Mechel, one of the leading Russian mining and metals companies, has announced the acquisition of a 100 percent stake in Eastern Siberian ferroalloy producer Bratsk Ferroalloy Plant (BFP).
BFP is the leading high grade ferrosilicon producer in the region. The plant's annual production capacity totals 84,000 metric tons of ferrosilicon. In 2006, BFP occupied a 16 percent share of the Russian domestic ferrosilicon market, while this increased to 20 percent in the first quarter of 2007.
BFP's acquisition is in line with Mechel's strategy aimed at developing its steel segment, improving its operational efficiency, reducing its production costs and strengthening its position in the market.
Indeed, taking the current market situation for ferroalloys in Russia into account - a market which is characterized by increasing demand and scarcity of supplies - the buyout of BFP will allow Mechel to be more self-sufficient in ferroalloys and to strengthen its position in the special steel market. Currently, the company holds a 39 percent share in Russia's overall special steels and alloy steel production. However, earlier this year, Mechel announced its intention to increase its special steel output. In the light of this stated aim, the incorporation of BFP into the company's structure is an ideal solution to guarantee stable supplies.