) announced that its project company Elgaugol OOO has signed
agreements with Vnesheconombank for the second and third credit
lines of project financing for developing the first phase of the
Elga Coal Complex. The market reacted positively to the news and
the Mechel's stock price increased as much as 5.4% during the
trading hours following the announcement.
The second credit line amounting $2.085 billion will be
utilized to finance construction of Elga Coal Complex's
facilities till the complex's coal mining and processing capacity
reaches 11.7 million tons of run-of-mine coal a year. Further, it
will be used to complete work at the complex, which in turn, will
increase the Ulak-Elga railway's capacity.
The third credit line of $418.7 million will be utilized to
fund expenses on paying Vnesheconombank's interest and fees for
the second credit line until Elga Coal Complex's first-phase
facilities are launched, as well as to repay the $150 million
bridge loan, which was the first tranche granted to Mechel for
the project financing for Elga Coal Complex's first stage.
Vnesheconombank's Supervisory Board approved Mechel's application
for funding the development of its Elga Coal Complex in Sep 2013.
The loan has a tenor of 13.5 years.
Mechel has the requisite facilities to support the Elga
project, such as its own wagon fleet, port facilities in the Far
East and long-term contracts with major international
steelmakers. The project is expected to create about 5,000 new
jobs. Mechel expects the project to enable it to create an
industrial cluster that will cater to the economic growth of the
The Elga Coal Complex, located in southern Yakutia, is one of
the world's as well as Russia's largest deposit of high-quality
coking coal. Mechel believes that Vnesheconombank's financing
will boost its efforts to complete the first phase of the Elga
Mechel currently retains a Zacks Rank #3 (Hold).
AK STEEL HLDG (AKS): Free Stock Analysis
MECHEL OAO ADS (MTL): Free Stock Analysis
TIMKEN CO (TKR): Free Stock Analysis Report
WORTHINGTON IND (WOR): Free Stock Analysis
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Other companies in the steel and related industries with
favorable Zacks Rank are
AK Steel holding Corporation
Worthington Industries, Inc.
). While AK Steel retains a Zacks Rank #1 (Strong Buy), both
Worthington Industries and Timken carry a Zacks Rank #2