Metinvest BV, the parent company of an international vertically integrated mining and metallurgical group of companies (hereinafter – Metinvest or the Group), acquired an additional stake in Ukraine’s largest coking coal producer and thus increased the effective ownership of the Group to the level of the controlling … Due to the consolidation of the acquired assets, Metinvest will fully meet its own needs for coking coal for pig iron production.
The acquired assets include several enterprises (hereinafter – “Pokrovskaya Coal Group”), the key ones of which are the Pokrovskoye mine administration and the Svyato-Varvarinskaya concentrating plant. Together, these enterprises extract raw coal, enrich it and then sell it in the form of coal concentrate. They are located on the border of Dnepropetrovsk and Donetsk regions, close to the Group’s coke-chemical plants. All acquired assets are located in the territory controlled by Ukraine.
The Pokrovskoye Mine Administration produces high-quality K grade coal, which is used for the production of metallurgical coke. As of January 1, 2019, the mineral resources and reserves of the Pokrovskoye mine management according to the JORC methodology amounted to 248 million tons and 151 million tons, respectively, which will be enough to ensure production for at least 30 years.
Svyato-Varvara Concentrating Plant is one of the largest enrichment enterprises in Ukraine. The design capacity of the beneficiation is about 8 million tons of raw coking coal per year.
In 2020, the production of run-of-mine coal from the Pokrovskaya coal group amounted to 6,200,000 tons, which is 55% more than in 2018, and the production of coal concentrate – 3,200,000 tons, which is 39% more than in 2018 …
Obtaining effective control over the Pokrovskaya Coal Group became possible due to the fact that Metinvest acquired 24.77% of the shares of this business in July 2018, as well as an option to acquire the remaining 75.22% in other co-investors, subject to obtaining all necessary government and other permits. In October 2020, Metinvest received permission from the Antimonopoly Committee of Ukraine for a period of one year to gain control over some enterprises belonging to the Pokrovskaya Coal Group.
The Group received the total consideration for the additional share acquired by Metinvest in the Pokrovskaya Coal Group, attributable to the value of the option, in 2018.
in 2019-2020, given the potential integration with Metinvest, Pokrovskaya Coal Group restructured a significant part of its loans and borrowings. As of December 31, 2020, the external debt of the Pokrovskaya Coal Group amounted to USD 535 million. Mostly this is a restructured credit line in the amount of USD 480,000,000 maturing in 2030. Metinvest intends to take a balanced approach to managing the debt portfolio of the Pokrovskaya Coal Group.
A presentation of the acquired assets is available here.
Commenting on this news, Yuri Ryzhenkov, CEO of Metinvest Group, noted:
“This is an important acquisition for us. Over the past several years, the Group has experienced a constant shortage of coking coal. We have now reached a full level of self-sufficiency in these raw materials, which makes our vertical integration even stronger.
The next step will be the integration of new assets into the Group to enhance synergy. I am confident that as part of Metinvest, the Pokrovskaya Coal Group will be able to increase its efficiency, and its employees will be able to feel the advantages of a corporate culture with high social guarantees. ”