Metals and Mining

According to Ukrainian mass media, the country’s fourth largest steelmaker, Zaporizhstal [ZPST UK], has been sold to a group of Russian investors represented by Russia’s state-owned Vnesheconombank. The deal reached USD 1.7 bln, or USD 0.64 per share. Ukraine’s Metinvest Holding, in the process of registering the deal, was returned its prepayment in the sum of USD 50 mln with an additional USD 50 mln as compensation.

In a press release, representatives of Mariupol Illich ISW [MMKI UK] blamed the Company’s broker for the registration of the Company’s sale. After receiving a formal power of attorney for completing internal transactions with the shares of MMKI, the broker seized the opportunity to make the deal possible.

According to Interfax, S. Corean POSCO will not anticipate in tender of acquisition of the fourth biggest steelmaker of Ukraine, Zaporizhstal [ZPST UK]. The rationale behind the decision is that the company needs heavy capital spending to bring its operational base up to date. POSCO also notes that there are not enough raw materials to secure stable work of Zaporizhstal.

According to Interfax, an unnamed Russian metallurgical concern has bought 100% of the shares in Illich Stal, which controls Mariupol Illich ISW. The company’s management denies the acquisition and has referred to the deal as being a provocation and merely an attack by raiders.

According to Interfax, Australia may introduce a 40% tax on the resource mining industry in the medium term. This tendency may spread to other countries that have a solid mineral resource base, such as Brazil, Canada, and South Africa. If the increase takes place, the profits of the world’s biggest iron ore producers may be at risk.

According to Vladimir Boyko, Mariupol Illich ISW’s CEO, the company will decrease its average daily steel output in May to 14 thsd tonnes (-17% MoM) from 16.9 thsd tonnes in April. This decline results from a lack of orders for the company’s steel products. The company plans to use this excess capacity to perform regular repairs.

According to the Ukrainian news agency, Poltava GOK’s [PGOK UK] shareholders on their AGM decided to sell the company’s stake in Yeristovo GOK and Belanovskyi GOK to the mother company, Ferrexpo. These two GOKs hold licenses to explore Yeristovskoe’s and Belanovskoe’s iron ore deposits.