Vnesheconombank Can Support Roman Abramovich Through Buying Raspadskaya For Enormous $5.3 billion

Vnesheconombank (VEB) can buy up to 80% of troublemaking Raspadskaya coal mine, from its current owner Evraz Group and holding’s management for enormous $5,3 billion, Russian newspaper Vedomosti has reported citing Interfax sources.

This amount is 36% higher than current Raspadskaya market price on the exchange, while VEB performs as the buyer as there were no other buyers for the asset. Discussions about sale of Raspadskaya mine started after the series of explosions happened in May 2010, when 90 people found dead and mine was flooded. 

Raspadskaya posted strong 4Q2010 shipment numbers

Raspadskaya (RASP RX) has posted its 4Q2010 coking coal concentrate shipments, which grew by 33% Q-on-Q to 0.9 million tons. At the same time, the company boosted its raw hard coking coal sales by 238% Q-on-Q to 243,000 tons. The company reported the weighted average price increased by 7% Q-on-Q to USD 131/ton.

Despite the shipments figure still showing a 53% Y-on-Y decrease, we see the news as positive for Raspadskaya, as it reflects the strong recovery of production volumes as the Raspadskaya mine was restarted in late December 2010. 

Moreover, we believe that the 33% qoq increase of coking coal concentrate is less indicative if raw coal sales are considered, as coking coal concentrate equivalent volume (taking into account average preparation ratios) increased by an even more impressive 50% Q-on-Q to 1.1 million tons.