Yildirim Group will be able to offer a wider chemistry of
ferrochrome in the U.S. market following its acquisition of
Mechel OAOs ferrochrome assets.
Russian coking coal
and steel producer Mechel agreed to sell its chrome mine in
Kazakhstan and its Russian smelting operation to Turkeys
Yildirim for $425 million, Mechel said Aug. 1.
The acquisition "will
give us more variety to offer as the chemistry is different
than our material" and will help "get our name out there for
those who still dont know how big we are," a source at
Yildirim told AMM.
doesnt expect the move to have a meaningful impact on
U.S. ferrochrome prices in the short term.
"There might be (an
impact on prices), but not an immediate impact, as the market
is oversupplied and there is not enough demand," he said.
The consolidation of
U.S. ferrochrome suppliers "should put a floor on chrome
prices," another trader said.
ferrochrome is currently trading at 94 cents to $1 per pound,
having steadily dropped in recent months due to weak spot
demand and currency depreciation in South Africa.
Pending approval by
Kazakh and Russian regulators, Yildirim will acquire
Mechels Voskhod Mine in Kazakhstans Khromtau region
and Tikhvin ferroalloys plant in Russias Leningrad
The Tikhvin plant,
Russias second-largest producer of high-carbon
ferrochrome, consumes half of the Voskhod Mines output
and can produce 120,000 tonnes per year of high-carbon
ferrochrome, with 69.5-percent chrome content.
Mechel is in the
process of selling a range of its global assets to pay debts
and minimize 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 centers.
Mechel will use the
proceeds of the deal to pay down its debts and finance
"priority development projects," which likely include its
universal rolling mill in Chelyabinsk in the Russian Urals, and
the continued development of the Elga coal deposit in eastern
Nadia Popova, Moscow,
contributed to this story.