It is reported that Mechel, one of the leading Russian mining and steel producing groups, may receive government support to finance the development of its Elga coal deposit located in Russia's Yakutia region, and also for the construction of the rail and port infrastructure required to export output from the deposit.
At the meeting held in Yakutia on August 21, Russian Prime Minister Vladimir Putin instructed state-controlled banks Sberbank, VTB, Gazprombank and VEB, as well as three government ministries, to look into buying Mechel bonds worth Ruble 10 billion (approx. $316.4 million) to help develop the Elga coal deposit. In August of the current year, Mechel, which is one of the most indebted Russian steel companies, said that it would issue Ruble10 billion worth of bonds before the end of 2009 and issue another Ruble 30 billion (approx. $949.25 million) worth in 2010.
In addition, the Russian government may also grant Mechel tax breaks for its mining operations at the Elga project.
The license for the development of the Elga deposit, the country's largest coal deposit with 2.2 billion metric tons of coal reserves, was acquired by Mechel via government auction in 2007. As a part of its obligations as the winner of the auction, Mechel will have to put the unfinished stretch of railway at the deposit into operation no later than September 30, 2010.