Belon expands coal reserves to meet MMK’s coking coal requirements

Friday, 18 June 2010 16:31:54 (GMT+2)

The Russian steelmaking group Magnitogorsk Iron and Steel Works (MMK) has announced that Kostromovskaya coal mine, a subsidiary of coal mining company Belon which is part of the MMK group, on June 15 won the auction for the right to develop the Nikitinsky area of the Nikitinsky coal deposit. The license was acquired for Ruble 457.6 million (about $14.8 million).

Preliminary coal reserves of the acquired area include 132 million mt of balance resources, and about 66 million mt of off-balance resources of coking coal of valuable Zh grade. The acquisition of the Nikitinsky area significantly increases Kostromovskaya mine's coal reserves, and is essential for its further development, as, with a current production capacity of two million mt of coal per year, its resources will be enough only for 11 years.

Under the terms of the license agreement, Kostromovskaya mine has to start commercial production on the acquired area not later than 72 months from the receipt of the license.

Accordingly, Belon's participation in the auction was in line with the company's strategy aimed at ensuring MMK's uninterrupted supply of raw materials in the necessary volume and of the necessary quality. Belon plans to meet 80 percent of MMK's coking coal requirements. Currently, it meets about 40 percent of the producer's needs.

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