DTEK Energy decreases coal mining 21% yoy in 2M21

Ukraine’s leading coal and power
holding DTEK Energy (DTEKUA) produced 2.92 mmt of ROM coal in 2M21, Concorde
Capital calculated based on sector-wide data provided by Energy Ministry. This
represents a 21.3% decrease yoy. On a like-to-like basis (adjusting for the
mine that DTEK discontinued operating), the holding’s mining decreased 12.1%
yoy in 2M21.

In February alone, DTEK Energy mined 1.37 mmt of coal,
which is 26% less yoy (and 10% less yoy on a like-to-like basis). Compared to
January (daily average output), the February output declined 2.0% (but
increased 12.3% on a like-to-like basis).

Total ROM coal output in Ukraine decreased 1.3% yoy in
2M21 to 5.15 mmt, with state mines demonstrating a spectacular growth in
production, or by 84% yoy to 0.86 mmt.

Recall, in January, DTEK Energy terminated a
long-term lease agreement for Dobropillia Coal and transferred all its assets
under government control.

Alexander Paraschiy: The decreased availability of own coal in early 2021 has resulted in
DTEK’s inability to meet increased demand for electricity at the market and
even resulted in a penalty assessed against the holding by the regulator.
Meanwhile, DTEK Energy has been gradually increasing coal output at its
flagship asset – Pavlograd Coal – since November. If this trend continues, the
holding will demonstrate a year-on-year increase in coal mining at its existing
assets and possibly will turn to self-sufficiency regarding hard coal in 2021,
as well as becoming able to accumulate enough coal stockpiles to meet high
demand for power (in any) in the next heating season.