Evraz signs joint venture agreement for coking coal

Evraz signs joint venture agreement for coking coal

Evraz Group, one of Russia’s leading vertically integrated steel production and mining businesses, announced yesterday (September 21) that it had signed a joint venture agreement with Japan’s Mitsui & Company (Mitsui), one of the world’s largest mineral resources companies. The joint venture covers the development of the Denisovskoye coal field in Yakutia, East Siberia, Russia. Under the terms of the joint venture agreement, Evraz will retain an ownership interest of 70% in the project while Mitsui will become a co-investor with 30%. Completion of the transaction is subject to certain terms in the joint venture agreement. It is expected that the transaction will close by the end of 2005. Development has already begun at the Denisovskoye coal field, and production and shipments of coking coal should begin in the second half of 2006. Denisovskoye contains estimated extractable reserves of 70-85 million tons of high-grade hard coking coal. The project is expected to reach its full production during 2008, with annual production volume anticipated in the region of 2.4 million tons of coking coal. The joint venture project plans to export all of the coking coal produced to steel mills in Asia, especially Japan. Commenting on the project, Alexander Abramov, Chairman and Chief Executive of Evraz Group, said: “We look forward to applying our strong track record of successful mine development to this joint venture with Mitsui, who will provide significant input based on their expertise and knowledge of the global coal market. The high quality of coking coal in the Denisovskoye field gives us a significant competitive advantage for exports to the fast growing Asian and Japanese markets. This partnership fits well with one of Evraz’s strategic aims, to build a stand alone mining business.”