The Russian mining and steel producing company Evraz Group has announced that it has won the license to develop the Mezhegey coal deposit in Russia's Republic of Tyva for Ruble 950 million (about $32 million) in a tender held by the Russian State Mineral Resources Agency. The license is expected to be received within two months.
Mezhegey is a world class coking coal deposit with an estimated 213.5 million mt of category A+B+C1 reserves of hard coking coal (grade Zh under Russian classification). Detailed plans for the development of the Mezhegey deposit will be prepared in due course.
"The development of the Mezhegey coal deposit is a strategic investment aimed at covering the needs of Evraz's steelmaking facilities for high quality hard coking coal after the depletion of existing Zh-grade coal reserves. Evraz will also benefit from production and sales of additional volumes to the market. Due to the long-term nature of the project, it will not require substantial capital expenditures over the next two years which is in line with our conservative cash management policy," Evraz's CEO Alexander Frolov commented.
This is the second time an auction for the development of the Mezhegey coal deposit was carried out. As SteelOrbis previously reported, in July 2008, bidding $725 million, Evraz won the right to develop the deposit, but then renounced its right to purchase the license due to the continuing global financial and economic crisis and also due to the weakening conditions in the coal market. In 2008, Evraz was targeting an annual production level of 10 million mt of raw coal at the deposit, i.e., approximately 8.4 million mt of coal concentrate, to be reached by 2016.