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ELSI Sells Siberian Mines to Focus on Far East Coal Expansion

/ Free, Met Coal / By

Russia’s coal producer ELSI is offloading its Siberian assets to focus on developing its flagship Elga coal complex in the Far East. The move involves selling mines to Bashkir Industrial Holding, a lesser-known copper producer, and marks a strategic shift for ELSI.

Details of the Deal:

  • ELSI is selling its four open-cut Siberian mines (Verkhneteshsky, Kolyvansky, Vostochny and Kiyzassky) producing anthracite, PCI, and high-c.v. thermal coal.
  • These mines will revert to the Sibanthracite name and be managed by their previous team.
  • The mines are located in Novosibirsk and Kemerovo regions, primarily exporting anthracite and thermal coal to Asian markets.
  • ELSI expects the mines to produce around 25 million tonnes of raw coal this year.
  • Sibanthracite also recently acquired licenses to develop the Kuznetskiy Yuzhny and Malinovsky open-cut mines that border the company’s existing mines in Kuzbass.

ELSI’s Focus on Elga:

  • The company will concentrate on developing its Elga coal complex, boasting better access to infrastructure and Asian markets.
  • To enhance export capabilities, ELSI is constructing Pacific Railways, a new line connecting Elga to a port in Manorskiy Bay.
  • The first stage of this project, due in 2024, will enable Elga to export 30 million tonnes of coal per year, with potential expansion to 50 million tonnes.
  • The new port will accommodate vessels up to 85,000 tonnes deadweight.
  • The cost of the railway line is estimated at around RUB140bn ($1.6bn).

The Rationale:

  • The sale of Siberian mines allows ELSI to concentrate resources on the larger, more strategic Elga complex.
  • Elga’s location offers easier access to Asian markets, reducing transportation costs and potentially boosting profitability.
  • The new railway and port project, despite its significant investment, will significantly enhance export capacity and efficiency.

Overall Impact:

  • This strategic shift highlights ELSI’s confidence in the Elga complex’s potential.
  • By focusing on Elga and investing in infrastructure, ELSI aims to become a major player in the Asian coal market.
  • The success of this strategy hinges on the timely completion of major infrastructure projects and continued demand for coal in the region.

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