MOSCOW, Jun 30 (PRIME) -- Russian state-owned industrial corporation Rostec and China’s Shenhua are considering an initial public offering (IPO) of its joint venture for the development of the Ogodzhinskoye coal field in the Amur Region, Andrei Korobov, CEO of RT Global Resources, Rostec’s affiliate, told PRIME in an interview on Monday.
“We and the Chinese side are interested in future monetizing (of the project) and do not rule out an IPO if, of course, this idea is approved by the Russian government,” Korobov said.
Rostec intends to keep its 50% plus one share stake in the venture, but the venture’s terms are being discussed and in the long term the stake can be decreased to a blocking amount of 25%, he said.
The company also expects the project to repay in 8-10 years. By 2019, 20 million tonnes of coal will have been produced on the field annually. When the projected capacity of 30 million tonnes annually is reached, the annual venture’s revenue will amount to around 40 billion rubles, Korobov said.
“The field development will exceed 50 years, according to the current reserves estimate. The approximate repayment period will be 8-10 years,” he said, adding that the main consumer of the field’s coal will be Shenhua and the rest will be sold to other Asia-Pacific countries.
Production costs will amount to U.S. $20 per tonne in the field, while the cost of steaming coal in Chinese ports amounts to $70 per tonne. RT Global Resources also plans to hold additional exploration works on the field for coking coal.
Rostec is ready to compensate the losses that Shenhua incurred with its previous partner in the project – state-owned Rostopprom, which went bankrupt.
The Gerbikano-Ogodzhinsky coal area reserves amount to 1.6 billion tonnes of steaming coal. Investments in the project amount to U.S. $5 billion.
(33.6306 rubles – U.S. $1)
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