December 2, 2021
PAO Severstal (“Severstal”, “The Group”), one of the world’s
largest vertically integrated steel and mining companies, announces that it has
signed a binding agreement with OOO Russkaya Energiya to sell its coking coal
assets, AO Vorkutaugol (“Vorkutaugol”). The transaction value is 15 billion
The deal is expected to be closed in the first quarter of
2022, once the relevant permits have been received from the Federal
Antimonopoly Service of the Russian Federation and a number of other conditions
have been fulfilled. The buyer intends to finance the transaction using its own
and borrowed funds.
Alexander Shevelev, CEO of Severstal, said:
“The sale of Vorkutaugol will allow us to focus on
delivering our strategy to develop our steel and iron ore assets to be the
leader of the future steel industry and to reduce our carbon footprint
consistently. Reducing our consumption of coking coal through the use of the
latest technologies is part of our ambitious decarbonisation programme. We
expect to accelerate this in the future, including through the use of hydrogen
At the same time, we understand that in the medium-term,
coal will remain an integral component of steel production. The sale of
Vorkutaugol to a strategic investor focused on the development of coal assets
not only reflects our commitment to reducing CO2 emissions but will
also allow this asset to maximise its potential.
Over many years, the Vorkutaugol team has become an
important part of the Severstal family, and we are confident that the company’s
fate is in good hands. We look forward to working closely with the new owner of
Vorkutaugol to support the transition of our workforce and maintain the highest
standards of health and safety, and will continue our cooperation into the
future, as we will remain a key consumer of Vorkutaugol coking coals. The terms
of the agreement with the buyer include an off-take contract guaranteeing
Severstal’s supply of raw material for the next five years.”
Vorkutaugol contributed 14.3% of Severstal’s greenhouse gas
emissions (scope 1 and 2) per annum. Part of the proceeds from the transaction
will be used to finance the projects within Severstal’s ambitious
Andrey Tyasto, CEO of Russkaya Energiya, said:
“The purchase of Vorkutaugol confirms that we believe in the
prospects for the development of the Russian coal industry and the great
potential of the Arctic zone. Our corporation has extensive experience in the
mining industry, which we plan to apply to develop this new asset in our
portfolio. It is important for us that Vorkutaugol maintains and enhances the
best practices in corporate culture, social guarantees and industrial safety
that have been developed as part of Severstal. We thank our partner for their
confidence in us and look forward to further fruitful cooperation.”
Notes for editors:
PАО Severstal is one of the world’s leading vertically
integrated steel and steel related mining companies, with assets in Russia,
Latvia and Poland. Severstal is listed on RTS and MICEX and the company’s GDRs
are traded on the LSE. Severstal reported revenue of $6 870 million and EBITDA
of $2 422 million in 2020. Severstal’s crude steel production in 2020 reached
11.3 million tonnes.
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AO Vorkutaugol is one of the largest coal mining companies
in Russia. It accounts for about 11% of the country’s coking coal production.
Vorkutaugol operates in the Pechora coal basin, which is a large raw material
base for the metallurgical, coke-chemical and energy industries. The Vorkuta
geological-industrial region has the largest coal reserves in Europe (about
four billion tonnes). The company consists of five underground mines, one open
pit mine and several auxiliary enterprises. Vorkutaugol delivered 10.3 million
tons of production in 2020, including 4.7 million tonnes of coal concentrate.
Vorkutaugol employs around 5,900 people.
OOO Russkaya Energiya
The co-founders of OOO Russkaya Energiya are Roman Trotsenko
(owning 70%), Chairman of the Board of Directors of Aeon Corporation and Andrey
Tyasto (owning 30%).
Aeon Corporation is the largest Russian holding company
operating on an international scale, investing in various heavy industries as
well as transport and construction. The AEON Holding includes NOVAPORT, which
is the largest network of regional airports in Russia (more than 21 airports).
One of the Holding’s key focuses is a project for the production of fertilizers
within the VTS “AZOT” framework. SDS Azot JSC is one of the largest producers
of nitrogen fertilizers in Russia.
One of the Holding’s latest development directions is in
coal. The AEON group includes projects such as Severnaya Zvezda LLC. The
company is implementing a project to develop the Syradasai coal deposit in the
Taimyr Dolgan-Nenets district of the Krasnoyarsk Territory. The project will
produce approximately 7.0 million tons per year starting from 2026.
Assets developed by Severnaya Zvezda LLC include: the
Yenisei seaport with a cargo turnover of up to 10 million tons / year, an
airfield, a 30 MW power plant, an enrichment plant, a shift camp, a coal mine,
a 61 km road. New technologies for power generation will be introduced during
the implementation of the project. These will include the creation of an
environmentally friendly block-modular pulverized coal power plant which could
also be used in remote areas of the regions.
The project is being developed as part of the strategy for
the development of the Arctic zone of the Russian Federation and ensuring
national security for the period up to 2035 (Decree of the President of the
Russian Federation dated October 26, 2020 No. 645). The project is included in
the list of investment projects planned for implementation in Russia’s Arctic
zone (Order Government of the Russian Federation dated February 1, 2021, No.
209-r), as well as in the Schedule for achieving the results of the “Northern
Sea Route” federal project. The construction of the “Indiga” deep-water
ice-free port in the area of the Indiga village is a priority project within
the framework of the formation of the Nenets transport and production cluster.
The estimated throughput of the port, the construction of which is planned to
be carried out on the principle of public-private partnership, will eventually
exceed 80 million tons. The port structure will include terminals for various
types of cargo: coal, mineral fertilizers, general cargo, oil cargo, gas
condensate (shipping terminal).