Russian pig iron exporter Industrial Metallurgical Holding (IMH), or Koks, will see further profitability improvement due to higher captive coal production, Fitch says in a note sent to Kallanish.

This increased output will come from the operating Butovskaya mine, commissioned in 2014, and at the Tikhova mine which is currently under development and scheduled to be commissioned in 2018.

Koks is currently over 100% self-sufficient in coke, 71% in iron ore and 50% in coking coal. With the commissioning of Tikhova and ramp up at Butovskaya, Koks expects to achieve 100% self-sufficiency in coking coal by 2018. Once Tikhova is operational, Koks will become a producer of rare high quality ZH-grade coking coal.

The commissioning of the iron ore deposit at Kombinat KMA Ruda in 2020 will bring Koks' self-sufficiency in iron ore to 100%.

Koks, the world’s largest merchant pig iron exporter, controlled 15% of the world's pig iron exports and 29% of total CIS pig iron sales in 2015. North America accounts for 38% of pig iron exports, Europe for 29%, Turkey and the Middle East for 25% and Asia for 8%. It also accounted for 25% of total coke sales in CIS. 

The firm plans to commission by end-2017 a 2 million tonnes/year crude steel plant as part of its Tula Steel project, along with partners LLC Steel and DILON Cooperatif. All three companies are ultimately controlled by the Zubitskiy family. The steelworks will produce specialty steel to be used in the machinery and automotive industries, and will be fed with pig iron from Koks subsidiary Tulachermet.

Koks’ pig iron output declined -6% on-year in 2015 to 2.06 million tonnes. Of this, 648,000t was premium grade pig iron, up 6%. Coke output rose 5% to 2.73mt.

Koks' revenue increased 12% on-year in 2015 to RUB 53 billion ($808.3 million), even though average dollar-denominated export prices of pig iron declined -34% on-year. The fall in the rouble against the US dollar has helped the company partially offset the negative effect of softer prices.