Metals and Mining

The Mariupol Illich Steel Mill [MMKI UZ] has announced that the Company plans to modernize its sinter plant and oxygen unit. It also became known that the Company has completed 80% of the installation of a pulverized coal injection unit and that, to finish the work MMKI needs an estimated UAH 200 mln.

According to the Reuters news agency, Arcelor Mittal may dismiss about 10 thsd workers at its operations around the world in 2010 in order to cut costs by USD 500 mln. However, the Company’s representatives have not yet confirmed the information, though they have stated that this number does not represent the final tally.

China’s Trade Ministry has announced the imposition of import restrictions on some metallurgical products from Russia and the USA. The official reason for such a decision was price dumping, which Russian and American steel producers practice in their respective local markets. Chinese officials underlined that steel producing companies in the USA are subject to government subsidies and thus, can offer lower prices on their production.

Most of Ukraine`s largest steel producing companies have revealed their steel output plans for December 2009. According to the information they provided, the total steel output for the entire FY2009 for every company, with the exception of the Yenakievo Steel Mill is expected to be down 14%-24% YoY.

Mariupol Illich Steel Mill’s [MMKI UZ] representatives have announced that the modernization of its #5 blast-furnace, which got underway in October 2008, was successfully completed.

In November 2009, Ukrainian steel production reached 2.7 mln mt, a 1% decline compared to October 2009. Most of the large steelmakers improved their monthly steel output: ArcelorMittal Kryvyy Rih [KSTL UZ] produced 516 thsd mt (+3% MoM), Mariupol ISW [MMKI UZ] was at 390 thsd mt (+12% MoM), Dnipropetrovskiy ISW [DMKD UZ] was at 294 thsd mt (+14% MoM), and Enakiyevo ISW [ENMZ UZ] was at 213 thsd mt (+24% MoM).

Ukrainian coke producers reported on their respective production data for October 2009. According to the results, Alchevsk Coke [ALKZ UZ] and Yasyniv Coke [YASK UZ] improved their MoM production by 9.3% and 8.8%, to 316 thsd metric tons and 136 thsd metric tons, respectively. Avdiyivka Coke cut its monthly production by 7.0% to 253 thsd metric tons. For the first ten months of 2009, ALKZ managed to improve output by 1.7% to 2.9 mln metric tons of coke, while other producers slashed their production as follows: AVDK -36% to 2.3 mln metric tons and YASK -7.7% to 1.2 mln metric tons.

The Constitutional Court declared the government's decision approving a list of the 99 coal mines to be privatized in 2009 to be unconstitutional. The court found the decision to sell the mines not to be privatizational, and in fact that the Cabinet’s decree violated the process of privatization. Earlier the Cabinet had planned to privatize 99 coal mines in 2009. They planned to sell the mines in 3 stages: 50, 39 and 10 mines. The funds realized was planned to be allocated at the special fund of the Ministry of Coal Industry.

In an interview to Ukrayinska Pravda, Ihor Kolomoyskiy, one of the partners of the Privat Group, mentioned that Viktor Pinchuk, the principal benefactor of the EastOne group, controls about 20% of Nikopol Ferroalloys [NFER UZ, SELL], and only indirectly.

Ukrainian News reported on coke production for July, which amounted, according to our estimates, to 1.55 mln mt. This is up 11% MoM, but still 5% below the average 2008 monthly output of 1.63 mln mt, and 9% below the average 2007 monthly reading of 1.72 mln mt.