Reuters reported that Russian steel and coal miner Mechel is looking to sell a 25% stake in its East Siberian Elga coal deposit to South East Asian investors

One of the sources told Reuters “They are in active talks with companies from South East Asia (including) Japan, China and South Korea. They could either sell a stake (in it) or (sign) a stake agreement, (which will bind) the company to sell its products at a fixed price in exchange for receiving a credit line.”

Another source familiar with the deal said Mechel saw a possible sale of an Elga stake as a way to pay down debts. He told “At this stage they are looking for interested parties. It would be interesting to see who would agree to buy this 25 %."

Mechel bought Elga coal deposit with proven reserves of 2.2 billion tonnes in 2008. Yakutugol, a subsidiary of Mechel Mining, holds a licence to develop Elga. Mechel planned to invest a total of USD 2.87 billion in Elga until 2014.

Mechel-Mining has been planning an IPO since 2008, but it has been postponed due to sluggish market conditions. In April, Mechel said that it had reached an agreement with lenders to renegotiate debt covenants on its loans, but did not provide the details.

Source - Reuters

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