Page 133 - RusRPTNov19

(excluding effect from reporting standards changes). Going forward, the company maintained its 2019 gold production guidance at 450-500k oz.
● Steel
Russian metals and mining major Evraz is in advanced talks with Europe's largest steel re-roller, Marcegaglia, to sell its Italian plate mill Palinie Bertoli , Sberbank CIB wrote on October 4 citing a report by Platts. Reportedly, Evraz is looking to get a valuation of around $50-60mn for the asset, whereas bids above $20-30mn "are not likely." The company acquired the asset in 2006-2007 for $240mn. The production of steel plates has recently been classified as a non-core business for Evraz after it sold its Czech heavy plate mill, Vitkovice Steel, in early 2014 and its Ukrainian assets in 2018, which also had some plate capacity.
Russian steel major Severstal reported revenues of $2.1bn in 3Q19 u nder IFRS, declining by 3% quarter-on-quarter. Despite the revenue decline the company showed 5% q/q rise in Ebitda to $787mn, beating the consensus expectations on lower cost of sales, and boosted cash flow by 32% q/q on working capital release. Company's net income gained 11% q/q to $529mn, mainly on stronger than expected Ebitda and lower depreciation and tax expenses, BCS Global Markets commented on October 21, with the bottom line beating BCS GM expectations by 12%. As reported by bne IntelliNews , Severstal approved a generous dividend for 3Q19 , but the steel market is expected to decline in the end of 2019. Weak prices have already undermined the performance of other metals majors in 3Q19 such as NLMK , MMK , and pipemaker TMK .
Russia's metals major Novolipetsk Metallurgical Kombinat (NLMK) reported 6% quarter-on-quarter steel output decline in quarter-on-quarter terms in 3Q19 to 3.7mn tonnes, due to repairs at company's main output site in Lipetsk. The results slipped after strong 2Q19 report . As reported by bne IntelliNews, i n June NLMK cashed in on its record-high capitalisation and sold 2.6% out of the 84% stake of the main shareholder Vladimir Lisin in an accelerated book building SPO. Net steel sales in 3Q19 fell also by 6% q/q to 4mn tonnes, as in Russia shipments dropped due to reduced output, while US division suffered from continuing deterioration in demand. "NLMK’s weakened q/q 3Q19 trading update is of no surprise, as the company continued maintenance and upgrade works at the main production site," BCS Global Markets commented on October 15.
Russian steel producers Severstal and N ovolipetsk Metallurgical Kombinat (NLMK) cut domestic HRC prices by 3-5% w/w. Prices were cut on the back of very weak demand from traders, who await lower prices before buying, according to Metal Expert. On the retail market, prices also fell c3% w/w and traders have started negotiating cuts to September prices post factum. Both companies held CRC prices unchanged for now.
Indebted Russian miner and metals major Mechel will accept an offer to buy out 34% from a 49% stake in the Elga mine that was used to collateralise credits from Gazprombank, Reuters reported on October 1 citing representatives of the company and the bank. As reported by bne IntelliNews, Mechel risked losing the 49% stake in Elga as Gazprombank previously
133 RUSSIA Country Report November 2019 www.intellinews.o