Belon Group: Results and Goals

Belon Group has held a press conference to discuss the Company's performance results for 2007 and its goals for 2008. The Company was represented by Konstantin Lagutin, the First Deputy Director General, and Yevgeny Gaisler, the Deputy Director General for Perspective Development.

Belon Group increased its total coal production by 38% compared to the respective figures of the last year—to reach 4,659,000 tn. In addition, the Company demonstrated significant improvements in steel trading—during the year, the Company sold 314,000 tn of steel mill products, thus exceeding the indices of 2006 by 11%.

Belon also attained significant growth in the steam coal sector. In 2007, production of steam coal amounted to 2,670,000 tn, which is 59% more than the respective index of 2006. As compared to 2006, production of metallurgical coal in the reporting period increased by 21%—up to 2,003,000 tn.

The volume of coal preparation at the Belovskaya central coal preparation plant in 2007 amounted to 4,387,000 tons of metallurgical coal. The Company produced 3,053,000 tn of metallurgical coal concentrate.

According to the performance results for 2007 and pursuant to the updated RAS data, revenues of Belon Group amounted to 13,153 bln rub, its net profit—to 595 mln rub, and EBITDA (earnings before tax, credit interest and depreciation)—to 2,413 bln rub.

In 2007, Belon Group met all its investment commitments and invested 6.6 bln rub in the production development of Kuzbass. The main event of 2007 for Belon Group was launch of the Listvyazhnaya coal preparation plant which operates in the sector of steam coal preparation and has a capacity of over 6 mln tn of raw coal per year. Section 1 of the Novobachatsky open-pit mine reached the design capacity of 500,000 tn of coal per year.

Rapid buildup of production volumes at the Company's enterprises is ensured by Belon Group's strategy to increase the volume of coal production and preparation. By 2012, the total production is expected to reach 14 mln tn of coal per year.

Belon’s plans for 2008 include 1.5-fold output increase as compared to the respective index of 2007 and production of at least 7.1 mln tn of metallurgical and steam coal. The production of these coals is expected to increase by 81% and 34% respectively.
The volume of coal preparation will be also significantly increased. As a result, the volume of metallurgical coal preparation at the Belovskaya central coal preparation plant will amount to 6 mln tons (+37%), while the volume of coal concentrate preparation will reach 4.25 mln tn (+39%). In addition, according to estimates, the Listvyazhnaya coal preparation plant will prepare 5 mln tn of steam coal and produce over 4 mln tn of high calorific steam coal concentrate. Thus, the total volume of coal to be prepared at the enterprises of Belon Group will reach 11 mln tn to demonstrate a 2.3-fold increase.

In accordance with the investment strategy of the Company for 2008, Belon is going to invest another 4.5 bln rub. The key priority for the 2008 investment programme will be the Kostromovskaya mine (under construction), which is expected to be commissioned in the second half of the year. The Company will also continue the renovation of the existing production and preparation facilities.