DTEK Energy coal mining falls 14% in 10M20

Ukraine’s leading
coal and power holding DTEK Energy (DTEKUA) mined 15.79 mmt of ROM coal in
10M20, Concorde Capital calculated based on sector-wide data provided by Energy
Ministry. This is 14.4% less yoy. The company’s flagship company Pavlohrad Coal
mined 13.40 mmt of coal, 10.9% less yoy. Total mining of raw coal in Ukraine
was 23.61 mmt in 10M20, or 8.0% less yoy, with state-run mines reducing their
output 23.3% yoy.

In October alone,
DTEK Energy mined 1.61 mmt of ROM coal, which is 17.5% less yoy and 12.1% less
m/m on an average daily basis.

Alexander
Paraschiy: Despite a
decline in coal mining, DTEK Energy is still producing more hard steam coal than it
needs for internal use. In particular, the company’s TPPs consumed 9.6 mmt of
hard steam coal in 10M20, we estimate, while its mines produced about 11.2 mmt
of marketable coal over the same period. That means the company’s attempts to terminate the lease
agreement for
state mining company Dobropillia Coal (producing about 2.3 mmt of marketable
coal in 2019) is a wise solution.

We expect DTEK Energy will produce 19.3 mmt of ROM coal in 2020 (or 14%
less yoy) and will further reduce its coal mining owing to its plans to exit
Dobropillia in 2021.