MOSCOW, April 21, 2009 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), one of the leading Russian mining and metals companies, 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 OOO, 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 OOO, 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 OAO (CMP OAO) subsidiary. The contract amount is limited at EUR 80.0 mln. The insurance coverage amounts to EUR 72.3 million.
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 EUR 25.0 million.
Mechel Materials OOO 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.
Mechel is one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, hardware, heat and electric power. Mechel products are marketed domestically and internationally.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.