Sales at Severstal's resources division were down by 9% in the
first three months of 2012, compared with the previous quarter,
on lower iron ore and coking coal demand both in Russia and
globally, the company said on Thursday May 24.
The division's first-quarter revenue stood at $811 million,
down from $886 million in the fourth quarter of 2011. This was
"due to weaker prices for iron ore and coking coal, as well as
lower sales volumes in Russia and overall weaker global
demand", Severstal said.
The division's earnings before interest, taxes, depreciation
and amortisation (Ebitda) dropped by 6% quarter-on-quarter to
$322 million, as a result of the slide in revenue and broadly
flat costs, Severstal said.
Ebitda margin, however, was up to 39.7%, from 38.3% in the
fourth quarter of last year.
A rise in total cash costs at Severstal's largest coking
coal-producing asset, Vorkutaugol in Russia, was balanced by a
fall in total cash costs at the company's US coal asset, PBS
At Vorkutaugol, total cash costs went up to $86 per tonne from
$72 per tonne in the fourth quarter last year, "due to an
annual increase in labour costs and a lower contribution of
low-cost semi-soft coal in the total product mix", Severstal
At PBS, total cash costs went down to $100 per tonne from $170
per tonne in the previous quarter, after being adjusted for
non-cash, one-off items.
Iron ore cash costs at Severstal's Russian assets in the first
quarter saw mixed fortunes. They remained "largely unchanged"
at Olcon at $51 per tonne, but came down to $60 per tonne at
Karelsky Okatysh, the company said, but it did not provide any