Page 94 - RusRPTFeb20

stones should be sold to Gokhran in 2020 – according to Interfax, citing the Head of Yakutia, Aisen Nikolaev. Gokhran’s volume of purchases may range from $500mn to $1bn (15-30% of Alrosa’s rough revenue or c14-28% of estimated market value of accumulated stocks). Nikolaev said the potential procurement of up to $1bn was raised before the President and the Minister of Finance of Russia. The idea is being considered by the government and the decision is expected by May-June depending on the situation on the diamond market and the Republic of Yakutia’s budget.
● Steel
Magnitogorsk Iron and Steel Works​ (MMK) reported trading data where prices and sales were down in 4Q19.​ Trading update volumes are less important for the stock – steel prices more so. Still, lower than expected volumes and declined realized prices will pressure 4Q19 IFRS – we expect weaker numbers q/q and y/y; in line with MMK’s peers. MMK published 4Q19 Trading Update. The results were slightly weaker vs BCSe on total steel sales volumes. The company’s realized steel prices, on the other hand came out slightly stronger than our estimates. MMK’s steel output decreased 4% q/q (down 1% y/y) to 3.07mt on the back of the seasonal decline in demand Total steel sales fell 3% q/q (down 4% y/y) to 3.04mt, with Russian sales falling 2% q/q (down 3% y/y) to 2.89mt, mainly on the seasonal business slowdown on the domestic market Sales of finished steel products in Turkey fell 16% q/q (down 22% y/y) to 158kt on a fall in sales of galvanized steel for export and on the domestic market The company’s average selling price decreased 13% q/q (down 8% y/y), on the back of a significant decrease in global steel prices in 4Q19
Troubled Russian metals and mining major​ ​Mechel​ could sell its 51% stake in its main extraction asset, Elga mine, to A-Property​, which filed a petition to the Federal Antimonopoly Service for the purchase, according to RBC business portal. As reported by ​bne IntelliNews,​ Mechel was previously said to have ​given up the fight for Elga​, not being able to raise enough funds to buy 34% in the mine back from its creditor Gazprombank. Gazprombank previously suggested selling a 49% stake to A-Property. Mechel’s ​shares saw a mysterious rally in January​, linked to inside trading on the prospective decision on the Elga mine buyout. BCS Global Markets estimated that a 51% stake in the asset is worth $760mn. On the one hand, selling its key asset will allow Mechel to decrease its leverage slightly (net debt may decrease by
94​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com