MMK buys majority stake in BRU

The Russian steelmaker Magnitogorsk Iron and Steel Works (MMK) has announced the acquisition of a 51 percent stake in iron ore producer Bakal Mining Administration (BRU). BRU is a relatively small company with approximately one billion metric tons of iron ore in reserves. BRU's mining capacity is estimated as 500,000-1 million metric tons a year. The acquisition of the controlling stake in BRU allows MMK to further expand its iron ore base. Until very recently MMK was the only Russian steel producer without its own iron ore assets. This situation changed in November 2006, when MMK won the rights to develop the Prioskolskoye iron ore deposit. However the location of the deposit, at a distance of 2,000 km from MMK, has created some problems including addition transportation expenses. BRU, on the other hand, is in very close proximity to MMK – at a distance of about 300 km.