13 May, 2014 – Mining Chemical Company Russian Bor, operating the only functional boron deposit in Russia, announces financial results for the year ended December 31, 2013. Net loss for 2013 is 1 billion 790 million 705 thousand rubles.
The negative financial performance is caused by challenging market conditions and growing semi-fixed costs. The price of boric acid, BOR's key product, decreased by 10% during 2013. At the same time semi-fixed costs grew by 15% due to regular wages indexation and raise of railway charges and energy prices.
In 2014 the situation is further aggravating: during the first two quarters the prices have dropped by another 5%, retrospective since the end of 2011 they have decreased in total by 32%. According to preliminary estimations in business plan, in 2014 the costs will grow by 11% compared to 2013, and compared to 2011 the growth will amount to 33%.
Since 2011, more than 3bn rubles have been invested into Bor to ensure indexations of wages on a regular basis, to eliminate issues in the deposit operation, to extend development licenses, to upgrade mining equipment and execute major repairs. Yet the state of the market barred against reaching the profit despite of strenuous efforts and investments.
Given the red ink of the plant’ balance and necessity of significant capital investments into revamping and reorganizing of the operations for higher efficiency on the floundering market, the owner has been negotiating with Vneshekonombank the allocation of funds since the middle of 2012. At the present moment the negotiations are still under way.
Vladimir Kozmin, the managing director of Russian Bor: «Under negative dynamics of prices, the top priority for the plant is to lower production costs by all means, including integrated modernization. By the end of 2013, due to the active stance taken by the owner and considerable investments, a smooth production loop was put in place and the output volumes increased. Yet the price reduction and low demand on the world market makes the growth of shipments economically inexpedient. At the present moment warehouses are overstocked so it was decided to halt the production lines starting on June 1 for one month, while mining works will continue»