IUD To Switch From Gas To Coal.

Vitaliy Gayduk, a co-owner of the Industrial Union of Donbas (IUD), the holding company for Alchevsk Iron & Steel (ALMK: BUY) and DMK Dzerzhynskogo, announced yesterday that the two companies are planning to replace natural gas with steam coal in their blast furnaces. The two plants will use pulverized coal injection technology, currently employed only by DMK (DOMZ). IUD will purchase 1 mln mt of steam coal annually to fuel the mills. In addition, it will construct a mini power generation plant that will produce electricity from top gas, a by-product in pig-iron production Overall, Alchevsk Iron & Steel and DMK Dzerzhynskogo will spend USD 2.5 mln on energy saving measures. Concorde Capital: These steps are in line with our expectations, following the jump in gas prices, as outlined in our Jan 16, 2006 note. IUD does not have its own coal assets, but works with the state-owned Krasnolimanskaya coal mine, which effectively reduces the purchase price of coal for the company.