Evraz Signs Joint Venture Agreement with Mitsui
Evraz Group S.A. (LSE: EVR), one of the leading vertically integrated steel production and mining businesses with operations mainly in Russia, announces it has signed today a joint venture agreement with Mitsui & Co., Ltd (“Mitsui”), one of the world’s largest mineral resources companies, in respect of Denisovskoye coal field, Yakutia, East Siberia.
Under the terms of the joint venture agreement, and upon completion of the transaction, Evraz will retain an ownership interest of 70% in the project while Mitsui will become a co-investor with 30%. Completion of the transaction is subject to certain terms in the joint venture agreement and is anticipated to close by the end of 2005.
The Denisovskoye coal field is now under development and it is expected that production and shipments of coking coal will begin in the second half of 2006. According to estimates extractable reserves are 70-85 million tons of high grade hard coking coal. The project is expected to reach its full production during 2008 and annual production volume is anticipated to be in the region of 2.4 million tons of coking coal.. The joint venture project plans to export all of the the coking coal produced to steel mills in Asia, especially Japan, taking advantage of favourable transport infrastructure.
Commenting on behalf of Mitsui, a spokesperson said:
“After an extensive search for a partner in Russia, we are pleased to be able to announce our joint venture with Evraz. Coal is one of Mitsui’s core businesses and we continue to seek opportunities to invest in the development of coal fields worldwide and Russia is a priority for us.We look forward to mutual development of this project with Evraz, Russia’s leading steel and mining business.”
Commenting, Alexander Abramov, Chairman and Chief Executive of Evraz Group said:
“We look forward to applying our strong track record of successful mine development to this joint venture with Mitsui who will provide significant input based on their expertise and knowledge of the global coal market. The high quality of coking coal in the Denisovskoye field gives us a significant competitive advantage for exports to the fast growing Asian and Japanses markets. This partnership fits well with one of Evraz’s strategic aims, to build a stand alone mining business.”
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