Russia’s Mechel bought Donetsk Steel Mill


Today, "Mechel" has completed the acquisition of 100% stake in the Donetsk steel plant. As previously reported, the transaction was approved at the annual shareholders’ meeting of JSC "Mechel" and the board of directors of the group. The deal amounted to 537 million U.S. dollars.

Payment for the shares will be DEMZ with payment by installments for a period of 7 years. At the time of making the transaction for approval by the shareholders of JSC "Mechel" installment plan provided for a period of up to 4 years. In preparation for the transaction installment was increased by another 3 years, the total amount of the deal has not changed.

DEMZ — one of the most modern metallurgical enterprises in Ukraine with a production capacity of 1 million tons of steel per year. The plant specializes in the production of continuous casting and rolling of special steel qualities including heat treatment. The company has strong market position as a manufacturer of high-quality steel, producing among other things, large-diameter wheels made of special steel grades, which are exported to the United States and Europe.

Currently, the company is working on a project with a total load capacity of electric steel production, with the release of 80-90 thousand tons of steel per month. In 2011, steel production is expected in the amount corresponding to the production capacity of 1 million tons.

Excellent geographical location of the plant, developed railway network, proximity to major seaports in Mariupol (115 km) and Odessa (900 km) enables efficient delivery of steel products in more than 30 countries.

Production of hot-rolled steel is expected at about 145 tons. The composition of the rolling mill equipment allows production car with such kinds of heat treatment, as quenching and tempering, annealing, normalizing. These products are in demand in the global market in high-tech industries, automotive and shipbuilding.

In partnership with "Mechel" plant launched a new investment program has created more than 1,000 new jobs, develops high-technology products and expanding markets.

Commenting on the transaction, Chairman of the Board of Directors of JSC "Mechel" Igor Zyuzin said: "The consolidation of the Donetsk steel plant — a logical step in the continuation of the existing strong partnership and investment relations with the Ukrainian company. This is a new stage of development of the metallurgical division of "Mechel" to increase the total capacity of the group in the production of steel and, most importantly, the share of new high-margin products deep processing. Seven-year installment payment does not require a significant diversion of funds "Mechel" in the present moment and the next few years, which should positively impact the financial flows of the group. "

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