The son of the writer Alexander Solzhenitsyn Stepan led the largest coal company in Russia - SUEK, controlled by businessman Andrei Melnichenko. This was told to RBC by a source close to SUEK, and the press service of the company confirmed.
Melnichenko's partner will focus on strategy
The former CEO and co-owner (owns 7.8%) of SUEK Vladimir Rashevsky, who has held this position since the end of 2004, will remain on the board of directors of the company and continue to be responsible for the strategy, said RBC's interlocutor.
Rashevsky will also be on the board of directors of another company, Melnichenko, a producer of fertilizers Eurochem, the SUEK said in a statement. “Changes in the management structure are aimed at further strengthening the company's market position and sustainable growth in operating efficiency, as well as at maximizing synergies both within SUEK and between SUEK and Eurochem,” the statement on the SUEK website said.
“I am grateful to Vladimir for the long-term partnership in SUEK and I am glad to develop cooperation both in SUEK and in the future at Eurochem,” Melnichenko noted (his words are quoted in the message of SUEK). The merger of SUEK and Eurochem is not discussed, but optimization of both companies is being prepared, the source of RBC said. According to him, we can talk about the joint use of transport and mining divisions of both companies. So far, however, there are no specific instructions, he added.
“Melnichenko on Friday (May 15, RBC) held the board of directors and the board of SUEK, Rashevsky and production director Vladimir Artemyev left their posts. Solzhenitsyn was appointed as general, and SUEK-Kuzbass CEO Yevgeny Yutiaev was appointed the main producer, ”a source told RBC.
Rashevsky previously served on the board of directors of a coal company and was a member of the strategy committee. He will retain his stake in SUEK, another source added close to one of Melnichenko’s companies. In 2018, Forbes magazine estimated Rashevsky’s fortune at $ 550 million, he took 183rd place in the ranking of the richest Russians.
SUEK is the largest supplier of thermal coal to the Russian market and one of the main producers of electricity and heat in Siberia. The company supplies coal to 48 countries through its own developed distribution network. SUEK also owns 24 power plants serving over 5 million consumers in Russia.
What are the permutations in SUEK related to
The changes in the management of SUEK “reflect the significant growth in the scale of SUEK’s activities and its transformation into a diversified holding, which includes, in addition to coal production enterprises, logistics and energy assets,” the company said. First of all, it is about the fact that in August 2018, the Siberian Generating Company (SGK), which also belonged to Melnichenko and Rashevsky (it had 7.8%), became part of SUEK. A few months later, SGK was headed by Solzhenitsyn.
In addition, SUEK is one of the five largest operators of gondola cars in Russia (53.35 thousand at the end of 2019). In April 2019, she acquired a leasing company with a fleet of 16 thousand cars from the ICT group of Alexander Nesis for about $ 500 million.
“Permutations may be caused by the failure to fulfill the SUEK production program,” says one of the sources of RBC. In March, SUEK left financial director Nikolai Pilipenko, who has held this position since 2016, and Andrei Vanyushin was appointed new.
Coal prices have been declining for more than a year. At the end of April 2020, Russian steam coal fell to its lowest level over the past four years, its price in Asia fell to less than $ 60 per ton amid falling demand due to the coronavirus pandemic. SUEK coal production in 2019 decreased by 4%, to 106.2 million tons. Revenue decreased by 9%, to $ 7.5 billion, EBITDA - by 17%, to $ 2.115 billion, and net profit - immediately by 39.3% , up to $ 706 million
Power Engineer from McKinsey
At the same time, the electricity business of SUEK (SGK), which has been managed by Solzhenitsyn since November 2018, has grown: the installed capacity of its power plants has increased by 35%, to 14.7 GW after the acquisition of Reftinskaya TPP from Enel Russia. As a result, electricity sales increased by 10%, reaching 55.2 billion kWh. Sales of electricity, heat and power brought SUEK $ 2.1 billion. The company attributed the growth of this indicator to the contribution of new assets, higher prices on the competitive capacity market, as well as a higher electricity price in Siberia under the influence of overflow from the first price zone (European part of Russia and Ural).
Stepan Solzhenitsyn, who will now combine the posts of General Director of SGK and SUEK, before joining Melnichenko for almost 15 years, worked at McKinsey consulting company since 2004. He oversaw the work of consultants with energy companies in Russia and the CIS, as well as relations with government agencies and projects in the field of urban planning and integrated development of territories. Since 1998, his brother Yermolay Solzhenitsyn, who heads the expert group on the mining and metallurgical industry in Europe, the CIS, the Middle East and Africa, has been working at McKinsey.
Stepan Solzhenitsyn graduated from the Massachusetts Institute of Technology and Harvard. He worked as an expert in energy, ecology and urban planning in New York.