MMK Illicha Steel to commission PCI unit by end-2012

MMK Illicha Steel (MMKI UK), a Metinvest subsidiary, is preparing to start testing a pulverized coal injection (PCI) unit in May-July 2012, Interfax reported yesterday. The company plans to launch the unit, which will eliminate gas consumption from the pig iron production process at all of the company’s blast furnaces, in working mode by the end of 2012.

Roman Topolyuk: MMK Illicha will be the fourth Ukrainian steel maker to implement PCI technology. Once the unit is fully loaded, its coal consumption will exceed 1 mmt per year, thus increasing the steam coal market in Ukraine by 2%. Though Metinvest preliminarily intends to import high quality PCI coal from Australia and the US (including from subsidiary United Coal Company), we believe emerging Ukrainian coal miners, such as Coal Energy (CLE PW) and Sadovaya Group (SGR PW) will have an opportunity to negotiate supply agreements as well.