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Russian coking coal miner Raspadskaya reported declines of about a third in its production and sales during the second quarter from the first quarter as a gas blast shut its main mine in May. It added that restarting the mine may cost Ruble 8.6 billion ($281 million) but gave no timeframe. Raspadskaya said its concentrate sales were 1.544 million mt in the April to June period, 31% below the preceding quarter, and the slump in sales affected domestic shipments more, according to preliminary company results published Thursday. Domestic concentrate sales fell 38% quarter-on- quarter to 974,000 mt and export sales were down 13% to 570,000 mt, it said. Average preliminary coal sales prices in the second quarter were $120/mt FCA Mezhdurechensk basis, up from $99.30/mt in Q1 2010, it said. Contracts for July were done on a monthly basis at prices maintained at second-quarter levels of Ruble 3,800/mt rather than the normal quarterly framework due to uncertainties over steel and coke demand, it said. Russian steel and mining group Mechel also said on July 14 it had reverted to monthly contracts for coking coal for the same reasons. "Raspadskaya agreed with proposals of Russian customers to temporarily fix contracts on a monthly basis due to the uncertain demand at steel and coke markets," chief executive Gennady Kozovoy said in the results release. In June, Raspadskaya was delivering coal to eight Russian customers, including major metallurgical companies of MMK, NLMK, and the Evraz Group, it said. Raw coal production totaled 1.75 million mt, 42% below the previous period, the release said. The shutdown of the Raspadskaya main mine, Russia's largest underground facility, has left the company producing at its smaller nearby mines of OAO MUK-96, ZAO Razrez Raspadsky and Koksavaya, which was acquired in April 2010, where output has just started of K-grade hard coking coal. Raspadskaya said May 19 it expected concentrate sales from its two remaining mines starting June to be at a monthly rate of about 255,000 mt, around a third of the previous total. Raspadskaya on May 18 said it had declared force majeure on shipments of its semi-hard coking coal product that were circa 760,000 mt/month from its mines before the forced shutdown on the weekend of May 8-9. The affected Raspadskaya Mine unit accounted for 76% of the group's raw coal production in the first quarter of 2010 of just over 3 million mt as the OAO MUK-96 underground facility and ZAO Razrez Raspadsky opencast mine provided contributions of 390,000 mt and 336,000 mt respectively, data supplied by the company shows. Raspadskaya said in a separate release that it was taking operational measures to increase production volumes at the company's other mines to compensate for the lost volumes from the Raspadskaya mine. Raspadskaya on July 20-22 will discuss with international experts invited by the Kemerovo Region Administration the further development of plans to reconstruct the Raspadskaya mine. The total preliminary cost of Ruble 8.6 billion estimated to restart output at the mine takes into account "social transfers, project works, fire extinguishing, pumping out water, reconstruction of mine workings, degassing and ventilation systems, as well as [the] purchase and repairs of mining equipment and preparation of coal faces," it said.
