Mechel continues implementation of its cement production project

Mechel  announces obtaining of decision from OeKB Austrian insurance agency to issue insurance coverage for the credit agreement which is to be made to finance the contract between Mechel’s subsidiary, Mechel Materials, and FMW of Austria. The contracts are prepared as part of Mechel’s project to launch its own cement production.

Mechel continues implementation of the project to establish its own production of construction materials. In line with the project, the decision was obtained from OeKB Austrian insurance agency on issuing insurance coverage for the credit contract which is to be concluded to finance the agreement between Mechel’s subsidiary, Mechel Materials, and the Austrian company FMW. FMW was contracted to construct a milling complex for production of slag Portland cement at Mechel’s Chelyabinsk Metallurgical Plant subsidiary. The contract amount is limited at € 80.0 mln. The insurance coverage amounts to € 72.3 mln.

The obtained decision means that OeKB is ready to provide credit insurance for loan which will be used to finance the contract for milling complex construction.

The contract for supply of the main technological equipment for the milling complex (vertical Jar rollers) has been concluded with the German company Loesche GmbH. In order to finance the contract a credit line has been opened with Commerzbank AG. Insurance coverage under the credit line is issued by the German Euler Hermes export agency for over € 25.0 mln.

Mechel Materials is a part of Mechel group. Currently the subsidiary is implementing the project of slag Portland cement production on the bases of granulated slag produced by Chelyabinsk metallurgical plant blast-furnaces (production line will be located at CMP). Production capacity of the plant is projected to reach 1.6 million tonnes of high quality slag Portland cement annually. Production is expected to commence in the third quarter of 2011.

Implementation of the project will enable Mechel to produce high marginable slag Portland cement which is in high demand by the market. The new plant will also help to improve the environmental situation in the region, as it allows to resolve the problem of utilization of steel production waste.