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Production Report

6th Aug 2008 07:00

RNS Number : 7213A
Eurasian Natural Resources Corp Plc
06 August 2008
 



6 August 2008

Eurasian Natural Resources Corporation PLC

Production Report for the Second Quarter ended 30 June 2008

London - Eurasian Natural Resources Corporation PLC ('ENRC' or, together with its subsidiaries, the 'Group'), the holding company of a leading diversified natural resources group based in Kazakhstan, today announces its Production Report for the second quarter ended 30 June 2008.

The information set out below, unless stated otherwise, relates to the three months ended 30 June 2008, and is compared to the corresponding three months of 2007. Within the Ferroalloys Division production volumes, unless otherwise stated, exclude Serov, which was acquired by the Group on 4 April 2008.

All references to 't' in the Production Report are to metric tonnes unless otherwise stated. 

In the quarter ended 30 June 2008 production volumes across the Group increased compared to the second quarter of 2007. Ore grades remained broadly consistent with the corresponding period.

 

Ferroalloys Division production volumes increased (excluding Serov):

2.0% for saleable chrome ore;

34.2% for manganese concentrateand

2.5% for total ferroalloys, including a 3.8% increase in high-carbon ferrochrome production.

Serov added saleable chrome ore production of 34 thousand tonnes and total ferroalloys production of 70 thousand tonnes

Iron Ore Division production volumes increased: 

6.1% for iron ore extraction;

2.6% for primary concentrate; and

2.1% for saleable ore.

There was a change in the saleable mix as concentrate production increased 15.7%, offsetting a 10.0% reduction in pellets. The reduction in pellets production was caused by a planned reconstruction of one pelletising unit that was still in progress during the quarter ended 30 June 2008.

Alumina and Aluminium Division production volumes increased:

7.1for bauxite extraction; and 

4.7for saleable alumina.

Aluminium production commenced at the end of 2007. The Division produced 

27 thousand tonnes of aluminium in the quarter ended 30 June 2008.  

Energy Division production volumes increased 12.2% for coal mined and 0.9% for electricity generated.

Logistics Division tonnage of goods transported by railway increased 3.1%.

 

Dr Johannes Sittard, Chief Executive Officer, said, "We are pleased to report overall growth in both production and saleable volumes, in line with our expectations. In addition to good organic production growth, our second quarter production performance benefited from the acquisition of Serov, a Russian ferroalloy producer, and the continued build up of Phase 1 of the aluminium smelter, which reached its full operating capacity ahead of schedule. 

In the second half of 2008, we expect continued organic growth across all divisions, and upon completion of the acquisition of a 50% stake in the 'Tuoli' ferroalloy plant in China we will benefit from additional ferrochrome production volumes. The completion of planned maintenance in the Iron Ore Division will ensure our annual production growth targets are met.

We continue to advance the implementation of our capital expenditure programme which will further enhance the Group's organic growth, the effects of which will be evident from 2010 onwards."

 

For further information, please contact:
 

ENRC
 
Mounissa Chodieva
+44 (0) 20 7389 1879
James S Johnson 
Marianna Adams 
+44 (0) 20 7389 1862 
+44 (0) 20 7389 1886 
 

M: Communications
 
Hugh Morrison
+44 (0) 20 7153 1534
Edward Orlebar
+44 (0) 20 7153 1523
Julia Kalcheva
+44 (0) 20 7153 1517

 

About ENRC

ENRC is the holding company of a leading diversified natural resources group with integrated mining, processing, energy, logistical, and marketing operations. ENRC is the world's largest producer of ferrochrome, based on chrome content, the world's sixth largest iron ore exporter by volume and the world's fifth largest supplier of traded alumina by volume (CRU and Heinz H. Pariser, 2006 data). The Group's revenue was US$4,106 million for the year ended 31 December 2007 (2006: US$3,256 million) and EBITDA before exceptional items was US$1,906 million (2006: US$1,256 million); EBITDA for the year ended 31 December 2007 was US$1,724 million (2006: US$1,250 million). For further information please see the Group's website at www.enrc.com.

Forward looking statement

This announcement includes forward-looking statements that reflect the current views of the management of the Group with respect to future events. These forward-looking statements include matters that are not historical facts or are statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies, and the industries in which the Group operates. Forward-looking statements are based on current plans, estimates and projections, and therefore too much reliance should not be placed upon them. Such statements are subject to risks and uncertainties, most of which are difficult to predict and generally beyond the Group's control. The Group cautions you that forward-looking statements are not guarantees of future performance and that if risks and uncertainties materialise, or if the assumptions underlying any of these statements prove incorrect, the Group's actual results of operations, financial condition and liquidity and the development of the industry in which the Group operates may materially differ from those made in, or suggested by, the forward-looking statements contained in this announcement. In addition, even if the Group's results of operations, financial condition and liquidity and the development of the industry in which the Group operates are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in future periods. The Group does not undertake any obligation to review or confirm analysts, expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this announcement.

  FERROALLOYS DIVISION

Ore Mining and Processing - Excluding Serov

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Chrome ore

Ore extraction (Run-of-Mine 'RoM')

000' t

1,062

1,168

(9.1)%

1,191

Processing of low grade stockpiles

000' t

436

308

+41.6%

372

Saleable ore production

000' t

980

961

+2.0%

900

Internal consumption of saleable ore

000' t

647

633

+2.2%

669

 - percentage

66.0%

65.9%

74.3%

Manganese ore

Ore extraction (RoM)

000' t

696

693

+0.4%

447

Processing of low grade stockpiles

000' t

339

228

+48.7%

108

Saleable concentrate production

000' t

349

260

+34.2%

182

Internal consumption of saleable concentrate

000' t

80

81

(1.2%)

85

 - percentage

22.9%

31.1%

46.7%

Iron-Manganese ore

Ore extraction (RoM)

000' t

80

89

(10.1)%

75

Processing of low grade stockpiles

000' t

176

40

+340.0%

155

Saleable concentrate production

000' t

151

91

+65.9%

100

In the second quarter of 2008 production in the Ferroalloys Division (excluding Serovshowed modest growth. Chrome ore extraction amounted to 1,062 thousand tonnes, decrease of 9.1%, with a reduction in open pit mining ahead of planned growth in underground extraction. This was offset by a growth of 41.6% in the processing of low grade ore from prior years' stockpiles, to 436 thousand tonnes. The processing of low grade stockpiled ore was achieved from improvements in beneficiation capabilities allowing for the more economical processing of this ore. From the extracted ore and the stockpiled ore the Division produced a combined total of 980 thousand tonnes of saleable chrome ore, a 2.0% increaseOf the saleable chrome ore produced, 647 thousand tonnes, representing 66.0% (2007: 65.9%), were consumed internally to produce chrome ferroalloys, an increase of 2.2%.  

 

Manganese ore extraction increased 0.4% to 696 thousand tonnes, whilst the processing of low grade stocks increased 48.7% to 339 thousand tonnes. Total manganese concentrate production increased 34.2% to 349 thousand tonnes in response to market opportunities. Production at Zhairemsky GOK increased 51% as a result of a planned expansion, implemented through an increase of 4.3% in ore extraction and a significant increase in the processing of low grade material from stocks. Production at Kazmarganets, which supplies manganese concentrates to Kazchrome for use in silico-manganese production, increased 12%. The percentage of total manganese concentrate production consumed internally decreased to 22.9% (2007: 31.1%), as the internal consumption of silico-manganese remained relatively steady, allowing more production to be available for external sale. The production of saleable iron-manganese concentrate increased 65.9% to 151 thousand tonnes.

 

Ore Mining and Processing - Including Serov for Q2 2008

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Chrome ore

Ore extraction (RoM)

000' t

1,116

1,168

(4.5)%

Processing of low grade stockpiles

000' t

436

308

+41.6%

Saleable ore production

000' t

1,014

961

+5.5%

Internal consumption of saleable ore

000' t

760

633

+20.1%

 - percentage

75.0%

65.9%

The Group's acquisition of Serov had a positive impact on the total volume of ore extracted by the Ferroalloys DivisionSerov's ore extraction was 54 thousand tonnes and saleable ore production was 34 thousand tonnes (Note 3). Saleable ore production increased 5.5%, of which 2.2 percentage points were attributable to the existing business and 3.3 percentage points were attributable to Serov. The inclusion of Serov resulted in a significant increase in the internal consumption of chrome ore to 75.0% in the quarter ended 30 June 2008, compared to 65.9% in the quarter ended 30 June 2007.

  Ferroalloys Production Excluding Serov 

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Ferrochrome

000' t

293

283

+3.5%

293

 - High Carbon 

000' t

273

263

+3.8%

273

 - Medium Carbon

000' t

12

11

+9.1%

12

 - Low Carbon

000' t

9

9

0%

8

Ferrosilicochrome

000' t

34

35

(2.9%)

29

Silico-manganese

000' t

38

39

(2.6)%

41

Ferro-silicon

000' t

8

7

+14.3%

12

Total ferroalloys

000' t

374

365

+2.5%

374

Internal consumption of ferroalloys

000' t

45

46

(2.2%)

43

- percentage

12.0%

12.6%

Note: table may not sum precisely due to roundings.

In the second quarter of 2008, the Ferroalloys Division (excluding Serov) produced 374 thousand tonnes of ferroalloys, an increase of 2.5%. Within this the Division produced 293 thousand tonnes of ferrochrome, an increase of 3.5%. Growth was achieved in the production of high- and medium-carbon ferrochrome.

Ferroalloys Production - Including Serov for Q2 2008

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Ferrochrome

000' t

340

283

+20.1%

 - High Carbon 

000' t

296

263

+12.5%

 - Medium Carbon

000' t

20

11

+81.8%

 - Low Carbon

000' t

24

9

+166.7%

Ferrosilicochrome

000' t

49

35

+40.0%

Silico-manganese

000' t

38

39

(2.6)%

Ferro-silicon

000' t

16

7

+128.6%

Total ferroalloys

000' t

443

365

+21.4%

Internal consumption of ferroalloys

000' t

67

46

+45.6%

- percentage

15.1%

12.6%

Note: table may not sum precisely due to roundings.

The Serov acquisition resulted in significant growth in the Division's production volumes, and especially in the scale of low-, and medium-carbon ferrochrome, ferrosilicochrome and ferro-silicon. Serov added 70 thousand tonnes to total ferroalloys production (Note 3). In the second quarter of 2008, the Ferroalloys Division produced 443 thousand tonnes of ferroalloys, an increase of 21.4%, of which 2.5 percentage points were attributable to the existing business and 18.9 percentage points were attributable to Serov. Within the 443 thousand tonnes, the Division produced 340 thousand tonnes of ferrochrome, an increase of 20.1%.

  

IRON ORE DIVISION 

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Ore extraction

000' t

10,722

10,106

+6.1%

10,142

Primary concentrate production

000' t

4,479

4,367

+2.6%

4,046

Saleable concentrate production

000' t

2,259

1,952

+15.7%

1,870

Saleable pellets production

000' t

1,984

2,205

(10.0)%

1,979

In the second quarter of 2008, the Iron Ore Division extracted 10,722 thousand tonnes of iron ore, an increase of 6.1%, in line with the extraction expansion planned for SSGPO. From the extracted ore the Division produced 4,479 thousand tonnes of primary concentrate production, an increase of 2.6%Production growth was broadly in line with the increase in extraction but was partially offset by marginally lower grade of mined ore and reduced yield of concentrate. 

Saleable concentrate production (with an iron content of 65.5%increased 15.7% to 2,259 thousand tonnesPrimary concentrate is either sold or used for pellets production.

Pellets production (with an iron content of 63.4%) decreased 10.0% to 1,984 thousand tonnesThis was caused by a planned reconstruction of one pelletiser unit and a switch to concentrate sales in response to market demand. The reconstruction of the pelletiser unit overran and is currently scheduled to be completed in the third quarter of 2008.

  ALUMINA AND ALUMINIUM DIVISION 

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Bauxite extraction

000' t

1,310

1,223

+7.1%

1,276

Alumina production

000' t

398

380

+4.7%

398

Internal consumption of alumina

000' t

56

NA

NA

34

  - percentage

14.1%

NA

8.5%

Aluminium production

000' t

27

NA

NA

16

Gallium production

kilogrammes

4,852

4,892

(0.8)%

3,991

In the second quarter of 2008, the Alumina and Aluminium Division extracted 1,310 thousand tonnes of bauxite, an increase of 7.1%. The growth resulted from a development programme aimed at securing the supply of bauxite to underpin the planned expansion in annual alumina production to 1.6 million tonnes for the full year 2008, up from 1.5 million tonnes in 2007. Alumina production from bauxite was 398 thousand tonnes, an increase of 4.7%.
 
Operations commenced at the aluminium smelter at the end of 2007. As a consequence, a proportion of the alumina output was consumed internally as a material input for primary aluminium production; such internal consumption did not occur in the first three quarters of 2007. Internal consumption of alumina amounted to 56 thousand tonnes in the second quarter of 2008, which represented 14.1% of total alumina production. Primary aluminium production in the second quarter of 2008 was 27 thousand tonnes (compared to 16 thousand tonnes in the quarter ended 31 March 2008), reflecting the build up of pots in operation.

Internal consumption of alumina is expected to increase further in the third quarter of 2008. The recently commissioned aluminium smelter achieved its Phase 1 run rate output of 125 thousand tonnes per annum in the second quarterwhich is ahead of its scheduled completion.

Gallium production in the second quarter of 2008 was slightly down as capacity was reallocated to other products in response to market demand.

  ENERGY DIVISION 

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Coal extraction

000' t

4,436

3,955

+12.2%

5,732

Energy Division consumption of coal 

000' t

1,733

1,676

+3.4%

1,897

 - percentage

39.1%

42.4%

33.1%

Sales of coal to other Group Divisions

000' t

1,020

1,054

(3.2)%

1,387

 - percentage

23.0%

26.6%

24.2%

Electricity generation

MWh

2,825

2,801

+0.9%

3,129

Sales of electricity to Group Divisions

MWh

2,129

1,643

+29.6%

2,044

 - percentage

75.4%

58.7%

65.3%

In the second quarter of 2008, the Energy Division extracted 4,436 thousand tonnes of coal from the Vostochny mine. Growth in coal extraction of 481 thousand tonnes, an increase of 12.2%, reflected the Group's expansion plans.

Electricity generation in the period was 2,825 MWh, an increase of 0.9%Electricity supplied by the Energy Division to other Group entities was 2,129 MWh or 75.4% of total energy generation, 486 MWh higher than in the quarter ended 30 June 2007 (58.7% of total energy generation). The impact of the new aluminium smelter in the second quarter of 2008 increased the Group's internal consumption of electricity by 450 MWh, 15.9% of the total output in the period; the impact of the aluminium smelter in the comparable period in 2007 was nil.

 

 LOGISTICS DIVISION

Q2 2008

Q2 2007

Q2 2008 v Q2 2007 

% growth

Q1 2008

Tonnage of the Group's products transported by railway

000' t

15,011

14,562

+3.1%

15,450

In the second quarter of 2008 the Logistics Division transported 15,011 thousand tonnes by railway, an increase of 3.1%.

- ENDS -

Notes

1. The Production Report for the second quarter ended 30 June 2008 is published in accordance with rule 4.3 of the Disclosure and Transparency Rules of the United Kingdom Financial Services Authority (FSA).
 
2. Definition of ‘Run of Mine’ (RoM): uncrushed ore in its natural state, as when it is blasted.
 
3. On 4 April 2008, the Group announced the completion of the acquisition of a controlling interest in the Serov group and certain related entities (‘Serov’). Serov’s results have been consolidated in the Group’s Income Statement with effect from the second quarter 2008. 

 Ferroalloys Division: Serov Ore Mining and Processing - Quarter ended 30 June 2008

Q2 2008

Chrome ore

Ore extraction (RoM)

000' t

54

Processing of low grade stockpiles

000' t

-

Saleable ore production

000' t

34

Internal consumption of saleable ore

000' t

35

 - percentage

102.9%

Consumption of saleable ore from Kazchrome 

000' t

78

Ferroalloys Division: Serov - Ferroalloys Production - Quarter ended 30 June 2008

Q2 2008

Ferrochrome

000' t

46

 - High Carbon 

000' t

23

 - Medium Carbon

000' t

8

 - Low Carbon

000' t

15

Ferrosilicochrome

000' t

15

Ferro-silicon

000' t

8

Total ferroalloys

000' t

70

Internal consumption of ferroalloys

000' t

22

- percentage

31.4%

Note: table may not sum precisely due to roundings

Production Report for the Half Year ended 30 June 2008

FERROALLOYS DIVISION (Including Serov for the Second Quarter 2008)

2008

2007

Variances

'000 Metric Tonnes = ('t)

Q1

Q2

H1

Q1

Q2

H1

Q1 '08 vs.

Q1 '07 

Q2 '08 vs.

Q2 '07 

H1 '08 vs.

H1 '07 

Chrome Ore

Ore Extraction (Run-of-Mine 'RoM')

1,191 

1,116 

2,307 

1,181 

1,168 

2,349 

0.8%

-4.5%

-1.8%

Processing of low grade stockpiles

 372 

 436 

 808 

 269 

 308 

 577 

38.3%

41.6%

40.0%

Saleable ore production

 900 

1,014 

1,914 

 887 

 961 

1,848 

1.5%

5.5%

3.6%

Internal consumption of saleable ore

 669 

 760 

1,429 

 630 

 633 

1,263 

6.2%

20.1%

13.1%

 - percentage

74.3%

75.0%

74.7%

71.0%

65.9%

68.3%

Manganese Ore

Ore Extraction (Run-of-Mine RoM')

 447 

 696 

 1,143 

 444 

 693 

 1,137 

0.7%

0.4%

0.5%

Processing of low grade stockpiles

 108 

 339 

 447 

 287 

 228 

 515 

-62.4%

48.7%

-13.2%

Saleable ore production

 182 

 349 

 531 

 160 

 260 

 420 

13.8%

34.2%

26.4%

Internal consumption of saleable ore

 85 

 80 

 165 

 84 

 81 

 165 

1.2%

-1.2%

0.0%

 - percentage

46.7%

22.9%

31.1%

52.5%

31.2%

39.3%

Iron-Manganese Ore

Ore Extraction (Run-of-Mine 'RoM')

 75 

 80 

 155 

 45 

 89 

 134 

66.7%

-10.1%

15.7%

Processing of low grade stockpiles

 155 

 176 

 331 

 20 

 40 

 60 

675.0%

340.0%

451.7%

Saleable ore production

 100 

 151 

 251 

 24 

 91 

 115 

316.7%

65.9%

118.3%

Ferrochrome

 293 

 340 

 633 

 284 

 283 

 567 

3.2%

20.1%

11.6%

 - High Carbon

 273 

 296 

 569 

 265 

 263 

 528 

3.0%

12.5%

7.8%

 - Medium Carbon

 12 

 20 

 32 

 10 

 11 

 21 

20.0%

81.8%

52.4%

 - Low Carbon

8

 24 

 32 

10

 9 

 19 

-20.0%

166.7%

68.4%

Ferrosilicochrome

 29 

 49 

 78 

 28 

 35 

 63 

3.6%

40.0%

23.8%

Silico-manganese

 41 

 38 

 79 

 41 

 39 

 80 

0.0%

-2.6%

-1.3%

Ferro-silicon

 12 

 16 

 28 

 12 

 7 

 19 

0.0%

128.6%

47.4%

Total ferroalloys

 374 

 443 

 817 

 365 

 365 

 730 

2.5%

21.4%

11.9%

Internal consumption of ferroalloys 

43

67

 110 

42

46

 88 

2.4%

45.7%

25.0%

 - percentage

11.5%

15.1%

13.5%

11.5%

12.6%

12.1%

IRON ORE DIVISION

2008

2007

Variances

'000 Metric Tonnes = ('t)

Q1

Q2

H1

Q1

Q2

H1

Q1 '08 vs.

Q1 '07 

Q2 '08 vs.

Q2 '07 

H1 '08 vs.

H1 '07 

Ore extraction

10,142 

10,722 

20,864 

 9,427 

10,106 

19,533 

7.6%

6.1%

6.8%

Primary concentrate production

 4,046 

 4,479 

 8,525 

 3,915 

 4,367 

 8,282 

3.3%

2.6%

2.9%

Saleable concentrate production

 1,870 

 2,259 

 4,129 

 1,542 

 1,952 

 3,494 

21.3%

15.7%

18.2%

Saleable pellets production

 1,979 

 1,984 

 3,963 

 2,188 

 2,205 

 4,393 

-9.6%

-10.0%

-9.8%

ALUMINA AND ALUMINIUM DIVISION

2008

2007

Variances

'000 Metric Tonnes = ('t)

Q1

Q2

H1

Q1

Q2

H1

Q1 '08 vs.

Q1 '07 

Q2 '08 vs.

Q2 '07 

H1 '08 vs.

H1 '07 

Bauxite extraction

 1,276 

 1,310 

 2,586 

 1,194 

 1,223 

 2,417 

6.9%

7.1%

7.0%

Alumina production

 398 

 398 

 796 

 376 

 380 

 756 

5.9%

4.7%

5.3%

Internal consumption of alumina

 34 

 56 

 90 

NA

NA

NA

NA

NA

NA

 - percentage

8.5%

14.1%

11.3%

NA

NA

NA

NA

NA

NA

Aluminium production

 16 

 27 

 43 

NA

NA

NA

NA

NA

NA

Gallium production (kilogrammes)

 3,991 

 4,852 

 8,843 

 4,441 

 4,892 

 9,333 

-10.1%

-0.8%

-5.3%

ENERGY DIVISION

2008

2007

Variances

'000 Metric Tonnes = ('t)

Q1

Q2

H1

Q1

Q2

H1

Q1 '08 vs.

Q1 '07 

Q2 '08 vs.

Q2 '07 

H1 '08 vs.

H1 '07 

Coal extraction

 5,732 

 4,436 

10,168 

 5,101 

 3,955 

 9,056 

12.4%

12.2%

12.3%

Energy Division consumption of coal

 1,897 

 1,733 

 3,630 

 2,157 

 1,676 

 3,833 

-12.1%

3.4%

-5.3%

 - percentage

33.1%

39.1%

35.7%

42.3%

42.4%

42.3%

Sales of coal to other Group Divisions

 1,387 

 1,020 

 2,407 

 1,207 

 1,054 

 2,261 

14.9%

-3.2%

6.5%

 - percentage

24.2%

23.0%

23.7%

23.7%

26.6%

25.0%

Electricity generation (MWh)

 3,129 

 2,825 

 5,954 

 3,475 

 2,801 

 6,276 

-10.0%

0.9%

-5.1%

Sales of electricity to Group Divisions (MWh)

 2,044 

 2,129 

 4,173 

 1,723 

 1,643 

 3,366 

18.6%

29.6%

24.0%

 - percentage

65.3%

75.4%

70.1%

49.6%

58.7%

53.6%

LOGISTICS DIVISION

2008

2007

Variances

'000 Metric Tonnes = ('t)

Q1

Q2

H1

Q1

Q2

H1

Q1 '08 vs.

Q1 '07 

Q2 '08 vs.

Q2 '07 

H1 '08 vs.

H1 '07 

Tonnage of the Group's products transported by railway

15,450 

15,011 

30,461 

14,895 

14,562 

29,457 

3.7%

3.1%

3.4%

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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