DTEK made its first coal acquisitions outside Ukraine by closing a deal with Rostovsky Anthracite, LLC, to buy three mines and a coal processing plant. We acquired corporate rights to Public Mining Corporation “Obukhovskaya” (Obukhovskaya mine and a processing plant), Public Company Don-Anthracite (Dalnyaya mine) and Sulinanhtracite Company of Limited Responsibility (mothballed mine No. 410). The deal amount is not disclosed.
The commercial reserves of the above enterprises located in Rostov region, the Russian Federation, are estimated at 136 million tonnes. The companies mined nearly 0.5 million tonnes of coal in 2011, however, DTEK plans to increase output up to 2 million tonnes per year.
The acquisition of the enterprises producing low-sulfur coal will enable DTEK to create a future demand for coal produced by DTEK Sverdlovanthracite and DTEK Rovenyanthracite and guarantee the operation of DTEK‟s Ukrainian anthracite mines. A lower sulfur content in the overall coal portfolio improves an outlook for Ukrainian coal consumption in the domestic market, particularly, in view of tightened sulfur emission standards and environmental requirements.
The sales of high-sulfur coal from Ukrainian mines mixed with low-sulfur coal from Obukhovskaya and Dalnaya mines will ensure an export quality of the coal portfolio in line with EU sulfur content standards (less than 1%). Thus, Ukraine will be able to make up for the shortage of anthracite in the European market, caused by mine closures in England and Germany, supplying up to 2.5 million tonnes of anthracite annually.
“The acquisition of the companies in Rostov region will expand DTEK‟s resource base and improve the quality of the coal supplied to Ukrainian thermal power plants. This will help prevent fuel shortage in winter. We will be able to enhance the efficiency of electricity generation by TPPs and significantly reduce hazardous emissions,” Maxim Timchenko, DTEK‟s CEO, commented on the new acquisitions.