DTEK Energy coal mining falls 12% in 4M21

Ukraine’s leading coal and power holding DTEK Energy (DTEKUA)
produced 5.71 mmt of ROM coal in 4M21, Concorde Capital calculated based on
sector-wide data provided by Energy Ministry. This represents a 12.3% decrease
yoy. On a like-to-like basis (adjusting for the mine that DTEK discontinued
operating), the holding’s mining decreased 1.1% yoy in 4M21. Recall, in
January, DTEK Energy terminated a long-term lease agreement for Dobropillia
Coal and transferred all its assets under government control.

In April alone, DTEK Energy mined 1.29 mmt of coal,
which is 59% more yoy (and 59% more yoy on a like-to-like basis), but 11% less
m/m (on daily average basis). In 3Q21, the holding mined 4.42 mmt of ROM coal,
or 23% less yoy (and 11% less on like-to-like basis).

Total ROM coal output in Ukraine increased 10% yoy in
4M21 to 10.38 mmt, with state mines raising their output by 176% yoy to 2.31
mmt (of which 0.89 mmt was mined at the assets spun off from DTEK Energy).

Alexander Paraschiy: While in
1Q21 DTEK Energy’s production of hard steam coal was not enough to cover its
internal coal needs, in April it turned back to self-sufficiency with own coal
(even despite a decline in mining) as its April consumption of hard steam coal
decreased by 34% compared to average monthly level of 1Q. We forecast DTEK
Energy will slightly increase its coal mining in 2H21 and reach total
production of about 17.5 mmt in 2021, which would be 7% less yoy and slightly
below the level of its self-sufficiency.