Sibanthracite Group to sell coal to Baosteel Resources

The Sibanthracite Group and Baosteel Resources, a subsidiary of China Baowu Steel Group, have signed a strategic long-term partnership agreement, under which Sibanthracite Group will increase coal exports, including PCI coal and high-quality anthracite, to the Chinese firm.

Sibanthracite Group plans to supply mainly PCI Siban — a new brand of coal that has been produced by the company since last year — to Baosteel Resources. PCI Siban supplies to Baosteel will amount to over 700,000t in 2021, depending on Sibanthracite Group's production. In terms of quality, PCI Siban is comparable to Australian PCI and has a total moisture content of 10-11pc on an as-received basis, a maximum sulphur content of 0.4pc on a dry basis, and an ash content not exceeding 10-11pc on a dry basis. PCI Siban volatile matter is in a 10-11pc range on a dry basis.

Sibanthracite Group aims to export coal to Baosteel through far eastern ports. The long-term contract should be concluded at a formula price, with a calculation based on market indexes.

Sibanthracite Group's PCI sales to China amounted to 2mn t last year, while the firm's total PCI sales were around 3.7mn t over the period.

The company plans to increase coal production and exports in 2021 in line with the purchase of additional new equipment and an increase in the number of contractors working at its facilities.

"We expect stable demand for our products in the key market for us — in China — as well as in other Asia-Pacific countries. The company aims to expand its sales. Last year we entered new markets — Canada, Morocco, the US, Mexico, Argentina, and others," a source in the company says.

Sibanthracite Group owns the most productive coal assets in the Novosibirsk region, including Kolyvansky, Gorlovsky and Vostochny opencasts. In the Kemerovo region, the company operates the Kiyzassky opencast, which produces low-volatile bituminous T-grade coal. Sibanthracite Group's total anthracite and coal reserves are estimated at 468.1mn t, according to the JORC mining code.

Find more news, price information and market analysis on Russian coal exports in Argus Russian Coal report.