DTEK Energy boosts coal mining 5.4% in 11M18, below plan

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA)
mined 22.03 mmt of hard steam coal in 11M18, Concorde Capital calculated based
on sector-wide data provided by the Energy Ministry. This is 5.4% more yoy but
2.0% below the plan. DTEK’s share in Ukraine’s total mining of steam coal
increased to 88% in 11M18 (from 81% a year before).

In November alone, DTEK Energy’s mines produced 2.19
mmt of coal (or 70.6 kt per day, on average), which is 1.1% more yoy and 0.7%
less compared to October (in daily average terms).

Recall, after losing three coal companies on the
occupied territory of Donbas in March 2017 (which mined anthracite and lean
coal), DTEK now controls only three coal mining companies located in the
Donetsk and Dnipropetrovsk regions that produce hard steam coal.

Alexander Paraschiy: The mining
statistics confirms our estimate that DTEK will mine 24.2-24.3 mmt of coal this
year (about 6% more yoy), or close to the holding’s updated plan of 24.3 mmt.
Such a production level is enough for the holding to remain self-sufficient in
hard steam coal.

Sector data also shows that DTEK’s biggest
competitor, private mining company Krasnolimanske, has stopped coal mining
since late September. Theoretically, that might force Centenergo (CEEN UK) –
the only operator of thermal power plants consuming hard coal that is not under
DTEK’s control – to buy coal from DTEK. Recall, in early 2018, DTEK was complaining that Centrenergo
refused to purchase its coal,
as they had agreed upon earlier, because it chose private miner Krasnolimanske
as its main supplier of hard steam coal.