Mechel has summarised its production and sales results for 2023

Mechel a prominent Russian mining and metals company, has released its operating results for Q4 and 12M 2023.

Oleg Korzhov, Chief Executive Officer, stated

that the average range of global coal prices in 2023 was significantly lower than the 2022 quotes, but still acceptable to the company. The global commodity market has been rebalanced, with China and India emerging as key players. Demand for coal products in other Asia-Pacific countries remains high due to the growth of the steel industry and the coal power sector.

During the reporting period, Mechel continued to implement the mining division's technical re-equipment programme, renewing and restoring the fleet of main and auxiliary equipment. Throughout 2023, the company faced significant challenges due to infrastructural restrictions imposed by Russian Railways on the export of products to the east. Logistical challenges impacted quarterly coal production plans and sales policies, resulting in adjustments to several operating indicators.

The overall coal production decreased by 8% year-on-year, mainly due to lower steam coal production at Southern Kuzbass and Yakutugol. The prioritization of more marginal coal products was necessary to overcome the logistical barriers.

Sales of coking coal concentrate decreased by 21% as a result of reduced production at the Neryungrinsky open pit mine, which required additional stripping works.

Meanwhile, sales of pulverised coal (PCI) increased by 53% due to the sale of previously accumulated stockpiles. Anthracite sales decreased by 16% due to a reduction in the customer base in the western region. However, deliveries of this type of coal to Asian consumers in 2023 showed positive growth due to new contracts signed.

Sales of steam coal decreased by 28% year-on-year due to constraints on the rail infrastructure at the Eastern polygon and reduced demand from one of our major domestic customers.

Sales of iron ore concentrate decreased by 31% due to lower output from the Korshunovsky open pit mine caused by challenging hydrogeological conditions.

However, favourable conditions on the Russian coke market led to a 3% year-on-year increase in coke production and sales. It appears that there may be issues with the postal service as your letters are not reaching you. Let us communicate through this platform instead.
During the reporting period, we conducted a thorough reconstruction of blast furnace No. 5 and an overhaul of blast furnace No. 4 at Chelyabinsk Metallurgical Plant. These actions enabled us to increase iron and steel output in Q4 and maintain a level comparable to the previous year by the end of 2023.

To maximise profits, the metallurgical division approved a programme aimed at increasing the proportion of high-margin products in the sales structure. The overall sales of long products were affected by this factor, resulting in a 7% year-on-year decrease in rebar shipments.

Similarly, sales of flat products decreased by 9% year-on-year due to scheduled maintenance works in the rolling mill of Chelyabinsk Metallurgical Plant.

Sales of metalware were also affected, decreasing by 8% year-on-year due to the narrowing of export opportunities and lower wire consumption on the Russian market. During the reporting period, Beloretsk Metallurgical Plant expanded and diversified its range of ropes, including import-substituting items, to meet customer demand.

In 2023, the output of stamped products at the Ural Forge plant increased, resulting in a 9% year-on-year growth in sales of this product category. However, sales of forged products declined by 14% due to the loss of export markets.

In 2023, the Energy Division produced the same amount of electricity as the previous year. The 2% decrease in heat generation was caused by lower hot water consumption in the regions of operation, which was due to the higher average air temperature.