Mechel sold two ferroalloy assets

Mechel announced signing an agreement for disposal of several ferroalloys assets to Turkey’s Yildirim Group.

According to the agreement, Yildirim Group acquires Mechel ’s Voskhod Mining Plant (Khromtau, Kazakhstan) and Tikhvin Ferroalloy Plant (Tikhvin, Leningrad Region, Russia) for a total of $425 million.

The buyer will pay the entire sum to Mechel immediately after the deal’s closure. In order to close the deal, all required approval by Kazakh and Russian regulatory agencies and both sides’ corporate management agencies is due to be obtained.

Societe Generale Corporate and Investment Bank, ING Bank and Dechert are advising Mechel on this transaction.

«This agreement was signed in line with the strategy on restructuring the group’s assets, earlier approved by our Board of Directors. The funds our company will get from this deal will help the company to deleverage and continue to finance its priority development projects,» Mechel ’s Chief Executive Officer Evgeny Mikhel noted.

Tikhvin Ferroalloy Plant – Located in Tikhvin, Leningrad Region, it is a modern enterprise of a capacity to produce up to 120,000 tonnes per annum of high-carbon ferrochrome used to produce stainless steel. As raw material, the plant uses the chrome ore concentrate produced at Voskhod mining plant.

Voskhod Mining Plant – includes a modern chrome ore mine and a beneficiation plant for further processing of the ore and producing chrome ore concentrate. Voskhod’s proved and probable reserves total 20 million tonnes of ore according to JORC standards.

Yildirim Group’s primary objective is to continue its growth trends in the chrome ore and ferrochrome markets and to strengthen its position. With this acquisition of the chrome ore assets and the concentration plant will improve Yildirim Groups production capacity to a world class level at 2.5Mtpa, with the addition of the TFP to the Group’s existing production plants, Eti Krom in Turkey and Vargon Alloys in Sweden, Yildirim Group will be one of the main players in high carbon high quality ferrochrome production with a total installed capacity of 520,000ktpa.