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EN+ to double coal reserves to 2bn tonnes in 3 – 5 years

The Russian firm said it will also double annual coal output to between 25 and 30m tonnes over the same time frame and look to joint ventures with Chinese power and mining companies

Russia’s EN+ Group aims to double its coal reserves in 3 to 5 years to 2 billion tonnes and double annual coal output to 25 million to 30 million tonnes in the same timeframe, the firm’s head of strategy said on Wednesday.

The company was also in talks with Chinese power and mining companies about possible investments in coal projects to supply thermal coal to Chinese power plants and was looking to form joint ventures with Chinese power companies, said Dmitry Yudin, head of strategy of EN+ Group, on the sidelines of the Russia & CIS Investment Summit in Hong Kong.

The goal of the joint ventures would be to export electricity from Russia to China.

“We have a strategy to develop our coal business because coal is an interesting commodity that will command a lot of demand from China and Indian,” said Yudin.

Coal demand from heavy industry in China has climbed in recent years as the country’s economy surges ahead, with coal giant China Shenhua Energy Co Ltd (1088.HK: Quote) posting a record second-quarter profit in August on higher sales.

Russian coal supplies to China skyrocketed last year to 12 million tonnes from 0.76 million tonnes in 2008.

EN+ Group, owned by Russian billionaire Oleg Deripaska, employs more than 100,000 people and is involved in mining, metals and energy businesses.

The group consolidated its energy assets last year into EuroSibEnergo Plc, creating Russia’s second-largest electricity producer.

With a total capacity of 19.5 GigaWatts, EuroSibEnergo generated more than 8 percent of the country’s electricity and produced 82.8 billion KiloWatt hour of electricity last year.

EuroSibEnergo owns a series of power stations in Siberia that power the smelters of United Company RUSAL Plc (0486.HK: Quote) (RUAL.PA: Quote).

EuroSibEnergo, formerly named EN+ Power, hired BOC International and Deutsche Bank AG (DBKGn.DE: Quote) to support its up to $1.5 billion Hong Kong IPO in the fourth quarter, sources close to the deal told Reuters in May.

Yudin declined to comment on the IPO plan, adding that there was no pressure to raise capital at the group level.

In addition to EuroSibEnergo, EN+ is the parent of ferromolybdenum maker Strikeforce Mining and Resources Ltd (SMR) and a major shareholder of RUSAL, the world’s largest alumina and aluminium producer.

Following RUSAL’s listing, more Russian companies plan to list in Hong Kong, giving them a base close to China’s booming market and access to fund managers in the region putting money to work in emerging economies. (Additional reporting by Joseph Chaney; Editing by Chris Lewis and Don Durfee)

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