Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has halted its purchases of coking coal from domestic mining and steel producing group Mechel, as the companies failed to agree prices in the fourth quarter, which has resulted in the annulment of the 2009-2013 delivery contract concluded in September 2008.
Mechel had been supplying about 20 percent of MMK's needs of high quality coking coal, including K9 grade coal which is not produced by any other Russian mining company.
On the other hand, MMK is drawing up options for replacing the missing volume of coking coal by lower-priced products, and says that the delivery cut in question has hardly affected the company's production operations, as MMK has decreased its output by more that 50 percent due to the downturn.
Meanwhile, Mechel has increased its claim against MMK at Chelyabinsk Regional Court to almost Ruble one billion (approx. $30.11 million), from the Ruble 613 million (approx. $18.46 million) filed in November, over debts for coking coal delivered last year.