Mechel pushes for world-class status

RUSSIAN miner Mechel has positioned itself as a world-class coal producer with the purchase of two coal companies late last week. The acquisition gives the miner significant access to the coking coal hungry markets of Japan, South Korea and Taiwan.
Mechel pushes for world-class status Mechel pushes for world-class status Mechel pushes for world-class status Mechel pushes for world-class status Mechel pushes for world-class status

Mechel Coal Resources.

Angie Tomlinson

During an auction held on October 5, Mechel acquired 75% of Yakutugol OJSHC, bringing its holding up to 100%. It also purchased 68.8% of Elgaugol. The acquisition cost Mechel $US2.3 billion.

Coking coal miner Yakutugol produces 10 million tonnes per annum and holds reserves of 200Mt, according to Russian reserve valuation standards.

Yakutugol is the largest Russian exporter of coking coal and sells most of its output to countries in the Pacific region, including Japan, South Korea and Taiwan.

Elgaugol OAO owns the development licence of the Elga coal deposit, which holds coking coal reserves of 2.2 billion tonnes. According to estimates, coal reserves in the region could reach 30 - 40Bt.

"By acquiring Yakutugol, we have gained control over the last operating unprivatised coal asset, concluding a three-year privatisation process," Mechel CEO Igor Zyuzin said.

"Yakutugol will significantly strengthen Mechel's position on the Russian and international coking coal markets.

"Secondly, we obtained access to the largest deposit of high quality coking coals, which lays a reliable foundation for long-term development of Mechel's coal mining.

"With ownership of Southern Kuzbass, Yakutugol and Elgaugol, we hope to establish a world-class modern coal mining company."

Last week's acquisition also included a complex owned by JSC Russian Railways.

The complex includes the railway spur track and an access road from Zeisk station of the Far Eastern Railway to the Elga coal deposit.