May 20, 2010 / 4:43 PM / 9 years ago

UPDATE 1-Russia asks coking coal firms to ensure local supply

* Coal firms say local market more attractive anyway

* Follows accident that killed 66 miners this month

* Raspasdkaya says has already re-routed supplies

(Adds Raspadskaya comment, details)

MOSCOW, May 20 (Reuters) - Russia’s top energy official Igor Sechin has asked coking coal firms to focus on local sales instead of exports after blasts in Raspadskaya’s (RASP.MM) core mine crippled Russian production, an industry source said.

“There was a letter from Sechin, which said that there should be no refusals to supply Russian customers in order to avoid creating an artificial shortage,” a source who saw the letter told Reuters.

“It was a recommendation. Coal firms have happily agreed to it because local prices are now higher than global,” he added.

Raspadskaya declared force-majeure on Wednesday to its main customers and said coking coal concentrate sales would plunge after a mine blast killed at least 66 miners earlier this month. [ID:nLDE64I1TX]

“We have already re-routed supplies to the local markets,” a Raspadskaya official told Reuters. Mechel, another big Russian producer of coking coal, was not immediately available for comments.

The accident at the Raspadskaya mine was Russia’s worst in three years. With 66 people confirmed dead, the search for the 24 men still missing had been halted because of fears of new underground blasts. [ID:nLDE64C0A9]

The accident has put safety at Russian coal mines in the spotlight.

On Tuesday, Russian prosecutors said they would probe safety issues at all Russian coal mines and open a criminal case against the general director of the Raspadskaya mine, who resigned after a rebuke from Prime Minister Vladimir Putin. [ID:nLDE64H0GW]

Raspadskaya sent the force-majeure notice, which allows it to stop or cut volumes under contracts without paying fines due to extraordinary circumstances, to Russian and foreign metal, coke-chemical, transportation companies and ports.

On Wednesday, it said that with its biggest mine production lost, semi-hard coking coal production at the two remaining units would amount to 350,000 tonnes per month and coal concentrate sales to 255,000 tonnes per month from June 2010 in the nearest 3-4 months, it said.

That compares to output of semi-hard coking coal of 950,000 tonnes per month before the accident and coal concentrate sales of 760,000 tonnes per month with around 65 percent of sales going to Russian clients and 35 percent to exports.

Reporting by Polina Devitt, writing by Dmitry Zhdannikov, Editing by Alfred Kueppers and Keiron Henderson

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