Evraz renounces licence to develop Mezhegey coal deposit
January 19, 2008 – Evraz Group S.A. (LSE: EVR) (“Evraz” or the “Company”) has renounced the right to purchase the licence to develop the Mezhegey coal deposit in the Republic of Tyva, Russia. The decision is based on the continuing global financial and economic downturn and weakening coal market conditions. In July 2008, Evraz won the tender to develop the Mezhegey coal deposit having offered 16.9 billion roubles for the licence.
In the future, Evraz will seek the possibility to develop its own resources of coal, particularly of hard coking coal, based on the existing licences and coal production facilities located in the Kuzbass region of Russia near the Company’s steel mills.
Total proved and probable coal resources of the Yuzhkuzbassugol coal company, Evraz’s biggest coal producing entity and main supplier of coal to the Company’s steel making facilities, amount to 1.6 billion tonnes, including 1 billion tonnes of hard coking coal, as estimated by an international consulting firm.
In 2008, Evraz mined 14 million tonnes of coal, including 9.1 million tonnes of coking coal, with Yuzhkuzbassugol accounting for 13 million tonnes and 8.4 million tonnes, respectively. At the current consumption level, Evraz’s mining division is capable to fully satisfy the Company’s steel making operations requirements for coal.
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