The Russian steelmaker Magnitogorsk Iron and Steel Works (
MMK) has announced the acquisition of a 51 percent stake in
iron ore producer Bakal Mining Administration (BRU).
BRU is a relatively small company with approximately one billion metric tons of
iron ore in reserves. BRU's mining capacity is estimated as 500,000-1 million metric tons a year.
The acquisition of the controlling stake in BRU allows
MMK to further expand its
iron ore base.
Until very recently
MMK was the only Russian steel producer without its own
iron ore assets. This situation changed in November 2006, when
MMK won the rights to develop the Prioskolskoye
iron ore deposit. However the location of the deposit, at a distance of 2,000 km from
MMK, has created some problems including addition transportation expenses. BRU, on the other hand, is in very close proximity to
MMK – at a distance of about 300 km.