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The Russian steel producer Novolipetsk Steel (NLMK) has announced that, in order to further develop upstream integration in coking coal, it is planning to start developing its coal deposit Zhernovskoye-1 in the Kemerovo region, and aims within three years to meet up to 50 percent of its coking coal needs.
 
NLMK is likely to start the development of its Zhernovskoye-1 coal deposit, with total reserves of 240 million mt, at the end of Q3 2010, with the mine to produce up to three million mt of coal in three to four years' time.
 
Meanwhile, considering that the quality of coking coal abundantly mined in Russia is not always satisfactory for modern efficient steel manufacturing, NLMK will start importing coking coal from the US, like fellow Russian steelmaker Mechel. 
 
"Given the existing deficit in hard coking coal (grade Zh) in the Russian market, in Q1 2010 NLMK signed a two‐year contract for coking coal deliveries from the US in order to improve the quality of coke and increase blast furnace production efficiency. Purchasing costs under the deal, including delivery costs, are comparable to the cost of acquiring coal of Russian origin but the quality of imported coal is much better, hence allowing higher efficiency of operations," reads the company's statement.
 
In addition, NLMK's Stoilensky Mining and Beneficiation Plant (Stoilensky GOK) is going to bid for the right to develop coal in the central western part of the Ulug-Khem coal basin in Russia's Tuva Republic, the coal reserves of which have been estimated at about 640 million mt.
 
In Q1 2010, NLMK's expenses for coke and coal amounted to $256 million, up from $160 million mt Q4 2009. In Q1 this year, market prices for coking coal concentrate increased by 18 percent quarter on quarter.