PAO Severstal, one of the world’s leading vertically integrated steel and steel-related mining companies, has acquired from Gazprombank rights for loans and accrued interest of Metal-group LLC worth over 12 billion rubles as well as collateral for the loans. Metal-group LLC is the owner of the mining license for the central part of Yakovlevsky iron-ore deposit. Severstal paid 6 billion rubles as part of the transaction.
Alexander Shevelev, CEO of Severstal, said: “The Yakovlevsky mine is a unique asset with rich resources. The mine is well known to Severstal, which has historically been one of the mine’s major customers. Severstal is committed to being vertically integrated as this offers a key strategic advantage, and further consolidation of the Yakovlevsky mine, which produces high-grade iron ore, could support the company’s continued self-sufficiency long-term. We are confident that our extensive experience of successfully transforming Severstal’s existing iron ore assets will support our plans to improve efficiency at Yakovlevsky to industry-leading levels. The asset’s debt position is currently preventing it from developing efficiently. As a long-term, strategic investor we will ensure that the mine fulfills its potential and give its employees restored confidence in the future”.
Yakovlevsky mine is located in Yakovlevo, 40 km north from Belgorod in the Kursk Magnetic Anomaly basin. The total resource base of the Yakovlevsky deposit exceeds 9.6 billion tons. The operational scheme includes underground mining and surface crushing without beneficiation (DSO). The ore has an iron content of 61.4%. The mine’s current production capacity is one million tons and a project to increase capacity to 4.5 million tons has recently been launched at the asset.
“The company is interested in the asset as in a means of supporting self-sufficiency in high-quality raw ore materials in the long run. We are sure that the implementation of consolidation plans will give us an opportunity to make the Yakovlevsky mine one of the leaders of the industry in its efficiency. It is evident that the current situation with the debt burden does not allow the asset to develop at full speed,” Shevelev said as cited by the company.
The company also said in a presentation that it plans to agree with owners of the mine and buy 100% in it. A source close to Severstal reported that currently two producers – Metalloinvest and Kovdor – dominated the Russian iron ore concentrate market, so there was an ungrounded premium to the price of the raw material.
“Severstal is only 50% self-sufficient in the concentrate. Consolidation of the Yakovlevsky mine will allow the company to stabilize the Russian iron ore concentrate market,” the source said.
Alexei Kulichenko, deputy CEO for finance and economy, said in a conference call that the company hoped that Yakovleskoye would create added value for the company, but negotiations were still under way.
Severstal also has no plans for any new acquisitions soon besides the Yakovlevsky mine, he said. (Severstal/Ukrainian metal)