Eurasian Natural Res ENRC Q3 Production Report and IMS

  Eurasian Natural Res (ENRC) - Q3 Production Report and IMS

RNS Number : 6059Q
Eurasian Natural Resources Corp Plc
08 November 2012






8 November 2012





                  Eurasian Natural Resources Corporation PLC

                                      

                November 2012 Interim Management Statement and

       Production Report for the Third Quarter ended 30 September 2012



London - Eurasian Natural Resources Corporation PLC ('ENRC' or, together  with 
its subsidiaries,  the  'Group') today  announces  its November  2012  Interim 
Management Statement and its Production Report for the Third Quarter ended  30 
September 2012.



ENRC will be hosting  a conference call for  analysts and investors  regarding 
the Group's Interim Management Statement  and Third Quarter Production  Report 
today at 9:30am. Conference call details are provided below.



Highlights for the Nine Months ended 30 September 2012

o Revenue decreased sharply compared to the corresponding period, largely due
to lower selling prices for our principal commodities;

o Saleable copper production increased  by 31% compared to the  corresponding 
period;

o Cost of sales increased only  moderately compared to the first nine  months 
of 2011;

o Net debt of US$3.9 billion as at 30 September 2012;

o Organic growth  programme on  track; capital  expenditure year  to date  of 
US$1.7 billion.



Recent Developments and Outlook for the Full Year 2012

o Production expected  to be at  full available capacity  across most of  our 
principal commodities;

o Revenue to continue to be impacted by the weak commodity price environment,
particularly for ferroalloys and iron ore;

o Planned  capital expenditure  for  the year  expected to  be  approximately 
US$2.2 billion; planned total spend in 2013 of US$1.7 billion;

o Capital expenditure review complete; in addition to sustaining  investments 
of US$3.6 billion, total expansionary spend expected over the next 5 years  of 
US$4.4 billion, of which US$3.2  billion to be spent on  5 key projects -  the 
New Aktobe Ferroalloys Plant,  Frontier and RTR, followed  by the Boss  Mining 
Concentrator and SSGPO iron ore expansion;

o Good progress  with on-going  production efficiency  programmes to  contain 
unit cost growth below previous guidance;

o Frontier licence in DRC acquired for US$101.5 million.



"Market conditions and the current pricing environment remain challenging. We
continue to focus on  maintaining our industry  leading cost position,  having 
made excellent progress in implementation of cost efficiency programmes across
the Group during the year. Our comprehensive review of capital expenditure  is 
now complete, with a clear plan to  focus on those projects that will be  cash 
generative in the near term."

Felix J Vulis, Chief Executive Officer



ENRC will be hosting  a conference call for  analysts and investors  regarding 
the Group's Interim Management Statement  and Third Quarter Production  Report 
today at 9:30am. The  call will be hosted  by ENRC's Chief Financial  Officer, 
Zaure Zaurbekova and Chief Commercial Officer,  Jim Cochrane. There will be  a 
facility available  for  participants  to address  questions  to  the  Group's 
Executive Management.



Conference call details are as follows:



Dial-in:Standard access international: +44 (0) 20 3003 2666

UK toll free: 0808 109 0700

USA local: 1 212 999 6659

USA toll free: 1 866 966 5335

Password:  ENRC





For further information, please contact:



ENRC: Investor Relations
Mounissa Chodieva        +44 (0) 20 7389 1879
Charles Pemberton        +44 (0) 20 7104 4015
Alexandra Leahu          +44 (0) 20 7104 4134



ENRC: Press Relations
Julia Kalcheva             +44 (0) 20 7389 1861
M: Communications (Press Relations Advisor to ENRC):
Hugh Morrison              +44 (0) 20 7920 2334
Charlotte Kirkham          +44 (0) 20 7920 2331
Andrew Benbow              +44 (0) 20 7920 2344





About ENRC

ENRC is a leading diversified  natural resources group, performing  integrated 
mining, processing, energy, logistics and marketing operations. The operations
comprise: the mining  and processing of  chrome, manganese and  iron ore;  the 
smelting of ferroalloys; the  production of iron  ore concentrate and  pellet; 
the mining and  processing of bauxite  for the extraction  of alumina and  the 
production of aluminium; the production of copper and cobalt; coal  extraction 
and electricity generation; and  the transportation and  sales of the  Group's 
products. The Group's production assets are largely located in the Republic of
Kazakhstan; other assets, notably the  Other Non-ferrous Division, are  mainly 
located in Africa; the Group  also has iron ore assets  in Brazil. In H1  2012 
the Group's entities employed on average 78,430 (H1 2011: 75,050) people.  The 
Group currently sells the  majority of its products  to Russia, China,  Japan, 
Western Europe and the United States. For  the six months ended 30 June  2012, 
the Group had  revenue of  US$3,246 million  (H1 2011:  US$4,011 million)  and 
profit attributable to  equity holders of  the Company of  US$463 million  (H1 
2011: US$1,166 million). ENRC has  six operating Divisions: Ferroalloys,  Iron 
Ore, Alumina and Aluminium, Other Non-ferrous, Energy and Logistics. ENRC is a
UK company with its registered office  in London. ENRC's shares are quoted  on 
the London Stock Exchange ('LSE') and the Kazakhstan Stock Exchange  ('KASE'). 
For more information on ENRC visit the Group's website at www.enrc.com.



Forward-looking Statements

This announcement  includes statements  that  are, or  may  be deemed  to  be, 
'forward-looking  statements'.   These  forward-looking   statements  can   be 
identified by  the use  of forward-looking  terminology, including  the  terms 
'believes',  'estimates',  'plans',   'projects',  'anticipates',   'expects', 
'intends', 'may', 'will',  or 'should'  or, in  each case,  their negative  or 
other variations or  comparable terminology,  or by  discussions of  strategy, 
plans, objectives, goals, future  events or intentions. These  forward-looking 
statements include matters  that are  not historical facts  or are  statements 
regarding the Group's intentions, beliefs or current expectations  concerning, 
among other things,  the Group's results  of operations, financial  condition, 
liquidity, prospects,  growth, strategies,  and the  industries in  which  the 
Group  operates.  Forward-looking  statements  are  based  on  current  plans, 
estimates and  projections, and  therefore  too much  reliance should  not  be 
placed upon them. Such statements are subject to risks and uncertainties, most
of which are difficult to predict and generally beyond the Group's control. By
their nature, forward-looking statements involve risk and uncertainty  because 
they relate to future  events and circumstances. The  Group cautions you  that 
forward-looking statements are not guarantees  of future performance and  that 
if risks and uncertainties materialise,  or if the assumptions underlying  any 
of these statements prove incorrect, the Group's actual results of operations,
financial condition and liquidity and the development of the industry in which
the Group operates may materially differ from those made in, or suggested  by, 
the forward-looking statements  contained in this  announcement. In  addition, 
even if the Group's results  of operations, financial condition and  liquidity 
and the development of the industry in which the Group operates are consistent
with the  forward-looking statements  contained  in this  announcement,  those 
results or developments may  not be indicative of  results or developments  in 
future periods. A number  of factors could cause  results and developments  to 
differ materially  from  those expressed  or  implied by  the  forward-looking 
statements  including,  without  limitation,  general  economic  and  business 
conditions,  industry  trends,  competition,  commodity  prices,  changes   in 
regulation, currency fluctuations, changes in business strategy, political and
economic uncertainty. Subject to the requirements of the Prospectus Rules, the
Disclosure and Transparency Rules and the Listing Rules or any applicable  law 
or regulation, the  Group expressly  disclaims any  obligation or  undertaking 
publicly to  review  or confirm  analysts'  expectations or  estimates  or  to 
release publicly any  updates or revisions  to any forward-looking  statements 
contained herein  to reflect  any  changes in  the Group's  expectations  with 
regard thereto or any change in  events, conditions or circumstances on  which 
any such statement is based. Nothing in this announcement should be  construed 
as a  profit  forecast.  The  forward looking  statements  contained  in  this 
document speak only as at the date of this document.



Disclosure and Transparency Rules

The Interim Management Statement ('IMS') and Production Report are prepared to
meet the requirements of the Disclosure  and Transparency Rules of the  United 
Kingdom Financial Services Authority ('FSA') to provide additional information
to shareholders. The IMS and Production Report should not be relied on for any
other purpose or by any other party.



A copy  of this  announcement will  be  available on  the Group's  website  at 
www.enrc.com.



                                      

                                      



              November 2012 Interim Management Statement ('IMS')



The information  in the  IMS, unless  stated otherwise,  relates to  the  nine 
months ended 30  September 2012,  and is  compared to  the corresponding  nine 
months of 2011. Save as set out in this statement, there have been no material
events, transactions or changes to the  financial position of the Group  since 
30 June 2012. The  Group's performance trends from  30 September 2012 to  date 
remain broadly consistent with those described herein.



Revenue

Group revenue for the first nine  months of 2012 deteriorated sharply  against 
the comparable period of 2011 largely due to lower selling prices for our main
commodities. The fall in prices for iron ore and ferroalloys had the  greatest 
impact, declining by 26% and 8% respectively. Revenue was further impacted  by 
lower sales volumes of ferroalloys, chrome  ore, iron ore and alumina as  well 
as the absence of railway line repairs since the disposal of this business.



For the first nine  months of 2012, the  revenue for the Ferroalloys  Division 
was significantly  lower than  in the  comparable period  of 2011,  reflecting 
lower realised  prices and  decreased sales  volumes. The  exclusion of  Tuoli 
reduced revenue in the Division by US$66 million compared to 2011. There was a
change in the geographical mix of sales, with an increase in sales to China on
the back of  weaker demand in  the key  markets of Japan,  Western Europe  and 
North America. Average  prices in  the reporting  period decreased  by 8%  for 
ferroalloys and 40% for chrome ore, mainly due to a lower grade of chrome  ore 
sold during 2012. The  Division operated at close  to full available  capacity 
for the period.



In the  Iron Ore  Division, revenue  showed a  very significant  deterioration 
compared to 2011 due to a sharp  decline in sales prices. Total sales  volumes 
saw a modest decline compared to the previous year. The share of higher priced
pellets sold  also decreased  reducing revenue,  although this  was  partially 
offset by higher sales of screenings in 2012. During 2012 the Group  increased 
its sales of iron ore to China and within Kazakhstan. Average realised  prices 
declined by 26% during the period. Production was slightly lower than in 2011.



In the Alumina and Aluminium Division, revenue dropped significantly due to  a 
19% decline in the London Metal  Exchange ('LME') average price for  aluminium 
and lower alumina sales volumes as a result of the production shortfall in the
beginning of the year.  Alumina production returned to  full capacity in  June 
2012. Aluminium production was in line with the previously reported period.



In the  Other Non-ferrous  Division, production  and sales  volumes of  copper 
continued to increase. However the  positive effect of additional volumes  was 
offset by sharp declines in sales  prices for copper and cobalt products.  The 
average realised price for copper for the first nine months of 2012  decreased 
13% against the comparative period of 2011 and the average realised price  for 
cobalt metal decreased by 19%.



The Energy Division  saw a very  strong increase  in revenue in  the period  . 
Third-party sales  of  electricity  were higher  reflecting  the  increase  in 
available capacity. The Division's revenue substantially benefited from  sales 
of Shubarkol's coal and semi-coke, included  from May 2012. Sales of EEC  coal 
were slightly below the  same period in  2011 as a  result of higher  internal 
consumption. Realised third-party  sales prices of  coal increased 4%,  whilst 
prices for electricity fell 2%.



In the Logistics Division revenue moderately declined due to lower volumes  of 
railway line repairs as a result of  a disposal of this business in May  2012. 
Third-party revenue from freight forwarding services declined slightly.



Costs

Cost of sales moderately increased compared to the first nine months of  2011. 
This was mainly due to  increased depreciation, higher input materials  prices 
and wage rates as  well as expansion in  the Other Non-ferrous operations  and 
the inclusion of Shubarkol. Depreciation  and amortisation costs increased  by 
around 30% reflecting the  higher value of property,  plant and equipment,  as 
well as additional  amortisation of  mineral rights in  the Other  Non-ferrous 
Division. For the  full year we  expect D&A costs  to be approximately  US$650 
million. Mineral Extraction Tax fell significantly as a result of lower prices
for chrome and iron ore. Distribution costs saw some increase on the  previous 
period in  2011 reflecting  increased tariffs  and transport  fares, a  higher 
proportion of iron ore  shipments to China, increased  copper volumes and  the 
inclusion of Shubarkol in 2012. General and administrative expenses  increased 
mainly as a result of higher labour costs and professional services  expenses, 
offset by lower  taxes and sponsorship  and donations paid  in the first  nine 
months of  2012.  For  the  full  year we  expect  social  investments  to  be 
approximately US$100 million. Exploration  expenses more than doubled  against 
the prior year period reflecting  increased activity in the Other  Non-ferrous 
Division.



Taxation

ENRC's Effective Tax Rate ('ETR')  is expected to be  in the range of  between 
37% and 39% of Profit Before Tax ('PBT') for 2012. This slight increase in the
ETR against guidance given at the Group's  Interim Results, is as a result  of 
the large-scale projects and increased expenditure undertaken in jurisdictions
where no revenues are presently being generated.



Balance Sheet

The Group had gross available funds as at 30 September 2012 of US$1.00 billion
and gross debt of US$4.86 billion.



Capital Expenditure Projects Update

During the nine  months of 2012  the principal areas  of capital  expenditures 
were:

· Ferroalloys Division: the New Aktobe Ferroalloys Plant;

· Iron Ore Division: mine expansion at SSGPO;

· Alumina and Aluminium Division: Anode production plant;

· Other Non-ferrous Division: expansion of copper production;

· Energy Division: reconstruction of Power Unit 6; and

· Logistics Division: railcar fleet expansion.



Estimated capital expenditures for the full year in 2012 will be approximately
US$2.2  billion  of  which  US$0.6  billion  relates  to  sustaining   capital 
expenditure.



Capital Expenditure Review

The Group has completed a review of its capital expenditure programme for  the 
next 5 year period. Our expansionary programme has prioritised projects  with 
both the highest returns and shortest payback periods, with the Group's  focus 
being  on  the  completion  of  the  New  Aktobe  Ferroalloys  Plant  and  the 
development of both  the Frontier and  RTR copper projects  in the  Democratic 
Republic of the Congo ('DRC'). Optimisation of our expansionary programme  has 
resulted in the  re-phasing of  the Boss  Mining Concentrator,  which will  be 
delayed by a  year, as well  as a delay  in expansion at  SSGPO in  Kazakhstan 
until 2015. These five key expansionary projects will amount to US$3.2 billion
of the Group's total expansionary  spend. We expect expansionary  investments 
in 2013 of US$1.0 billion.



With the exception of the New Aktobe Ferroalloys Plant, the remaining four key
expansionary projects still require formal Board approval, expected by the end
of  2012  or  early  in  2013.  All  other  expansionary  projects  have  been 
indefinitely deferred, including  the development  of our  Brazilian iron  ore 
projects and additional power units at in Kazakhstan.



The Group's sustaining capital expenditure projects have also been reviewed so
as to  ensure  that  production  volumes  for  ENRC's  key  products  will  be 
maintained over  the next  5 years.  Total sustaining  investments over  this 
period are  expected  to amount  to  US$3.6 billion,  with  spend in  2013  of 
approximately US$600 million.



The Group will have additional corporate capital expenditure of US$140 million
in 2013, associated with Programme Arrow, a Group-wide efficiency  improvement 
project. We  expect  total  capital  expenditure  in  2013  of  around  US$1.7 
billion.



Acquisitions

As announced as part of our Interim  Results, in July 2012 the DRC  Government 
granted the Group a  new mining licence  in respect of  the Frontier mine  for 
US$101.5 million. The new Frontier licence will provide feed for the Frontier
processing plant,  acquired as  part  of the  transaction with  First  Quantum 
Minerals Ltd, which completed in March 2012.



Outlook

The outlook for  the global economy  continues to be  defined by  uncertainty, 
leading to weakness, particularly  in pricing. Together  with the build-up  of 
ferroalloy  inventories   in  China,   currency   moves  have   created   cost 
opportunities for South  African ferroalloy producers,  leading to the  market 
experiencing oversupply and resulting  in weaker spot  prices. We expect  this 
trend to continue  through to  the year  end. Regarding  iron ore,  we do  not 
foresee any material change to pricing before the year end.



The Group has striven to reduce cost inflation for the full year 2012  against 
the guidance  given  earlier in  the  year.  We anticipate  unit  cost  growth 
year-on-year including Mineral Extraction Tax to rise for Ferroalloys by up to
5% and for Iron Ore, Alumina, Coal and Electricity by between 10 and 15%. Some
inflation for  materials and  energy, higher  stripping and  mine  development 
costs, as well  as growing  D&A charges  will continue  to be  the main  costs 
drivers for  the remainder  of  2012. We  will  remain focused  on  production 
efficiency programmes and  cost savings initiatives  to maintain our  relative 
low cost advantage.





       Production Report for the Third Quarter ended 30 September 2012



The information in this Production Report, unless stated otherwise, relates to
the three months ended 30 September 2012, and is compared to the corresponding
three months  ended 30  September 2011.  Production volumes  for Q2  2012  are 
provided for additional information.



The Ferroalloys Division and  the Alumina and  Aluminium Division operated  at 
full available capacity for the quarter. The Energy Division operated at  full 
available capacity for electricity and coal production and below full capacity
for special  coke due  to repair  works  and decreased  demand. The  Iron  Ore 
Division operated  below  full  capacity  both  for  concentrate  and  pellets 
production due  to  equipment  repairs. In  the  Other  Non-ferrous  Division, 
production of copper contained showed exceptionally strong growth against  the 
corresponding period. 



· Ferroalloys Division.Overall gross ferrochrome production increased
by 1.5%  compared  to Q3  2011  (1.7% increase  in  high-carbon  ferrochrome). 
Low-carbon ferrochrome production increased  4.5%, ferrosilicochrome 9.5%  and 
ferrosilicon 8.3%. High-carbon  ferrochrome saleable  production decreased  by 
1.0%, while total saleable ferroalloys production for the quarter was in  line 
with Q3 2011.

· Iron  Ore  Division.Iron  ore extraction  and  primary  concentrate 
production decreased by 13.0% and 10.5%, respectively, against the  comparable 
period. Total saleable product decreased 7.1% against Q3 2011.

· Alumina and Aluminium  Division. Bauxite extraction increased  3.2% 
and alumina production 0.2% against Q3 2011. Aluminium production was in  line 
with Q3 2011.

· Other Non-ferrous  Division. Production  of saleable  copper in  Q3 
2012 was 9,967 t,  a 31% increase versus  Q3 2011. Saleable cobalt  production 
fell 28% to 2,230 t versus Q3 2011.

· Energy Division. Coal extraction by EEC increased by 1.1%  compared 
to Q3 2011. Electricity generation  increased 1.8% and sales to  third-parties 
decreased 6.2% compared to Q3 2011.

·  Logistics  Division.The  volume  of  goods  transported  by   rail 
decreased 4.2%  compared  to  Q3  2011  as coal  volumes  to  Russia  are  now 
transported using  our  customers  own railcars.  The  proportion  of  volumes 
attributable to third parties decreased by 1.9 percentage points from Q3 2011.



References to  't'  in the  Production  Report  are to  metric  tonnes  unless 
otherwise stated and  all references  to 'kt'  are to  thousand metric  tonnes 
unless otherwise stated.



Definition of Run  of Mine ('RoM')  extraction: uncrushed ore  in its  natural 
state, as when it is blasted.



FERROALLOYS DIVISION



Ore Mining and Processing



                                                        Q3 12/          Q3 12/

                                      Q3 2012 Q3 2011¹   Q3 11 Q2 2012   Q2 12
                                                        change          change
Chrome ore
Ore Extraction (Run-of-Mine,
'ROM')                          000 t   1,184    1,166    1.5%   1,267  (6.6%)
Grade, % Cr2O3                           39.1     37.9            39.0
Total Ore Processed             000 t   1,577    1,541    2.3%   1,480    6.6%
Grade, % Cr2O3                           37.4     36.4            37.3
Saleable ore production         000 t   1,006      921    9.2%     974    3.3%
Grade, % Cr2O3                           47.5     48.5            47.4
Internal consumption of
saleable ore                    000 t     771      751    2.7%     734    5.0%
Percentage                              76.6%    81.5%           75.0%
Manganese ore
Ore Extraction ('ROM')          000 t     796      786    1.3%     750    6.1%
Grade, % Mn                              20.6     21.0            19.5
Total Ore Processed             000 t   1,088      999    8.9%   1,001    8.7%
Grade, % Mn                              18.6     19.6            17.9
Saleable concentrate production 000 t     313      359 (12.8%)     271   15.5%
Grade, % Mn                              36.2     35.1            36.0
Internal consumption of
saleable concentrate            000 t      82      104 (21.2%)     101 (18.8%)
Percentage                              26.2%    29.0%           37.3%

Note 1: Q3 2011 numbers adjusted to exclude Tuoli consumption



Chrome ore extraction in Q3 2012 amounted to 1,184 kt, an increase of 1.5%  on 
Q3 2011 and a decrease of 6.6% on  Q2 2012. The Division produced 1,006 kt  of 
saleable chrome ore, an increase of 9.2% on Q3 2011 and 3.3% against Q2 2012.



Internal consumption of saleable chrome ore  in Q3 2012 increased 2.7%  versus 
the comparable period of 2011 and 5.0% against Q2 2012.



Manganese ore extraction  increased 1.3%  versus Q3  2011 and  6.1% versus  Q2 
2012. Saleable manganese concentrate production decreased by 12.8% compared to
Q3 2011  to 313  kt following  changes in  market demand  and increased  15.5% 
against Q2 2012.



Production at  Zhairem  GOK, which  mainly  sells manganese  concentrates  for 
export, decreased 15.0% to 164  kt (34.1% Mn) against  Q3 2011 (193 kt;  31.6% 
Mn) but increased  5.8% compared  to Q2 2012  (155 kt;  34.0% Mn),  reflecting 
seasonal market demand. Production at Kazmarganets (38.6% Mn), which  supplies 
manganese  concentrate   to   the   Aksu  ferroalloys   plant   for   use   in 
silico-manganese production, amounted to 149 kt,  a decrease of 10.2% from  Q3 
2011 (166 kt; 39.0%  Mn) and an increase  of 28.4% on Q2  2012 (116 kt;  38.6% 
Mn).  The  proportion  of  total  manganese  concentrate  production  consumed 
internally was  slightly lower  in Q3  2012,  at 26.2%  (Q3 2011:  29.0%)  and 
decreased by 18.8% against Q2 2012.



Ferroalloys Production



                                                        Q3 12/          Q3 12/

                                      Q3 2012 Q3 2011¹   Q3 11 Q2 2012   Q2 12
                                                        change          change
Gross Production
Ferrochrome                     000 t     341      336    1.5%     329    3.6%
- High-carbon                  000 t     305      300    1.7%     293    4.1%
- Medium-carbon                000 t      13       14  (7.1%)      12    8.3%
- Low-carbon                   000 t      23       22    4.5%      24  (4.2%)
Ferrosilicochrome               000 t      46       42    9.5%      45    2.2%
Silicomanganese                 000 t      40       48 (16.7%)      48 (16.7%)
Ferrosilicon                    000 t      13       12    8.3%      13   0.0%
Total Ferroalloys               000 t     440      438    0.5%     435    1.1%
Internal Consumption of
ferroalloys
High-carbon Ferrochrome         000 t      31       28   10.7%      29    6.9%
Ferrosilicochrome               000 t      26       27  (3.7%)      26    0.0%
Other alloys                    000 t       2        2    0.0%       2    0.0%
Total Ferroalloys               000 t      59       57    3.5%      58    1.7%
Percentage                              13.4%    12.8%           13.3%
Saleable Production
Ferrochrome                     000 t     311      309    0.6%     300    3.7%
- HC FeCr                      000 t     275      273    0.7%     264    4.2%
- MC FeCr                      000 t      13       14  (7.1%)      12    8.3%
- LC FeCr                      000 t      23       22    4.5%      24  (4.2%)
Ferrosilicochrome               000 t      20       15   33.3%      19    5.3%
Silicomanganese                 000 t      38       47 (19.1%)      47 (19.1%)
Ferrosilicon                    000 t      12       11    9.1%      12    0.0%
Total Ferroalloys               000 t     381      381    0.0%     377    1.1%

Table may not sum precisely due to rounding.

Note 1: Q3 2011 numbers adjusted to exclude Tuoli consumption



In Q3 2012, the Ferroalloys Division produced 381 kt of saleable  ferroalloys, 
in line with production in Q3 2011 and a 1.1% increase against Q2 2012.



Ferrosilicochrome and  ferrosilicon saleable  production increased  33.3%  and 
9.1%  respectively  compared  to   Q3  2011  while  silicomanganese   saleable 
production decreased 19.1% against Q3 2011  due to capital repairs at  Furnace 
13 at Aksu smelter during the reporting period.



Serov contributed 57 kt of saleable ferroalloy production in Q3 2012 (Q3 2011:
56 kt; Q2 2012: 58 kt).

IRON ORE DIVISION



                                                         Q3 12/         Q3 12/

                                        Q3 2012 Q3 2011   Q3 11 Q2 2012  Q2 12
                                                         change         change
Ore Extraction ('ROM')            000 t   9,883  11,358 (13.0%)   9,893 (0.1%)
Grade, % Fe                                31.5    32.4            31.0
Primary concentrate production    000 t   4,142   4,629 (10.5%)   3,890   6.5%
Grade, % Fe                                65.2    65.2            65.3
Saleable concentrate production   000 t   2,307   2,550  (9.5%)   1,803  28.0%
Percentage of total saleable
product                                   58.7%   60.3%           50.1%
Saleable pellet production        000 t   1,620   1,677  (3.4%)   1,796 (9.8%)
Percentage of total saleable
product                                   41.3%   39.7%           49.9%
Total Saleable Product            000 t   3,927   4,227  (7.1%)   3,599   9.1%





In Q3 2012, the Iron Ore Division  extracted 9,883 kt of iron ore, a  decrease 
of 13.0% on Q3 2011 (11,358 kt) and  0.1% on Q2 2012 (9,893 kt). The  Division 
produced 4,142 kt of primary concentrate, a  decrease of 10.5% on Q3 2011  but 
an increase of 6.5% compared to Q2 2012. Ore mining decreased against previous
periods mainly due to availability  of mining equipment at Kacharsky.  Primary 
concentrate production decreased in Q3 2012 reflecting planned repair works at
the processing plant in  July and problems with  the slimes pumping system  at 
the beginning of September.



Saleable concentrate production (with an iron content of 65.3%) was 2,307  kt, 
a decrease of 9.5% compared to Q3 2011 (2,550 kt) but an increase of 28.0%, or
504 kt,  compared to  Q2 2012  (1,803  kt). Pellet  production (with  an  iron 
content of 62.7%) was 1,620 kt, a decrease  of 3.4% on Q3 2011 (1,677 kt)  and 
9.8% on Q2 2012 (1,796 kt). The decrease in concentrate and pellet  production 
against Q3  2011  was  caused by  repair  works  both at  the  processing  and 
pelletizing plants during the period. Total saleable product volumes were 7.1%
lower than in Q3 2011 and 9.1% higher than in Q2 2012.





ALUMINA
ALUMINA AND ALUMINIUM DIVISION



                                                      Q3 12/            Q3 12/

                                   Q3 2012   Q3 2011   Q3 11   Q2 2012   Q2 12
                                                      change            change
Bauxite extraction         000 t     1,429     1,385    3.2%     1,310    9.1%
Grade, % Al2O3/SiO2              42.6/11.7 42.8/11.6         43.2/11.7
Alumina production         000 t       429       428    0.2%       376   14.1%
Internal consumption of
alumina                    000 t       121       121    0.0%       120    0.8%
Percentage                           28.2%     28.3%             31.9%
Aluminium production       000 t        63        63    0.0%        62    1.6%
Gallium production         kg        4,527     4,760  (4.9%)     3,797   19.2%
Electricity
Electricity generation     GWh         514       527  (2.5%)       564  (8.9%)
Alumina & Aluminium
Division own electricity
consumption                GWh         384       378    1.6%       374    2.7%
Percentage                           74.7%     71.7%             66.3%
Electricity supply to
other Group Divisions      GWh          96       108 (11.1%)       156 (38.5%)
Percentage                           18.7%     20.5%             27.7%
Third-parties electricity
supply                     GWh          35        41 (14.6%)        34    2.9%
Percentage                            6.8%      7.8%              6.0%





In Q3 2012, bauxite extraction was 3.2% higher than in Q3 2011 and 9.1% higher
than in Q2 2012. Alumina production recovered and stabilised at full  capacity 
during Q3 2012, with an  increase of 0.2% versus Q3  2011 and 14.1% versus  Q2 
2012.



Internal consumption of alumina amounted to 121  kt (in line with Q3 2011  and 
0.8% higher than in  Q2 2012) representing 28.2%  of total alumina  production 
and consistent  with  the aluminium  smelter  running  at its  full  250  ktpa 
capacity.



Primary aluminium production in Q3 2012 was 63 kt, consistent with Q3 2011 and
a slight increase of 1.6% on Q2 2012.



Electricity generation in Q3  2012 decreased 2.5%  on Q3 2011  and 8.9% on  Q2 
2012 mainly due to unplanned  repair works on one  of the turbines. Supply  of 
electricity to other Group Divisions decreased 11.1% against Q3 2011 and 38.5%
against Q2 2012  reflecting lower generation  capacity and increased  internal 
consumption  due  to   higher  alumina  production.   Electricity  supply   to 
third-parties decreased by 6 GWh, or  14.6%, against Q3 2011 and 2.9%  against 
Q2 2012.





OTHER NON-FERROUS DIVISION



Copper and Cobalt Production



                                                  Q3 12/          Q3 12/

                                 Q3 2012 Q3 2011   Q3 11 Q2 2012   Q2 12
                                                  change          change
Copper
Ore Extraction ('ROM')     000 t     320     486 (34.1%)     418 (23.4%)
Grade, %Cu                          2.83    2.70            3.81
Saleable copper contained¹ t      9,967   7,596   31.2%   8,505   17.2%
Cobalt
Ore Extraction ('ROM')     000 t     327     242   35.1%     341  (4.1%)
Grade, %Co                          1.27    1.58            1.51
Saleable cobalt contained¹ t       2,230   3,099 (28.0%)   2,615 (14.7%)



Note: 1. Production numbers for saleable copper and cobalt refer to tonnes  of 
contained metal. Contained  metal consists  of total units,  whether in  metal 
form or  metal units  contained in  concentrate and  sludge, net  of  internal 
consumption, but excludes copper contained in cobalt concentrate.



Copper ore extraction in Q3  was 34.1% lower than in  Q3 2011 and 23.4%  lower 
than Q2  2012. Ore  extraction  was matched  to  crushing capacity  which  was 
constrained by power availability.



Copper grades started to decline from August 2012, with production at Kabolela
being stopped at the end of September 2012 due to high calcium content.



Saleable copper production for Q3 2012 was 9,967 t, an increase of 31.2%  over 
Q3 2011 (7,596 t) and 17.2% higher  than Q2 2012 (8,505 t). Copper  production 
in Q3 2012 benefitted  from the high grades  in Q2 and the  first month of  Q3 
2012.



The production of saleable copper metal  at the SX/EWplant at Boss Mining  in 
Q3 2012 was 3,735 t (Q3 2011: 1,353 t; Q2 2012: 2,403 t). The increase was due
to the commissioning  of bay  two and three  of the  cobalt SX/EWplant.  This 
allows more efficient plating of copper requiring less electricity.



Cobalt contained production  in Q3  2012 was 28.0%  below Q3  2011 levels  and 
14.7% below Q2  2012 due to  lower grades,  power constraints in  the DRC  and 
Zambia, as well as the effect of higher internal consumption at Chambishi.



ENERGY DIVISION



                                                        Q3 12/          Q3 12/

                                        Q3 2012 Q3 2011  Q3 11 Q2 2012   Q2 12
                                                        change          change
EEC
Coal
Coal extraction total             000 t   4,317   4,272   1.1%   4,392  (1.7%)
EEC consumption of coal           000 t   1,940   1,940   0.0%   1,972  (1.6%)
Percentage                                44.9%   45.4%          44.9%
Coal supply to other Group
Divisions                         000 t   1,122   1,183 (5.2%)   1,157  (3.0%)
Percentage                                26.0%   27.7%          26.3%
Third-parties coal supply         000 t   1,086   1,184 (8.3%)   1,186  (8.4%)
Percentage                                25.2%   27.7%          27.0%
Shubarkol
Coal
Coal extraction total             000 t   2,144       -      -     927       -
Internal consumption of coal (for                     -      -               -
special coke production)          000 t     109                     68
Percentage                                 5,1%       -      -    7,3%       -
Coal supply to other Group                            -      -               -
Divisions                         000 t     241                    136
Percentage                                11.2%       -      -   14.7%       -
Third-parties coal supply         000 t   1,927       -      -     673       -
Percentage                                89.9%       -      -   72.6%       -
                                                             -               -
Special Coke                                                 -               -
Special coke production           000 t      49       -      -      34       -
Special coke supply to other                          -      -               -
Group Divisions                   000 t      30                     21
Percentage                                61.2%       -      -   61.8%       -
Third-parties special coke supply 000 t      11       -      -       9       -
Percentage                                22.4%       -      -   26.5%       -
Electricity¹
Electricity generation            GWh     3,218   3,161   1.8%   3,229  (0.3%)
Energy Division own electricity
consumption                      GWh       245     241   1.7%     253  (3.2%)
Percentage                                 7.6%    7.6%           7.8%
Electricity supply to other Group
Divisions                         GWh     2,653   2,579   2.9%   2,544    4.3%
Percentage                                82.4%   81.6%          78.8%
Third-parties electricity supply  GWh       320     341 (6.2%)     435 (26.4%)
Percentage                                 9.9%   10.8%          13.5%

Note: 1. Electricity consumption and supply numbers may not round precisely
due to the purchase of small volumes of electricity from third-parties.



In Q3  2012, EEC  extracted  4,317 kt  of coal  from  the Vostochny  mine,  an 
increase of 1.1% versus Q3 2011 and a decrease of 1.7% on Q2 2012 as a  result 
of seasonal demand.

Shubarkol coal production in the period was 2,144 kt. Special coke  production 
in Q3 2012 was 49 kt.

Electricity generation in the period was 3,218 GWh, an increase of 1.8% on  Q3 
2011 and a slight decrease of 0.3% on Q2 2012 also due to seasonal demand.



Electricity supplied by the Energy Division to other Group Divisions was 2,653
GWh, an increase of 2.9% on Q3 2011.



Third party electricity sales  of 320 GWh decreased  6.2% compared to Q3  2011 
and  26.4%  against  Q2  2012,  reflecting  the  change  in  balance   between 
electricity generation and internal Group consumption.



LOGISTICS DIVISION



                                                         Q3 12/         Q3 12/

                                         Q3 2012 Q3 2011  Q3 11 Q2 2012  Q2 12
                                                         change         change
Volume of products transported by
railway                            000 t  14,984  15,635 (4.2%)  13,681   9.5%
Percentage of products volume
attributable to third parties              13.3%   15.2%           9.4%





In Q3 2012, the Logistics Division transported 14,984 kt of products by  rail, 
a decrease of 4.2%  compared to Q3  2011 and increased  9.5% against Q2  2012. 
Since Q2  2012,  coal  shipments  to  Russia  have  been  transported  by  our 
customers' own fleets.



A smaller  proportion  of third-party  volumes  were transported  in  Q3  2012 
(13.3%) than in the comparable period (Q3 2011: 15.2%).



                                   - ENDS -









                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCUGGGGGUPPPUM -0- Nov/08/2012 07:01 GMT
 
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