EVRAZ signs Memorandum of Understanding to sell ore business in KhakassiaEVRAZ plc (LSE: EVR) and LLC Ruda Khakasii have signed a Memorandum of Understanding agreeing the acquisition by LLC Ruda Khakasii of 100% of LLC Abakanskiy Rudnik, LLC Abaza-Energo, LLC Teyskiy Rudnik and LLC Teyskie Energoseti from JSC Evrazruda. This agreement is supported by the Government of Khakassia, and if the deal is realised, it may be closed in the first quarter of 2014.
The decision to sell these facilities in Khakassia is in line with the EVRAZ strategy to optimise its ore asset portfolio, and is targeted both at reducing operating losses and at improving Evrazruda’s financial performance.
Marat Atnashev, EVRAZ Vice President, Head of the Iron Ore Division, commented: "The joint efforts of EVRAZ management and the Government of Khakassia enabled us to find a solution to ensure further development of Evrazruda facilities, which are currently unprofitable due to the unfavourable market situation and general price deflation. We expect that once completed successfully this transaction will safeguard both jobs and existing production volumes, and that the plants’ production output will continue to be supplied to EVRAZ steel facilities under the long-term contracts. We appreciate the support of the Government of Khakassia in relation to this Memorandum of Understanding, and we strongly believe that implementation of this plan will have a positive effect on the economy of Khakassia and ensure the social stability of the region."
The Head of Khakassia, Chairman of the Government of Khakassia Victor Zimin remarked: "The parties involved in this negotiation managed successfully to find a workable alternative to the cutbacks in production and in the mid-term, potential closures of the remote branches of Evrazruda. Instead, the agreement that we have achieved combines best-practice current economic and sustainable business thinking, enabling these enterprises to continue their operations in this area."
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