The Russian mining and steel producing group Mechel has announced the signing of a contract with Chinese state industrial corporation Minmetals for the construction of a rail and structural steel mill at its subsidiary Chelyabinsk Metallurgical Plant. The total cost of the contract amounts to approximately $300 million.
The new rail and structural steel mill will be constructed on a turn-key basis with a tied loan being granted, and will produce structural shapes in a wide range of sizes and sections. The main output will include railroad rails up to 100 m in length.
Within the scope of the deal, Minmetals will construct the workshop, will install the mill’s equipment and will commission the technologies to be delivered by the Italian-based plantmaker Danieli.
A minimum 400,000 mt of rails will be annually provided to Russian Railways (RZhD OAO) through its long-term partnership signed with Mechel in the month of February current year.
The construction of the mill is scheduled for completion by late 2010.
The contract in question is the first to be signed within the scope of the memorandum of intent signed between Mechel and Minmetals on October 28, 2008 at the Third Russian-Chinese Economic Forum in Moscow. The purpose of the said memorandum of intent is to establish a long-term mutually advantageous partnership to realize Mechel’s key projects for the reconstruction of operating infrastructure and the construction of new infrastructure of federal importance, which includes the construction of the mill in question and the building of a new coal mining complex at the Elga deposit.