The Russian pipe producing company United Metallurgical Company (OMK) has sold 100 percent of its Perm region-based coke producing subsidiary Gubakha Coke to Russia's Kemerovo city-based company Stroyservis. The transaction was previously approved by the Russian Federal Antimonopoly Service (FAS), while financial details of the deal have not been disclosed.
Gubakha Coke has an annual production capacity of 1.3 million mt of (6 percent moisture) metallurgical coke per year, most of which is sold on the open market. Since it was commissioned, Gubakha Coke has not reached its designed capacity level, as the company, which does not have its own coal, was facing problems with raw material supplies. According to the company's Q4 report, Gubakha Coke operates at half capacity, as one of its two coke oven batteries of 650,000 mt capacity is idle and its commissioning requires additional investments. In 2009, Gubakha Coke produced 287,000 mt of coke (i.e., 305,000 mt of coke with 6 percent moisture) and processed 48,300 mt of coal pitch, recording decreases of 40.7 percent and 19.4 percent respectively compared with 2008.
Meanwhile, Stroyservis, which is specialized in mining and beneficiation of coal, mining machinery and metal trading, already possesses five mines in the Kemerovo region. In September 2009, Stroyservis acquired from Evraz Group the coal-producing Mine 12 with 18.6 million mt of coking coal reserves.
Stroyservis' coal mining subsidiaries produced 2.257 million mt of coal for the production of coking coal in 2009, and plan in 2010 to increase this number to 2.7 million mt. "Considering this fact and Stroyservis' stable partnerships with many metallurgical and coal associations, the company intends to fully meet Gubakha Coke's needs in high quality raw material, to increase its coke production, as well as to provide the sale of its finished products," reads Stroyservis statement.