15.5 million tonnes in 2012 (on a pro-forma basis).
The primary drivers of the growth in output of raw coking coal atYuzhkuzbassugol by 31% to 11.1 million tonnes were the launch of the new Yerunakovskaya VIII coking coal mine in February 2013 (2013: 1.4 million tonnes), the operation of the Alardinskaya mine with two longwalls (2013: 3.3 million tonnes) and less downtime associated with repositionings at other mines. At the same time the Company decided to proceed with the closure of the Abashevskaya mine due to high operating costs and risks.
TheRaspadskaya coal company increased production in 2013 by 12% to 7.8 million tonnes of raw coking coal due to increased mining volumes at the Razrez Raspadsky open pit(+1.7 million tonnes), the Raspadskaya Koksovaya(+0.2 million tonnes)and the MUK-96(+0.2 million tonnes)underground mines which more than offset loss of production volumes (-1.3 million tonnes) at the Raspadskaya underground mine after the suspension of mining works in May-June 2013 due toexcessive concentration of carbon monoxide in certain areas of the mine.
The growth of mined volumes of coking coal by Yuzhkuzbassugol and theRaspadskaya coal company led to increased loading rates across all coal washing plants of the Group with the preparation yield growing from 70.8% in 2012 to 72.2% in 2013.
In Q4 2013, raw coking coal production increased by 5% compared to Q3 2013. The output of raw coking coal at Yuzhkuzbassugol increased by 14% as the Yerunakovskaya VIII mine gradually ramped up toits nameplate capacity and repositioning of a longwall at the Alardinskaya mine in Q3 2013 was completed.
In the reporting quarter the Company stopped tunneling works at the Abashevskaya mine and is currently in the process of the permanent shut down of this mine. Going forward the reduction in volumes of coking coal from Abashevskaya mine will largely be replaced by other mines of the Group.
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