The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced that it has gained effective control over Russia's leading coal concentrate producer Belon by doubling its stake in the company to 82.6 percent. The move is aimed at securing stable coking coal supplies for MMK's steel smelting operations, including supplies of deficit coal grades.
At the final stage of the transaction, MMK increased to 100 percent its stake in Cyprus-based Onarbay Enterprises Ltd, which owns 82.6 percent of Belon. As SteelOrbis previously reported, in March 2008, by acquisition of a 50 percent interest in Onarbay Enterprises Ltd, MMK increased its indirect ownership in Belon from 10.8 percent to 41.3 percent for a consideration of $230.4 million. The current price of the transaction has not been disclosed.
Accordingly, the supplies from Belon will account for the bulk of MMK's requirements of coking coal concentrate. "This transaction brings MMK's self-sufficiency in strategically important input material to a new level. We are sure that this acquisition will strengthen our competitiveness in the current situation and in the long term," MMK's majority owner and chairman Victor Rashnikov commented.
Meanwhile, MMK said it will continue to implement Belon's investment program, which is designed to increase its production efficiency and its market share. In 2008 Belon produced 5.5 million mt of coal, including 2.9 million mt of coking coal, while its sales stood at $1.125 billion, with a net profit amounting to $124 million.