It is reported that Russian mining and steel producing group Mechel is to take over the management of ESTAR's Rostov Electrometallurgical Works (REMZ), which was declared bankrupt in August 2009, and also the management of other ESTAR facilities located in Russia's Rostov region, including the scrap producer Lomprom, Vostochnaya coal mine and thermal power plant Experimentalnaya TES.
Accordingly, the arrangement was reached at the meeting of the governor of Russia's Rostov region, Vladimir Chub, with the owners of steelmaking holdings ESTAR and Mechel, during which the prospects for the production activities of ESTAR's facilities located in the Rostov region were discussed.
As SteelOrbis previously reported, in August this year, Mechel assumed management of and financial interest in the operation of ESTAR subsidiary Zlatoust Metallurgical Works (ZMZ) under a trilateral strategic partnership agreement reached between the two companies and the regional administration in the Chelyabinsk region. It is supposed that a similar scheme will be used for the recovery of the financial situation of REMZ.
At the end of 2008, REMZ had a total debt of Ruble 13.2 billion (about $439.3 million), while its revenue for the first operating year was reported at Ruble 7 billion ($233 million), with a bottom-line loss of Ruble 330 million ($11 million). In August this year, REMZ was declared bankrupt and a court-ordered administration of the mill was put into effect.
Commissioned in 2008, REMZ is one of the newest subsidiaries of ESTAR, with an annual capacity of 750,000 metric tons of steel, and a product portfolio of long products intended for the southwestern Russian construction sector.