Page 111 - RusRPTJul19

potential utilities asset swap with the structures of Andrei Melnichenko, consolidating DEK that controls a substantial portion of generation facilities and grids in Russia's Far East, Kommersant daily reported on June 14 citing unnamed sources. The Far East region is the next frontier of Russian regional development favoured by state support and investment programmes, but the projects run by the main energy and utilities majors in the region remain costly. Reportedly, RusHydro could acquire a 41.84% stake currently controlled by Melnichenko's structures in exchange for a large coal fired power plant (Primorsk TPP, 1.47GW, 17% of RusHydro's total Far East fossil fuel generation) and a coal mine (Luchegorsky).
Russian utility company Enel Russia won a state tender for the construction of wind generation parks with capacity of 71MW in 2024, Reuters reported on June 13 citing unnamed sources familiar with the deal. Enel Russia, along with RusHydro hydropower major, is one of the most visibly active utility majors in the renewable energy segment. So far the government support program for the sector enabled Enel Russia to launch projects to produce 291MW. Reportedly, the bids for wind generation, part of the ongoing state capacity modernisation drive, exceeded the supply eight times. The investment in the new wind generation park in the Stavropol region is estimated at €90mn. In February, Enel Russia has presented its strategy through 2021 and analysts expected that 2019 will be the culmination of the company’s hardships, VTB Capital (VTBC) said in a note on February 7. The company forecasts a profit drop, and debt closing in on the 4x threshold. Management said that a fundamental rebuild of the company is the goal, moving toward more sustainability and seizing upon future growth opportunities as the reason for shareholder privation," VTBC wrote. "However, there is a price to be paid: Enel Russia remains free cash flow (FCF) negative until 2021 – even before dividend payments – leaving a stark choice: cut dividends or, given a paucity of capex financing, eschew those growth opportunities. This is the catch-22 Enel Russia shareholders face. Our unchanged 12-month Target Price of RUB 1.40 implies an ETR of 34%. Buy reiterated,” VTBC said.
9.2.11 Metallurgy & mining corporate news
Russian diamond mining giant Alrosa plans to restore production at its Mir mine in 2031–2032, the company said in a presentation on Thursday quoting preliminary estimates. The total cost of the mine’s restoration may reach 73bn rubles, and the internal rate of return is 18.3%. The production goal is 3.8mn carats per year, and the resource base is 68.6mn carats, the company said. The company will make a final decision on the project only after it finishes a feasibility study, it said. The Mir mine was flooded in August 2017, killing eight miners and flooding the well, which accounted for about 10% of the company’s diamond output.
Russian aluminium major Rusal reported 18% year-on-year gain in export shipments in January-May 2019 to 1.44mn tonnes, the company said. After Rusal had the US sanctions lifted in February 2019, the company is expected to deliver solid results starting with 2Q19, and plans to tap debt markets again as its credit ratings remained intact. BCS Global Markets analysts said, "expect robust improvement in 2Q19 trading and financial results.
111 RUSSIA Country Report July 2019 www.intellinews.com