Slide 1

Russian Coking Coal Developments

– An Update

Presented by

John P L Bacharach, Director, IMC Montan, Moscow

19-20 June 2013

Slide 2

The Projects – Eastern Russia

Slide 3

The Projects – North-West Russia

Slide 4

Summary of ProjectsRef Name Developer Location Coal

Type

Reserves

(mt)

Mining Method Full

Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

1 Apsatskoye SUEK Nr Chara, Chita C&T +/-425 Surface &

underground

6.8 1 Short China

2 Central Severstal Nr Kyzyl, Tyva C +/-630 Underground 7-12 1.8 As Elegest Asia Pacific

3 Denisovsky Kolmar Nr Neryungri,

Sakha

C 256 Surface &

underground

2 0.3 Short CIS,

Asia Pasific

4 Elegest Tyvinskaya

Invest

Corporation

Nr Kyzyl, Tyva C +/-760 Underground 18 1.8 405 Russia &

Export

5 Elga Mechel Mining 370km west of

Nerungri, Sakha

C&T +/-2000 Surface 27 3.8 315 Asia Pacific

6 Inaglinsky Kolmar Nr Neryungri,

Sakha

C 722 Surface &

underground

10.5 1.5 5.7 to

existing

CIS,

Asia Pasific

7 Kaa-Khem Mine En + Nr Kyzyl, Tyva C +/-200 Surface &

underground

3-5 1 As Elegest Asia Pacific

8 Mezhegeiskoye

Vostochny

Evraz Group Nr Kyzyl, Tyva C +/-400 Underground 7-12 1.8 As Elegest Asia Pacific

9 Usinskoye 1 Severstal Nr Vorkuta, Komi C +/-620 Underground 4.0 1 30 to

existing

Russian

Steel Plants

10 Usinskoye 3 NLMK Nr Vorkuta, Komi C +/-225 Underground 4.5 1.5 3 from

existing

Russian

Steel Plants

Slide 5

Ref 1. Apsatskoye – Update

Operator SUEK is Russia’s largest

thermal coal producer

Industrial scale washing tests carried

out

Geologocal exploration stage

completed 2011 – 2012 and confirms

425 mt of reserves

Project and design stages ongoing

Coking coal production of 0.5mt

planned for 2013

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

SUEK Nr Chara,

Chita

C&T +/-425 Surface &

underground

6.8 1 Short China

Slide 6

Ref 2. Central

Exploration is ongoing

PFS to be completed in 2013

Detailed exploration results to be

approved by GKZ in 2014

No final decision on the timeline

of the project development

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

Severstal Nr Kyzyl,

Tyva

C +/-630 Underground 7-12 1.8 As Elegest Asia Pacific

Slide 7

Ref 3. DenisovskyDeveloper Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

Kolmar Nr Neryungri,

Sakha

C 256 Surface &

underground

2 0.3 Short CIS,

Asia Pasific

Project includes construction of

washing plant

Mining started in 2009

Washing plant design ongoing

R&P mining method

Planned production of 2 mta for

2015

Slide 8

Ref 4. Elegest – Update

Being developed by Tyvinskaya

Invest Corp (formerly by EPK)

Railroad project was approved and

construction started in 2011, with

estimated completion 2016

Licensing process will be finalised

during 2013

Original CAPEX planned $1bn, now

expected to be up to $1.8bn

Developer Location Coal Type Reserves

(mt)

Mining Method Full

Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

License to be

Auctioned

(April 2013)

Nr Kyzyl,

Tyva

C +/-760 Underground 18 1.8 405 Russia &

Export

Slide 9

Ref 5. Elga – Update

More than 290km railroad

completed

Large-scale washing test at

Nerungri satisfactory

Planned production for 2013 –

more than 2mt

Total production capacity 27mt

planned from 2022

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

Mechel

Mining

370km west of

Nerungri, Sakha

C&T +/-2000 Surface 27 3.8 315 Asia Pacific

Slide 10

Ref 6. InaglinskyDeveloper Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

Kolmar Nr

Neryungri,

Sakha

C 722 Surface &

undergroun

d

10.5 1.5 5.7 to

existing

CIS,

Asia Pasific

Project includes construction of

washing facilities

Mine construction started in

2011

Railroad project is underway

Start production in 2016

Reaching project capacity by

2020

Slide 11

Ref 7. Kaa-Khem

License acquired by Tyvinskaya

Mining Company (En +)

Geological Exploration ongoing

Scoping Study for underground

mine to be commissioned

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

En + Nr Kyzyl, Tyva C +/-200 Surface &

underground

3-5 1 As Elegest Asia Pacific

Slide 12

Ref 8. Mezhegeiskoye/Vostochny

Scoping study completed

Gazprombank lent +/-$200m

over 7 years on project finance

basis

Initial production planned for

2013 with full production 2014

Possibility of delays as Evraz has

consolidated 82% of

Raspadskaya

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance to

Connect

(km)

Target

Market

Evraz

Group

Nr Kyzyl,

Tyva

C +/-400 Underground 7-12 1.8 As Elegest Asia

Pacific

Slide 13

Ref 9. Usinskoye 1 – Update

Licence acquired by Vorkutaugol

in 2011

Exploration works completed in

2012

PFS is underway

Developer Location Coal Type Reserves

(mt)

Mining Method Full

Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

Severstal Nr Vorkuta,

Komi

C +/-620 Underground 4-5 1 30 to

existing

Russian

Steel Plants

Slide 14

Ref 10. Usinskoye 3 – Update

Further exploration being

undertaken

Scoping Study soon, with

Feasibility Study to follow

Start of geological exploration

2014

Start of mining expected 2017 or

later

Developer Location Coal Type Reserves

(mt)

Mining Method Full Capacity

(mtpa)

Approx

CAPEX

($b)

Rail Distance

to Connect

(km)

Target Market

NLMK Nr Vorkuta,

Komi

C +/-225 Underground 4.5 1.5 3 from

existing

Russian

Steel Plants

Slide 15

Summary The projects demonstrate huge perspective of

Russian coal industry

Potential development of almost 100mtpa capacity,

mostly in new regions

Further projects envisaged in other areas that

require infrastructure (Krasnoyarsk, Chukotka,

Magadan)

However, low investment activity in 2012-13 has

resulted in some delay to projects

Actual rate of development will be dependent

principally on steel demand and hence coking coal

requirements

Slide 16

Contact

John P L Bacharach

Director

IMC Montan

Chayanova 22, Block 4

Moscow 125047

Russia

Tel: +7 499 250 6717

Fax: +7 499 251 5962

E-mail: consulting@imcgroup.ru