Mechel acquires Metals Recycling

Archiv – Metals and mining concern Mechel OAO has announced the acquisition of a 100% stake in fellow Russian firm Metals Recycling OOO of ChelyabinskMetals and mining concern Mechel OAO has announced the acquisition of a 100% stake in fellow Russian firm Metals Recycling OOO of Chelyabinsk. The purchase, which was completed through Mechel subsidiary Mechel Service OOO for around US$ 6 million, reflects the buyer’s policy of ensuring its steel segment’€™s self-sufficiency in raw materials.
Mechel produces coal, iron ore, nickel steel, rolled products and hardware. Meanwhile, Metals Recycling OOO is a full-scale scrap collector and processor comprising eight operating facilities which produced a total of 178 000 tonnes of scrap last year. The company has invested in a modernisation programme and expects to boost its output.
The consolidation of Metals Recycling OOO into Mechel is likely to lead to a reduction in the amount of scrap purchased on the open market by Chelyabinsk Metallurgical Plant (CMP) and Izhstal, thereby cutting overall operating costs. Last year, CMP and Izhstal consumed a combined total of around 2.6 million tonnes of scrap, including more than 1.1 million tonnes of internal arisings. The acquisition will therefore increase the control held by these facilities over scrap supplies, thereby helping to reduce their exposure to market fluctuations. Mechel’€™s COO Alexey Ivanushkin comments: ’One of the main objectives of our overall strategy is to increase the efficiency of Mechel’€™s steel segment. The key factor here is the reduction of our production costs by expanding our own raw material base.’€™