BUSINESS

Mechel reports disposal of Romanian steel assets

Mechel, one of the leading Russian mining and metals companies, reports that it has disposed of its Romanian steel assets, a press release informs. Mechel transferred the shares of all its Romanian assets to the buyer, Romania’s Invest Nikarom SRL. The sum of the transaction is for a nominal amount of RON 230 (some 70 US dollars or EUR 52). Invest Nikarom SRL acquired Mechel Group’s five assets — Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A. Mechel OAO’s Chief Executive Officer Evgeny Mikhel commented: “This transaction is yet another step in implementing Mechel OAO’s revised strategy aimed at developing our key production lines and disposal of non-core businesses. We have earlier announced our intention to exit the European steel production, which is chronically loss-making both currently and in the foreseeable future. Not only does it have a negative impact on the Group’s financial results and cash flow, but also increases its alternative costs, which we cannot afford as we invest in such promising projects as the Elga coal deposit and the universal rolling mill. With the Romanian assets’ planned loss of 2.4 billion rubles in 2013, this transaction will have a marked financial effect for our shareholders. The freed cash flow will be used for operational activities as well as decreasing the company’s leverage.” In November 2012, due to unfavourable prices in European steel markets linked to rising ferrous scrap prices and weak demand for finished products, production at Mechel’s Romanian steelmaking facilities was temporarily halted. While production at these steelmaking facilities was temporarily suspended, all necessary measures were undertaken to retain the affected facilities’ operational capability and to conduct maintenance works in winter.

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