Mechel makes u-turn decision on mining sale plans

28 April 2013 (Last Updated April 28th, 2013 18:30)

Russian steel and coking coal producer Mechel has put its plans to sell up to 25% of mining division Mechel Mining on hold, amid unfavorable market conditions.

Elga Coal Complex

Russian steel and coking coal producer Mechel has put its plans to sell up to 25% of mining division Mechel Mining on hold, amid unfavorable market conditions.

The sale was expected to generate about $1.25bn until late 2013 after long-term negotiations with various potential buyers, reports Reuters reports.

"The company is expected to speed-up the sale process when coal prices improve."

The company is expected to speed-up the sale process when coal prices improve and is also seeking time for completion of the valuation process.

Mechel Mining announced its plans to sell the stake in September 2012 in order to advance the development of the Elga coal deposit located south-east of Yakutia, Russia, but has had to cut investments and put non-core assets on the market to service more than $9bn.

Potential buyers for the deal include China's Baosteel and Korea's Posco, but neither of the potential suitors was expected to make an immediate decision in the present market environment, the sources told Reuters.


Image: Mechel previously announced plans to sell stake in itsmining unit in order to speed up the development of the Elga coal deposit. Photo: courtesy of Mechel Mining OAO.

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