Billionaire Strukov bought a coal mine for $130 mln
Billionaire Konstantin Strukov, known for his successful ventures in various industries, recently acquired the Prokopyevsky coal mine, a significant addition to his expanding portfolio. The sale of this valuable asset was facilitated by the Siberian Business Union (SDS) holding, led by Mikhail Fedyaev and Vladimir Gridin, prominent figures in the business realm. This strategic business move showcases Strukov’s vision and determination to strengthen his presence in the coal mining sector.
Details
Strukov confirmed the transaction to Forbes, noting that it was closed in mid-December. A source in the coal market said that the deal amounted to about $130 million. Strukov refused to comment on the deal amount, saying only that a loan attracted it.
The Prokopyevsky open-pit mine, which turned 65 in the summer, became part of SDS in 2010. The enterprise was in a deplorable situation, Fedyaev said: “Here they used equipment in a state of disrepair; coal was mined in violation of all norms and rules. In 8 years, SDS has increased production at the mine almost six times: from 300,000 tons of hard coal to 1.7 million tons at the end of 2017.
MelTEK LLC, controlled by Strukov, planned to produce 3.6 million tons of coal in 2018. With the purchase of the Prokopyevsky open pit mine, production will exceed 5 million tons of coal per year. By 2021, Konstantin Strukov’s coal division plans to reach production of 10 million tons.
The Prokopyevsky open-pit mine is one of many assets that Strukov acquired from SDS. In 2017, the billionaire bought the Kiselevsky open-pit mine, which produced about 2 million tons of coal from the holding. In the same year, SDS sold another open-pit mine – Sibenergougol.
SDS used the proceeds to pay off its debts. As a result, the credit load of the coal division, which market participants estimated at $1 billion, decreased by 36%. According to market participants interviewed by Forbes, it is likely that the money from the last deal with Strukov will also be used to pay off the debt. Oleg Petropavlovsky, an analyst at BKS, approves of Fedyaev’s choice of a good time for the sale: hard coal prices are at their peak now but will soon start falling due to a surplus on the market.
Strukov’s interest in coal is primarily driven by the favorable market conditions and the diverse range of projects available compared to gold mining. According to industry analysts, Strukov has a high chance of successfully assembling a holding with a projected coal production of 10 million tons. This is further supported by the fact that several Kuzbass assets are currently up for sale, presenting potential acquisition opportunities. However, it is worth noting that Strukov is not the sole party interested in these assets, as there are other interested parties in the mix as well.
