DTEK ramps up daily coal mining in Ukraine 5% m/m in November

The coal mines of energy holding DTEK (DTEKUA) produced 2.66 mmt of coal in November (-25.5% yoy), we estimate, based on preliminary data provided by the Energy Ministry via Interfax on Dec. 8. Average daily coal output of the holding grew for the second consecutive month in November at 5.1% m/m, based on provided statistics.



The growth in coal production was mainly due to increased mining on the territory that is under the control of the Ukrainian government (+8.7% m/m in November), while daily coal mining fell 3.0% m/m (after a 27.2% m/m increase in October) at the DTEK subsidiaries located in the territories occupied by pro-Russian separatists.



We estimate DTEK mined 32.58 mmt of coal in Ukraine in 11M14, which is a 10.4% yoy drop, based on preliminary data. Production at mines in the occupied territory declined 24.1% yoy, while increasing 0.5% yoy in Ukrainian-controlled territory.



Meanwhile, Ukraine’s total mining of steam coal plunged 36.4% yoy to 3.40 mmt in November, according to Interfax.



Alexander Paraschiy: Just in the last three months, DTEK’s mines located on the occupied territory of Donbas produced 2.1 mmt of anthracite coal (which is in low supply in central Ukraine) at a total value of about USD 130 mln. We estimate DTEK spent about USD 80 mln to mine that coal, and it has effectively frozen these costs as it has not delivered the mined coal to consumers in Ukraine.



At the same time, its three power plants designed to burn anthracite coal should significantly decrease their output and desperately seek to import needed coal from abroad, at a price that is at least twice the cost of its own mined coal. DTEK’s financial flexibility may significantly deteriorate if it doesn’t find a way with the Ukrainian government to deliver coal from the occupied territories of Donbas in the coming months.

Источник: Конкорд Капитал