Metinvest affiliate Pokrovske Coal plans to boost output 30% in 2021

Private joint stock company Pokrovske Coal plans to
boost its output of raw coking coal to 8 mmt (21.9 kt per day) in 2021, a 30% yoy
jump, according to the company’s March 2 press release as reported by
Interfax-Ukraine.

Recall, in 2020, Pokrovske Coal produced 6.13 mmt of coal (16.8 kt per
day), a 22.6% yoy rise. In 2019, Pokrovske Coal produced 5.0 mmt of coal (13.7
kt per day), a 25.8% yoy jump.

Metinvest (METINV), Ukraine’s largest steelmaker, owns
25% of Pokrovske Coal assets and recently received permissionfrom the Antimonopoly Committee of Ukraine to acquire the remaining 75%.

Dmytro Khoroshun: We continue
to expect Pokrovske Coal to produce 6.9-7.7 mmt of coal in 2021, or 13-25% more
yoy.

The company’s guidance suggests its 2021 production
volume might be closer to the upper bound of this range. The yoy increase of
Pokrovske Coal’s production volume in 2021 might top 20% for the third year in
a row after Metinvest and its co-investors purchased the miner in 2018.

Looking beyond 2021, we note that Svyato-Varvarynska
enrichment plant, which processes raw coal produced by Pokrovske Coal, has an
annual capacity of about 8-8.5 mmt of raw coal. Therefore, the growth of
Pokrovske Coal’s volume to above 8 mmt per year might require either expanding
Svyato-Varvarynska’s capacities or using additional capacities of other
enrichment plants.