* Kolmar to raise coal output from 2 mln to 12 mln tonnes
* Building port in Far East to be operational by 2016
* Kolmar buy marks new move upstream for powerful oil trader
By Alexei Anishchuk
MOSCOW, Jan 17 Kolmar, controlled by the
billionaire founder of trader Gunvor, will plough money into its
east Siberian coal fields to capture the Asian steel making
market ahead of its Russian rivals further west, its CEO said in
With over 1 billion tonnes of reserves in the ground - more
than enough to supply the global steel industry for a year with
coking coal - the miner plans to spend $1.3 billion to raise
output sixfold in the next seven years, Andrei Churin said.
Through Swiss-based Gunvor and his Luxembourg-based
investment fund, Volga Resources, magnate Gennady Timchenko
acquired 60 percent of Kolmar, once owned by Russian mining
tycoon and New Jersey Nets owner Mikhail Prokhorov.
Churin said Kolmar will increase output to 3 million tonnes
per year in 2013-2015 from the current 2 million tonnes, then
continue to expand with the completion of a processing plant at
its leading mine, Denisovskaya, in the Yakutiya Republic of
Eastern Siberia, hitting 12 million by 2020.
"Our primary goal is to increase output and launch
full-cycle (coking coal) enrichment to make high-quality coal
concentrate," he said.
Kolmar's trump card was its location some 2,500 km (1,553
miles) nearer the Pacific coast than established west Siberian
"Russian coal exporters today compete not in terms of
extraction costs, but rather in terms of their railway costs,"
Churin said. "We have this advantage and thus our strategy sees
the supply of a large part of our product to China, Japan, South
Korea and possibly India."
Construction of its export facilities is underway in the
Muchka harbour of Vanino, which is under development as a major
outlet for Siberian coal exports to the Pacific.
The Muchka facility will have initial capacity of 10 million
tonnes and expansion potential of up to 27 million tonnes per
year. Kolmar now sells 80 percent of its coal domestically.
"Hopefully, by the end of 2015 we will be able to load
vessels there," he said. "Therefore, our sales strategy will
change, supplies to South-East Asia will become a priority."
"China is the main driver and the market will follow Chinese
demand," he added.
He said Kolmar will rely on Gunvor's trading power and
expertise to sell its products.
"Today 100 percent of our exports are run by Gunvor," he
said. "This is sensible and right...because the company's
advanced level of operation allows us to handle the sales
process in the most efficient way."
Gunvor has risen spectacularly in just a decade from
obscurity to a major exporter of Russian oil and an $80 billion
annual revenue trading house. It started to trade coal in 2009
and invest in mines around the world two years ago.
The Kolmar purchase marks the latest move upstream for
Timchenko, who owns a stake in gas producer Novatek.
Timchenko, 60, with an estimated $9.1 billion fortune
according to Forbes 2012 global ranking, is believed to have
close ties with President Vladimir Putin, which both men deny.
Churin said Gunvor's acquisition of a stake in coal miner
Kolmar, finalised last August, should be seen as a strategic
investment for the trader.
"Our shareholders made the decision to come to coal business
in a big way and for the long term, and not only in Russia," he
"They have an in-depth expertise in the Russian and
international energy markets which will aid efficient
development of the company."
In addition to Kolmar, Gunvor directly and indirectly holds
stakes in the U.S.-based Signal Peak miner and South Africa's
Keaton Energy Holding.
Transport costs are seen as the Achilles heel of the
Russian coal sector, sapping competitiveness when prices fall.
But Churin, who managed Oleg Deripaska's coal assets at EN+
before he joined Kolmar, saw weak coal prices bouncing back
after a flat 2013, driven by iron ore mining and steel market
"Given the fact that a lot of miners are shutting down mines
and production facilities, the market is at the bottom now and
there's nowhere else left to fall," he said. "2013 will witness
slight market fluctuations, while the situation is likely to
start to improve in 2014."
He said sagging markets made Kolmar pull more coal from
export to the domestic market.
"We had to redirect supplies from external markets to
Russia's and Commonwealth of Independent States (CIS) markets
for 2013, because we even had orders canceled by our overseas
clients when coal shipments were already being loaded at the
(Editing by William Hardy)