Market Chatter: Mechel Looking to Sell A Minority Stake in Mining Unit; Shrs Down 6.5%, But Above Yr Low Hit Earlier

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Heavy indebted Mechel OAO ( MTL ) is in talks with several major mining companies in Asia, including China's Baosteel, for the sale of a minority stake in its mining unit, its CFO says, according to a Seeking Alpha report. MTL has said it wants to refocus on its mining business and sell many of its other non-core assets in an effort to raise around $4B, the report said.

MTL today reported net revenue in 2012 decreased by 10.1% and amounted to $11.3 billion compared to $12.5 billion in 2011. The operating loss amounted to $897.9 million or -8% of the net revenue, compared to the operating income of $1,840.1 million or 14.7% of the net revenue in 2011.

This result - added to selling pressure on commodity related stocks after data showed slower than expected economic growth in China - has weighed on the stock.

But on a more positive news, MTL announced signing a memorandum of understanding with Baosteel Resources Int. Co. Ltd. The memorandum stipulates that Mechel OAO, through its subsidiary Mechel Carbon Singapore will supply Baosteel Resources with up to 960,000 tonnes of coking coal annually. The price will be corrected monthly. In addition, the memorandum allows for implementation of joint projects in mining resources on the territory of the Russian Federation, People's Republic of China and third countries. The sides will consider the possibility of cooperation on other fields as well, including the possibility of collaboration with the economic development institutes of the Russian Federation and the People's Republic of China.



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This article appears in: Investing , Commodities

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