EVRAZ PLC — Earnings Release 2013

Jan 17, 2014

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RNS Number : 9147X

Evraz Plc

17 January 2014

EVRAZ Q4 2013 and FY2013 PRODUCTION REPORT

17 January 2014 - EVRAZ plc (LSE: EVR) today releases its operational results for the fourth quarter of 2013 and full year of 2013.

FY 2013 OPERATIONAL HIGHLIGHTS:

·    Consolidated crude steel production and gross output of steel products increased by 1% and 2% respectively, despite suspensions in Europe and North America with Russian, Ukrainian and South African operations contributing to the overall growth

·    EVRAZ NTMK implemented the PCI project allowing for the sustainable reduction of operating costs

·    Production at EVRAZ ZSMK rail mill recommenced following the successful completion of the major modernisation project and the Company obtained all necessary approvals for commercial production of head-hardened rails

·    EVRAZ suspended operations at EVRAZ Claymont and EVRAZ Palini e Bertoli as part of the group wide optimisation plan

·    Production of saleable iron ore products decreased by 1% in 2013 as a result of the ongoing restructuring programme within the iron ore business which resulted in the disposal of EVRAZ VGOK and certain mines of Evrazruda

·    The coking coal business of the Group increased the output of of raw coking coal in 2013 by 22% (on a pro-forma basis) with both key assets Yuzhkuzbassugol and the Raspadskaya coal company contributing significantly to the growth

·    EVRAZ commissioned a new coking coal mine - Yerunakovskaya VIII, which will be a large scale and low cost operation

·    EVRAZ continued the integration of the Raspaskaya coal company following its acquisition in January 2013

·    Although underlying demand for most steel product groups in Russia and North America was strong, average selling prices for all key product groups continued to soften over the year in line with global benchmarks

Q4 2013 OPERATIONAL HIGHLIGHTS and RECENT DEVELOPMENTS:

·    Consolidated crude steel production was broadly flat in Q4 2013 vs. Q3 2013

·    Output of gross steel products remained unchanged vs. Q3 2013 supported by export demand for Russian made semi-finished products and a strong order book for tubular products in North America while the output of construction products showed seasonal decline

·    Share of finished steel products decreased to 69% in Q4 2013 vs. 75% in Q3 2013 due to seasonal factors and redistribution of production at the Russian steel mills towards semi-finished products

·    Output of iron ore products decreased by 10% in Q4 2013 as a result of the disposal of EVRAZ VGOK in October 2013

·    Consolidated raw coking coal output grew 5% driven by increased mining volumes at Yuzhkuzbassugol, and despite two of the mines of the Raspadskaya coal company being closed for repositioning of longwalls

·    In October 2013, EVRAZ sold the Gramoteinskaya steam coal mine, which was adjudged to be a non-core operation for EVRAZ's coking coal business

·    In November 2013, EVRAZ was awarded with a compliance certificate for head-hardened rails with lengths of up to 100 meters, allowing the Company to launch commercial production. The first batch of 10 thousand tonnes of 25-meter head-hardened rails was shipped to the Russian Railways in December 2013

·    In December 2013, EVRAZ announced the completion of construction works and commencement of hot tests at the light-section rolling mill in Kostanay, Kazakhstan, with a nominal capacity of 450 thousand tonnes of construction products, which are currently in strong demand in the Central Asian markets

·    In December 2013, the Raspadskaya coal company launched a new longwall at its flagship Raspadskaya underground mine, being an important milestone in the programme of mining volume growth for 2014

·    In December 2013, EVRAZ announced the sale of a number of Evrazruda's loss making iron ore assets and utilities companies located in the Republic of Khakassia and the Kemerovo region as part of its iron ore asset portfolio optimisation programme

·    Average selling prices for EVRAZ's key steel product groups changed responding to global steel and local market demand, changes in product mix and seasonal factors

·    Prices for iron ore products slightly increased in line with global benchmarks

·    Average quarterly prices for Russian-produced coking coal concentrate are more resilient to price movements globally and remained broadly at the level of Q3 2013

STEEL

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Coke (saleable)	1,380	1,416	-2.6%	283	342	-17.2%
Pig iron	12,553	12,031	4.3%	3,158	3,137	0.7%
Pig iron (saleable)	341	261	30.4%	119	131	-9.1%
Crude steel	16,109	15,932	1.1%	3,989	3,962	0.7%
Steel products, gross	15,972	15,701	1.7%	3,924	3,933	-0.2%
Steel products, net of re-rolled volumes	14,673	14,195	3.4%	3,728	3,649	2.2%
Semi-finished products **	3,843	3,153	21.9%	1,155	918	25.8%
Finished products	10,830	11,042	-1.9%	2,574	2,731	-5.8%
Construction products	5,186	5,207	-0.4%	1,250	1,363	-8.3%
Railway products	1,903	1,801	5.7%	510	515	-0.9%
Flat-rolled products	2,108	2,465	-14.5%	365	460	-20.6%
Tubular products	927	872	6.4%	273	229	18.9%
Other steel products	706	697	1.3%	175	163	7.3%

Note. Numbers in this table and the tables below may not add to totals due to rounding.

*     Gross volume of steel products in the tables includes those re-rolled at other EVRAZ's mills. However, such volumes are eliminated as intercompany sales for purposes of EVRAZ's consolidated operating results.

**   Consolidated production volumes of semi-finished products are preliminary as intra-group re-rolling volumes are yet to be finalised.

RUSSIA

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Coke (saleable)	592	504	17.5%	117	141	-17.3%
Pig iron	10,936	10,554	3.6%	2,760	2,735	0.9%
Pig iron (saleable)	303	185	64.2%	110	110	0.8%
Crude steel	11,904	11,675	2.0%	2,986	2,967	0.6%
Steel products, gross	11,056	10,821	2.2%	2,780	2,753	1.0%
Steel products, net of re-rolled volumes	10,799	10,556	2.3%	2,754	2,661	3.5%
Semi-finished products	4,517	4,091	10.4%	1,214	1,024	18.6%
Finished products	6,282	6,465	-2.8%	1,540	1,637	-5.9%
Construction products	4,185	4,281	-2.2%	1,016	1,109	-8.4%
Railway products	1,409	1,310	7.6%	380	389	-2.4%
Flat-rolled products	120	334	-64.1%	0	4	n/a
Other steel products	568	540	5.0%	144	135	7.0%

In 2013, the production of pig iron increased by 4% vs. 2012 to 10.9 million tonnes due to implementation of the PCI project at EVRAZ NTMK and related operational improvements as well as more efficient operation of the blast furnaces at both Russian steel mills. The PCI project at NTMK also decreased the internal requirements in coke and led to increased production of saleable coke to third parties.

The output of crude steel and gross steel products tracked the increased output of pig iron and each grew by 2% in 2013. At the same time the share of finished products in 2013 vs. 2012 decreased from 61% to 58% largerly explained by the growth in volumes of semi-finished products by 10%, while the output of finished products declined by 3%.

The higher output of semi-finished products in 2013 was due to increased availability of crude steel and stable underlying demand in EVRAZ's key export markets.

The production of finished products decreased by 3% year-on-year due to lower output of flat-rolled products following the shutdown of the plate rolling mill at EVRAZ ZSMK in June 2013 and the reduced output of construction products, which were partially offset by growth in production of railway products after the completion of modernisation at the EVRAZ ZSMK rail mill in January 2013.

In Q4 2013, both pig iron and crude steel production were broadly flat vs. Q3 2013. The production of coke saleable to third parties decreased in the reporting quarter by 17% as output was adjusted to the prevailing market demand.

In Q4 2013, production of gross steel products increased by 1% compared to Q3 2013, with the volume of semi-finished goods growing by 19% and the output of finished products declining by 6% driven by low seasonal demand in the domestic market.

In November 2013, EVRAZ was awarded with a compliance certificate for head-hardened rails with lengths of up to 100 meters, allowing the Company to launch the commercial production of these products. The first batch of 10 thousand tonnes of 25-meter head-hardened rails was shipped to the Russian Railways in December 2013.

In Q1 2014, there will be held 9-day scheduled maintenance works at the EVRAZ ZSMK's blast furnace number 3 and one of the converters, as well as 15-day scheduled maintenance works at EVRAZ NTMK's blast furnace number 5 with simultaneous maintenance works of converters.

In Q4 2013, selling prices for semi-finished steel products increased reflecting slightly improving trends in the global steel market. Prices for construction products decreased reflecting seasonal demand, whilst prices for railway products increased with the commencement of commercial sales of head-hardened rails  produced at the modenised ZSMK rail mill.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Coke	160	191	137	150
Pig iron	301	353	317	292
Steel products
Semi-finished products	401	457	399	374
Construction products	649	677	632	639
Railway products	852	891	847	829
Flat-rolled products	560	607	296	393
Other steel products	658	729	645	634

NORTH AMERICA

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Crude steel	2,180	2,411	-9.6%	499	558	-10.7%
Steel products, net of re-rolled volumes	2,760	2,662	3.7%	691	673	2.6%
Construction products	348	331	5.1%	78	81	-3.9%
Railway products	494	491	0.6%	130	126	3.7%
Flat-rolled products	990	968	2.3%	210	237	-11.4%
Tubular products	927	872	6.4%	273	229	18.9%

In 2013, crude steel output decreased by 10% to 2.2 million tonnes due to outages at EVRAZ Pueblo and EVRAZ Regina during 2013, and suspension of the EVRAZ Claymont mill in Q4 2013. Meanwhile, the volume of output of finished products increased by 3.7% to 2.8 million tonnes, with a growth in production recorded across all product groups.

The 5% increase in production of construction products was driven by higher demand for structural tubing and rod & bar, including new products launched in H2 2012-2013. However, the capacity for construction products was negatively impacted by crude steel availability at the EVRAZ Pueblo steel mill.

The rail mill operated close to the full capacity in 2013 and the output remained broadly flat at 494 thousand tonnes of railway products.

In 2013, the production of flat-rolled products remained largerly unchanged at 990 thousand tonnes despite the suspension of the EVRAZ Claymont mill in Q4 2013.

The annual output of tubular products increased by 6% compared to 2012 driven by the relaunch of the pipe mill at EVRAZ Portland Spiral (+32 thousand tonnes) and Camrose Long Seam Welded  (+73 thousand tonnes) mills, and improved productivity and orders at EVRAZ Regina Spiral (+113 thousand tonnes), which were partially offset by lower OCTG demand, and an initiative to reduce finished goods on-hand in the yard, as well as unplanned downtime at Pueblo seamless.

In Q4 2013, crude steel volumes at EVRAZ's North American operations decreased by 11% compared to Q3 2013 primarily due to the suspension of EVRAZ Claymont and output decrease at Pueblo. The output reduction at Pueblo was mainly due to additional downtime to install investment upgrades and to resolve electrical issues.

The output of construction and railway products was flat quarter-on-quarter, while the utilisation rates remained high.

The suspension of EVRAZ Claymont and scheduled maintenance works at EVRAZ Regina's steel shop in October-November 2013 led to a 11% decrease in production of flat-rolled products vs. Q3 2013.

In Q4 2013, production of tubular products increased by 43 thousand tonnes, or 19%, mostly driven by the stronger order book.

In Q4 2013, prices for all major product groups remained largely unchanged vs. Q3 2013 as a result of robust demand and satisfactory product mix.

In Q1 2014, production of long products is expected to remain at the high level achieved in Q4 2013, supported by the solid market demand. The order book for tubular products is strong with planned record high shipments subject to the availability of rail cars in January.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Construction products	764	843	744	747
Railway products	932	987	919	930
Flat-rolled products	860	1,019	847	840
Tubular products	1,318	1,497	1,301	1,299

UKRAINE

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Coke (saleable)	788	913	-13.7%	166	201	-17.2%
Pig iron	978	857	14.1%	237	257	-7.7%
Pig iron (saleable)	38	77	-50.8%	9	21	-59.8%
Crude steel	995	820	21.4%	239	246	-2.8%
Steel products	854	702	21.6%	223	207	7.7%
Semi-finished products	359	244	47.1%	111	87	27.8%
Finished products	494	458	8.0%	112	120	-6.8%
Construction products	407	357	13.9%	91	101	-10.0%
Other steel products	87	101	-13.2%	21	19	10.6%

EVRAZ's Ukrainian operations demonstrated solid performance in 2013 with output of pig iron rising by 14% to 978 thousand tonnes and crude steel production increasing by 21% to 995 thousand tonnes, as a result of increased efficiency of blast furnaces after a number of operational improvements in the melting process, coke quality and less downtime for repairs.

The lower output of coke saleable to third parties in 2013 was driven by the increased in-house requirements for this product for the blast furnace's process.

In 2013, the output of semi-finished products grew by 47% due to strong demand for export billets. The Company also increased the output of construction products, mostly channels, by 8%.

In Q4 2013, pig iron production decreased by 8% quarter-on-quarter due to scheduled maintenance works at blast furnaces in December 2013.

The crude steel output decreased by 3% quarter-on-quarter due to lower volumes of output of pig iron. Despite this, the output of steel products increased by 8% in Q4 2013 supported by the feedstock of ingots built up in anticipation of maintenance works at blast furnaces.

Maintenance works will be held in Q1 2014 to optimise the blast furnaces' productivity.

Selling prices in Ukraine demonstrated diverging trends in Q4 2013 - while prices for semi-finished products moved in line with FOB Black Sea benchmarks, the demand for construction products was strong and resulted in 5% growth of average selling prices.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Coke (saleable)	213	214	199	211
Pig iron	356	337	352	348
Steel products
Semi-finished products	465	524	452	462
Construction products	600	646	611	581
Other steel products	878	884	788	872

EUROPE

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Crude steel	388	454	-14.6%	102	46	119.4%
Steel products, gross	801	1,055	-24.0%	114	174	-34.3%
Steel products, net of re-rolled volumes	792	1,028	-22.9%	114	174	-34.3%
Construction products	80	69	17.1%	28	22	29.6%
Flat-rolled products	693	920	-24.7%	83	147	-43.8%
Other steel products	19	39	-51.2%	3	5	-32.5%

The 2013 production results of the European operations of EVRAZ totalled 792 thousand tonnes of steel products net of re-rolled volumes vs. 1,028 thousand tonnes in 2012 and were primarily impacted by the temporary suspension of works at EVRAZ Palini e Bertoli in Italy from 21 August 2013 onwards (-187 thousand tonnes of rolled products) as a result of subdued market demand in Europe, and interrupted production at EVRAZ Vitkovice Steel (-67 thousand tonnes of rolled products) driven by the level of slab stocks, pig iron prices and market demand.

In Q4 2013, crude steel production increased by 119% compared to Q3 2013 as a result of the EVRAZ Vitkovice Steel steel shop being in operation for two months in Q4 compared to less than a month in the previous quarter.

The volume of steel products in Q4 2013 declined by 34% compared to Q3 2013, as the Italian mill remained idle and maintenance works were carried out at EVRAZ Vitkovice's rolling facilities.

In Q1 2014, volumes are expected to return to Q3 2013 levels.  However, currently the market information does not indicate sufficiently positive conditions to re-start Palini e Bertoli's operations in Q1 2014.

The prices for steel products, both flat-rolled and construction, rose in Q4 2013 compared to Q3 2013 on the back of improved macroeconomic outlook for the European economy for 2014.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Construction products	873	876	892	842
Flat-rolled products	675	744	707	661

SOUTH AFRICA

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Pig iron	639	620	3.0%	161	145	11.1%
Crude steel	642	572	12.3%	164	144	13.6%
Steel products	502	461	8.8%	116	127	-8.1%
Semi-finished products	0	15	n/a	0	0	n/a
Finished products	502	446	12.4%	116	127	-8.1%
Construction products	166	169	-2.3%	37	50	-25.4%
Flat-rolled products	305	243	25.4%	72	72	0.3%
Other steel products	31	34	-7.4%	8	6	38.2%

In 2013, the output of crude steel and steel products increased by 12% and 9% respectively compared to 2012, due to the effect of a low base in 2012, as a result of the operations of EVRAZ Highveld Steel and Vanadium being affected by labour action.

In Q4 2013, the output of pig iron and crude steel at EVRAZ Highveld Steel and Vanadium increased by 11% and 14% respectively, as a results of the operations being temporarily scaled back in Q3 2013 to avoid the negative effect of peak electricity tariffs.

Q4 2013 hot metal production increased compared to Q3 2013 due to the absence of measures to reduce electricity consumption during expensive winter peak demand periods. Finished goods production reduced in Q4 2013 compared to Q3 2013 as a result of a two-week structural mill maintenance in December and customers' closures during the festive season.

Prices of finished goods decreased in 2013 as a result of a market mix change related to weaker local demand and higher export sales. Prices in the domestic market increased in Q4 2013 vs Q3 2013, but due to the weakening of the Rand, the US dollar price decreased.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Steel products
Semi-finished products	436	489	156*	595
Construction products	717	737	632	689
Flat-rolled products	689	765	609	674
Other steel products	660	604	497	698

*The calculation includes a year-end adjustment to the selling expenses. The price excluding the adjustment would be $357/t

MINING

IRON ORE

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Concentrate, saleable (Russia)	4,692	5,615	-16.4%	982	1,264	-22.3%
Sinter (Russia)	4,396	4,698	-6.4%	904	1,124	-19.6%
Pellets (Russia)	6,301	6,051	4.1%	1,575	1,606	-1.9%
Lumpy ore (Ukraine)	2,973	2,608	14.0%	796	717	11.0%
Lumpy ore (South Africa)	1,431	1,174	21.9%	298	377	-20.9%
Fines ore (South Africa)	651	607	7.2%	145	154	-5.7%

In 2013, the overall production of saleable iron ore products by the Company decreased by 1% and amounted to 20.4 million tonnes compared with 20.8 million tonnes in 2012. The primary driver of the decreased production was the performance of the Russian operations where the output of saleable iron ore products declined by 6% from 16.4 million tonnes to 15.4 million tonnes largely driven by the disposal of the high cost operation EVRAZ VGOK in October 2013 (EVRAZ VGOK produced 1.7 million tonnes of saleable iron ore products in 2013) and the shutdown of the uneconomic Irba mine from July 2013 (approx. 0.2 million tonnes of iron ore concentrate was produced out of the Irba mine's iron ore in 2013). At the same time the performance of the low cost large scale open pit mine EVRAZ KGOK was stronger in 2013 vs. 2012 by 2%, or 195 thousand tonnes, and amounted to 9.8 million tonnes.

In the reporting year the Ukrainian and South African iron ore mines also increased their output by 0.7 million tonnes as a result of the successful implementation of programmes designed to debottleneck and improve productivity.

In Q4 2013, the Company produced in Russia 3.5 million tonnes of iron ore products compared to 4 million tonnes in Q3 2013, largely due to the abovementioned disposal of EVRAZ VGOK. In addition, on 27 December 2013 the Company announced the sale of the Abakan and Teya mines of Evrazruda which accounted for mined volumes of iron ore for production of 1.7 million tonnes of iron ore concentrate in 2013. EVRAZ concluded short-term agreements with the purchaser for primary iron ore concentrate produced by the Abakan and Teya mines. The loss of volumes will be partially off-set in 2014 by the ramp-up of production at other lower cost mines of Evrazruda, including the Sheregesh mine, which are expected to add 0.5-0.6 million tonnes of iron ore concentrate in 2014.

Production of lumpy ore by EVRAZ Sukha Balka increased by 11% in Q4 2013 compared to Q3 2013 due to improved productivity at the Yubileynaya mine after the launch of a new loading complex.

The prices for the key iron ore product groups slightly increased in Q4 2013 compared to the previous quarter  in line with the global price trends.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
Concentrate, saleable (Russia)	87	84	84	82
Sinter (Russia)	76	91	76	71
Pellets (Russia)	86	91	88	82
Lumpy ore (Ukraine)	66	61	68	66
Fines ore (South Africa)	23	12	14	14

COAL*

Product, '000 tonnes	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Raw coking coal (mined)	18,933	15,509	22.1%	5,048	4,802	5.1%
Yuzhkuzbassugol	11,110	8,506	30.6%	3,193	2,794	14.3%
Raspadskaya	7,824	7,002	11.7%	1,855	2,008	-7.6%
Coking coal concentrate (production)	13,664	10,983	24.4%	3,348	3,464	-3.3%
Produced at Yuzhkuzbassugol coal washing plants	5,821	4,102	41.9%	1,579	1,502	5.2%
Produced at EVRAZ ZSMK coal washing plant	2,591	2,375	9.1%	657	632	4.0%
Produced at Raspadskaya coal washing plant	5,252	4,506	16.6%	1,112	1,330	-16.4%
Raw steam coal (mined)	1,432	2,283	-37.3%	456	482	-5.4%
Steam coal concentrate (production)	99	421	-76.5%	16	21	-25.5%

* 2012 data for Raspadskaya is on a pro-forma basis, as Raspadskaya is consolidated in the results of EVRAZ from 16 January 2013

Coking coal

Both key assets of the Group in the coking coal business - Yuzhkuzbassugol and the Raspadskaya coal company increased their output of raw coking coal in 2013 with the consolidated output reaching 18.9 million tonnes compared to 15.5 million tonnes in 2012 (on a pro-forma basis).

The primary drivers of the growth in output of raw coking coal at Yuzhkuzbassugol by 31% to 11.1 million tonnes were the launch of the new Yerunakovskaya VIII coking coal mine in February 2013 (2013: 1.4 million tonnes), the operation of the Alardinskaya mine with two longwalls (2013: 3.3 million tonnes) and less downtime associated with repositionings at other mines. At the same time the Company decided to proceed with the closure of the Abashevskaya mine due to high operating costs and risks.

The Raspadskaya coal company increased production in 2013 by 12% to 7.8 million tonnes of raw coking coal due to increased mining volumes at the Razrez Raspadsky open pit (+1.7 million tonnes), the Raspadskaya Koksovaya (+0.2 million tonnes) and the MUK-96 (+0.2 million tonnes) underground mines which more than offset loss of production volumes         (-1.3 million tonnes) at the Raspadskaya underground mine after the suspension of mining works in May-June 2013 due to excessive concentration of carbon monoxide in certain areas of the mine.

The growth of mined volumes of coking coal by Yuzhkuzbassugol and the Raspadskaya coal company led to increased loading rates across all coal washing plants of the Group with the preparation yield growing from 70.8% in 2012 to 72.2% in 2013.

In Q4 2013, raw coking coal production increased by 5% compared to Q3 2013. The output of raw coking coal at Yuzhkuzbassugol increased by 14% as the Yerunakovskaya VIII mine gradually ramped up to its nameplate capacity and repositioning of a longwall at the Alardinskaya mine in Q3 2013 was completed.

In the reporting quarter the Company stopped tunneling works at the Abashevskaya mine and is currently in the process of the permanent shut down of this mine. Going forward the reduction in volumes of coking coal from Abashevskaya mine will largely be replaced by other mines of the Group.

In Q4 2013, raw coal production by the Raspadskaya coal company decreased by 8% compared to Q3 2013 due to repositioning of longwalls at the MUK-96 and Raspadskaya mines.

The blended average selling price for coking coal concentrate slightly increased from $78/t in Q3 2013 to $82/t in Q4 2013: while the average price of coking coal concentrate produced by Yuzhkuzbassugol remained at $89/t in Q3 and Q4 2013, the average coking coal concentrate produced by Raspadskaya increased from $66/t in Q3 2013 to $72/t in Q4 2013 due to higher export sales prices.

Steam coal

In 2013, steam coal was mined by the Kusheyakovskaya mine only, as the Gramoteinskaya steam coal mine remained suspended and was subsequently sold in October 2013. The company also decreased the output of steam coal concentrate due to the shift in favour of producing more coking coal concentrate.

Average selling prices

USD/tonne (ex works)	2013	2012	Q4 2013	Q3 2013
unless otherwise stated
Raw coking coal	58	69	55	53
Raw steam coal	30	27	31	32
Coking coal concentrate	87	136	82	78
Steam coal concentrate	50	56	-	59

VANADIUM

Product, tonnes of V*	2013	2012	2013/ 2012, change	Q4 2013	Q3 2013	Q4 2013/ Q3 2013, change
Vanadium in slag (gross production)	21,077	21,060	0.1%	5,433	4,808	13.0%
Russia	14,403	14,856	-3.0%	3,770	3,335	13.0%
South Africa	6,675	6,205	7.6%	1,663	1,473	12.9%
Vanadium in final products (saleable)
Ferrovanadium	14,059	14,381	-2.2%	3,650	3,466	5.3%
Produced at own facilities	7,549	7,259	4.0%	1,899	1,875	1.3%
Processed at 3rd parties' facilities	6,510	7,122	-8.6%	1,751	1,591	10.1%
Nitrovan®	2,294	2,723	-15.7%	435	436	-0.1%
Oxides, vanadium aluminium and chemicals	1,648	1,330	23.9%	365	358	2.0%

* Calculated in pure vanadium equivalent.

Slag production in Russia decreased by 3% in 2013 despite the growth of pig iron production by EVRAZ NTMK due to a decrease of pig iron volumes produced by the duplex melting process.

In 2013, the Company focused on utilising own production capacities as much as possible and did not require additional third party conversion capacities to the same extent as in 2012, due to reduced V2O5 availability. Production of ferrovanadium produced at EVRAZ's own facilities increased by 4%.

In 2013, Nitrovan output was impacted (-16% vs. 2012) by a labour strike at Vametco in South Africa lasting from September until mid-October 2013 and a temporary suspension of operations in the plant initiated by the South African Department of Mineral Resourses, which lasted for two weeks in November-December 2013. 

Production of oxides, vanadium aluminum and chemicals increased by 24% in 2013 compared to 2012 due to a resolution of feedstock supply issues faced during 2012.

In Q4 2013, EVRAZ's total production of vanadium in slag increased by 13% compared to Q3 2013, as a result of a higher pig iron production at EVRAZ NTMK in Russia and EVRAZ Highveld Steel and Vanadium in South Africa.

Production of oxides, vanadium aluminum and chemicals remained broadly unchanged in Q4 2013 vs Q3 2013.

Average prices for vanadium products increased in 2013 compared to 2012, largely due to sustained high prices in the first quarter driven by improved sentiment.

Average selling prices

USD/tonne of V (ex works)	2013	2012	Q4 2013	Q3 2013
Ferrovanadium	26,581	24,062	24,525	25,185
Nitrovan®	28,945	27,900	26,507	27,856
Oxides, vanadium aluminium and chemicals	34,295	32,579	35,444	32,854

Notes:

Semi-finished products include slabs, billets, pipe blanks and other semi-finished products.

Construction products include beams, channels, angles, rebars, wire rods, wire, and other construction products.

Railway products include rails, wheels, tyres and other railway products.

Flat-rolled products include commodity plate, specialty plate and other flat products.

Tubular products include large diameter line pipes, ERW pipes and casings, seamless pipes and other tubular products.

Other steel products include rounds, grinding balls, mine uprights, strips etc. For Ukraine they also include railway products, for Europe - slabs and cut shapes; for South Africa - rails.

For further information:

Media Relations:

Vsevolod Sementsov

VP, Corporate Communications

London: +44 207 832 8998          Moscow: +7 495 937 6871

media@evraz.com

Investor Relations:

Sergey Belyakov

Director, Investor Relations

London: +44 207 832 8990          Moscow: +7 495 232 1370

ir@evraz.com

EVRAZ is a vertically integrated steel, mining and vanadium business with operations in the Russian Federation, Ukraine, USA, Canada, Czech Republic, Italy and South Africa. EVRAZ is among the top steel producers in the world based on crude steel production of 15.9 million tonnes in 2012. In 2012 EVRAZ sold 15.3 million tonnes of steel products. A significant portion of the company's internal consumption of iron ore and coking coal is covered by its mining operations. The company's consolidated revenues for the year ended 31 December 2012 were US$14,726 million, and consolidated EBITDA amounted to US$2,012 million. The H1 2013 consolidated revenue was US$7,362 million and the H1 2013 EBITDA was US$939 million.

This information is provided by RNS

The company news service from the London Stock Exchange

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