Mechel acquires majority stake in Russian port to boost coal exports

14 January 2013 (Last Updated January 14th, 2013 18:30)

Russian mining and metals firm Mechel has acquired a majority stake in Vanino Sea Trade Port for RUB15.5bn ($512m) as part of its strategy to boost coal exports and reduce transport costs.

Vanino Sea Trade Port

Russian mining and metals firm Mechel has acquired a majority stake in Vanino Sea Trade Port for RUB15.5bn ($512m) as part of its strategy to boost coal exports and reduce transport costs.

Mechel bought a 55% stake in Vanino from the Government of the Russian Federation through its logistics subsidiary Mecheltrans.

The purchase follows a decree issued by the Russian government on 29 December 2012 to divest federally owned shares in the port.

Vanino Sea Trade Port comprises 16 berths, storehouses and open storage space and is located in Vanina Bay in the Strait of Tartary that connects the Pacific Ocean's Sea of Okhotsk with the Sea of Japan.

It is also considered to be largest transport centre in the Khabarovsk region and one of the ten largest ports in the country, with a cargo turnover in 2012 totalling 6 million tonnes.

The sea port handles cargo bound to Russia's north-east, Japan, South Korea, China, Australia and the US, and is located about 1,500km away from the company's Yakutia coal assets.

Mechel CEO Evgeny Mikhel said that by gaining access to Port Vanino's transhipment capacities, the company can boost its export volumes to Asia Pacific.

"Port Vanino's operations will indisputably improve our ability to manage the logistics of our deliveries, expand the range of our exports due to greater storage capacity and minimize our dependency on transport markets," Mikhel said.

"The fact that Port Vanino's coal transhipment capacities may be increased as early as in 2013 to seven million tonnes a year at little expense and without any significant reconstruction of its facilities, gives us the chance of greatly reducing investment costs for construction of our own terminal at Vanino in the next three to five years."

With this deal, Mechel expects to ensure guaranteed sales volumes of its coal products, including those produced at the Elga deposit, one of the largest coking coal fields in the world.


Image: Mechel plans to increase its coal export capacity from the Vanino Sea Trade Port in Russia. Photo: LxAndrew.