Mechel concludes acquisition of Ukrainian EAF steel plant

Russia / Ukraine – Russian steel manufacturer Mechel takes over Donetsk Electrometallurgial Steel Plant (DEMZ AO) in acquisition valued at US$537 million.

The company, formerly known as ISTIL, is one of Ukraine’s most modern steelmaking plants with an annual capacity of over 1 million tonnes. The plant focuses on the production of continuously-cast billets as well as rolls of specialty steels, including thermally treated.

Donetsk-based DEMZ has a firm market standing as a producer of high-quality rolls, resuming production of large-diameter specialty-steel pipe, which is exported to the United States and Europe.

The plant’s electric furnace smelting facilities are currently working at their full capacity, producing up to 90,000 tonnes of steel per month. In 2011, steel production is expected to total over 1 million tonnes.

‘This is a new level of development for Mechel Group’s steel division, aimed at increasing the Group’s total production volume and, which is particularly important, the share of high margin products in the group’s product portfolio,’ Igor Zyuzin, Chairman of Mechel says.

According to the new owner Mechel, the plant’s advantageous geographic location, well-developed railway network and proximity to major seaports at Mariupol (115 kilometers) and Odessa (900 kilometers) enables it to make efficient deliveries of steel products to more than 30 countries.

DEMZ was controlled by Estar Group until 2009 when control over the plant was transferred to Alfa Group investment firm for debts.