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Raspadskaya is one of Russia's largest producers of coking coal and operates in the Kuzbass region. Its product is a raw material for the steel industry: without coking coal, pig iron cannot be smelted in a blast furnace. The shares trade on the Moscow Exchange under the ticker RASP.
The company mines coal by both underground and open-pit methods, processes it and sells it to steelmakers in Russia and abroad. The price is set by the global market, and it is noticeably more volatile than that of most commodities: demand is tightly tied to steel production, while supply responds slowly — a mine cannot be opened or closed within a quarter.
Production costs depend on the mining method and on the depth of the seams. Open-pit mining is cheaper than underground mining, but the reserves that can be reached by an open pit are limited.
A separate and very substantial cost item is logistics. Coal is heavy and cheap relative to its weight, so delivery to the port accounts for a noticeable share of the final price, and the capacity of the railways heading east is limited.
Underground mines and open pits in Kuzbass that produce mainly coking coal.
Plants that upgrade raw coal into concentrate suitable for steelmaking.
Deliveries to steelmakers in Russia and for export.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company mines coal in Kuzbass, processes it and sells it to steel mills. Its main product is coking coal, the raw material for smelting pig iron.
Thermal coal is burned at power plants for heat. Coking coal is used differently: it is made into coke — the fuel and reducing agent for the blast furnace. It is more expensive, and demand for it depends not on the power sector but on steel production.
Coal is heavy and relatively cheap, so the cost of delivery makes up a noticeable part of its final price. In addition, the capacity of the railways leading to the eastern ports is limited, and this is a physical ceiling on exports.