The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced its acquisition of a 10.75 percent stake in the Russian coal producer Belon Group (Belon) from Sapwood Investment Limited.
Furthermore, MMK has also stated that it is considering the possibility of upping its stake in Belon in the future.
Belon is one of Russia's largest coal and coking coal producers, owning several mines, processing companies and service centers. In 2006, Belon mined 1.72 million metric tons of coking coal and produced 4.4 million metric tons of coal concentrate.
In the light of the current scarcity of coking coal in the Russian domestic market, MMK's acquisition of the stake in Belon is a highly strategic move, which will allow the company to guarantee stability of its coking coal and coal concentrate deliveries. In addition, MMK's option to raise its stake in Belon brings the company one step closer to creating its own raw material base.