Mechel sells chrome assets to Yildirim Group for $425m

Russian coking coal and steel producer Mechel has agreed to sell its chrome mine in Kazakhstan and its Russian smelting operation to Turkey’s Yildirim Group for $425 million, Mechel said on Thursday August 1.

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Yildirim will acquire Mechel’s Voskhod mine in Kazakhstan’s Khromtau region and the Tikhvin ferro-alloy plant in Russia’s Leningrad region.

The Tikhvin plant consumes half of the Voskhod mine’s output and can produce 120,000 tpy of high carbon ferro-chrome, with 69.5% chrome content.

Tikhvin is Russia’s second-largest producer of high-carbon ferro-chrome.

Steel First sister title Metal Bulletin reported that the Turkish company was a frontrunner to buy Mechel’s chrome assets in June.

Mechel is in the process of selling a range of its global assets to pay debts and minimise losses.

The New York-listed miner has accumulated massive debts over the past few years by investing heavily in coal and steelmaking assets and setting up a network of service and distribution centres.

Companies including Glencore, ENRC, Outokumpu and private Kazakh hedge fund Verny Capital all showed interest in Mechel’s chrome assets at some stage of the sale process, Metal Bulletin reported earlier.

Yildirim Group – the Turkish industrial company and owner of chrome producers Eti Krom and Vargon Alloy – will pay the entire sum of the agreed payment immediately after its closure. The transaction’s completion requires the approval of the Kazakh and Russian regulators.

Mechel said it will use the deal’s proceeds to pay out the company’s debt and finance its “priority development projects”.

The miner earlier described the construction of its universal rolling mill in Chelyabinsk in the Russian Urals, and the continued development of the Elga coal deposit in eastern Siberia, as its priority projects.

The company launched the mill last month.