Russia buys big in the US

RUSSIAN miner Mechel OAO has announced it will buy Bluestone Coal, giving it ownership of four West Virginia mining complexes, including eight active open cut mines and five underground mines.

Angie Tomlinson

Mechel will pay Bluestone $US436 million in cash, issue 83.3 million preferred shares and assume $132 million in debt. Bluestone’s Kentucky and non-coal operations are not part of the deal.


Mechel CEO Igor Zyuzin said the acquisition established Mechel as one of the largest producers of coking coal in the world.


“Following the closing, we expect to have up to an estimated 725 million tonnes of coal reserves and resources in the US [JORC guidelines, subject to confirmation during a planned drilling program] and a more diversified asset base, including a strong foothold in North America and enhanced European, American and Asian sales channels,” he said.


“We also see significant opportunities for continued growth at Bluestone to reach production levels of more than 7 million tonnes per year of high-quality hard coking coal concentrate.”


Last year Bluestone sold 2.8Mt of hard coking coal and generated sales of $327 million.


Bluestone currently employs about 520 people and sells half its coal domestically, with the remainder exported, mainly to Europe.


Zyuzin said using coking coal concentrates from its Russian assets, Mechel would be able to blend coal into new brands, “thus increasing the overall value of Mechel’s coal portfolio”.


“The long-term drivers of demand for high-quality coking coal remain strong and we believe this acquisition will further enhance our ability to capitalise on the opportunities in the marketplace, even under today’s challenging conditions,” he said.

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