Identify and Evaluate Major Coal Miners: Russia - dummies

Identify and Evaluate Major Coal Miners: Russia

By Nick Hodge, Jeff Siegel, Christian DeHaemer, Keith Kohl

Energy investors should know that Russia produced 336.3 million tons of coal in 2011, which was 4 percent more than the prior year and a record for the post-Soviet era. Russia is the third-largest exporter of coal with 11 percent of the global market.

Despite the fact that 80 percent of its coal is located in Siberia, most of its coal (73 percent) goes to the European Union. This trend is starting to change. Russian and Chinese leaders met in the first quarter of 2013 and worked out loans and trade deals to develop coal resources in eastern Siberia for export to China.

Like China, many of Russia’s coal companies are state-owned, with only one listing its shares on a major exchange.

Mechel OAO (NYSE:MTL) is a mid-sized company with a $2.2 billion market cap. Mechel had sales in 2012 of $11.7 billion, which was down 15.4 percent from the previous year. The company also lost $428 million in 2012. Mechel has mines in Russian, Europe, the Middle East, and the United States.

The company has four segments: mining, steel, ferroalloys, and power. The company produces both types of coal from open pit and underground mining. The company also produces iron ore and sells finished steel products like wire, stampings, and forgings. Mechel is also involved in nickel, chrome, and silicon. The power segment produces electricity.