The Russian government has agreed to provide a state guarantee for a Ruble 30.75 billion (approx. $987 million) credit line that state-owned bank VTB will give to four subsidiaries of Russian iron ore and steel producing company Metalloinvest Holding (Metalloinvest), namely, Lebedinsky GOK, Mikhailovsky GOK, Oskol Elektrometallurgical Plant (OEMK) and Ural Steel.
"The state support will guarantee the VTB bank credit line, which has already been agreed in principle," reads Metalloinvest's statement. The loan funds will be invested in the production activities of the enterprises and their capital expenditures.
According to reports, Metalloinvest's mining subsidiaries Lebedinsky GOK and Mikhailovsky GOK will receive state guarantees for Ruble 10 billion (approx. $321million) loan each, while its steelmaking subsidiaries OEMK and Ural Steel will receive state support for securing credit lines of Ruble 6.25 billion (approx. $201 million) and Ruble 4.5 billion (approx. $144 million) respectively.
Metalloinvest said in its statement that its subsidiaries "satisfy all government requirements for state support. The enterprises developed and implemented a set of crisis management measures and as a result sufficiently increased the efficiency of production by the optimization of operations and the reduction of administrative costs."
According to market sources, Metalloinvest plans to carry out some big investment projects, including the reconstruction of OEMK's rolling mill 350, the commissioning of Ural Steel's blast furnace and casting machines, the construction of a new oxygen converter shop at Ural Steel and of a flat rolling production facility at OEMK, and the capacity expansion of its mining subsidiaries Lebedinsky GOK and Mikhailovsky GOK.