Russian mining and steel group Mechel has announced that it has signed an agreement with Russian bank Gazprombank for the sale of its 49 percent share in the Elga coking coal deposit development project for RUB 34.3 billion ($494.23 million) to Gazprombank.
According to the agreement, Mechel is due to sell its 49 percent stake in Elgaugol, the operator company of the project and owner of its subsoil license, its 49 percent stake in Elga-Doroga, which owns the Ulak-Elga railroad, and its 49 percent stake in Mecheltrans-East, which is the railroad’s transport operator, to Gazprombank by June 30 this year.
Mechel will use the cash acquired through this deal to repay its debt to Sberbank of Russia and Sberbank Leasing. According to Mechel, the agreement also stipulates coordinated efforts and mutual guarantees of the two sides regarding the project’s development. Gazprombank has the option of selling the stake in the Elga project to Mechel within three years following a five-year tenure.