Mechel announces acquisition of laminorul Braila Metallurgical Plant in Romania

Mechel one of the leading Russian mining and metals companies, announces acquisition of Laminorul Braila metallurgical plant located in Romania.

On February 25, 2010 Mechel acquired 100% of the shares of Donau Commodities SRL, which holds 90.9% of the shares of Laminorul SA (Laminorul Braila), a steel plant located in Braila, Romania, for a consideration of 9.4 million Euros subject to a final price adjustment. The final price adjustment is expected to be agreed by the end of April, 2010.

On April 19, 2010, the Romanian Competition Council approved the transaction.

Laminorul Braila plant is located in the southeast Romania on the left side of Danube River in close proximity to Braila ports. The ports’ facilities allow for embarkation onto ships with cargo capacity of up to 5 thousand tonnes. Constantsa international port (Black Sea) is also located nearby, thus providing convenient logistics for the plant.

The plant’s main production facilities include two rolling mills with total capacity of over than 380 thousand tonnes per year. Rolling mills manufacture structural shapes of different types: beams, channel bars, equal and unequal angles for industrial, civil and machinery construction. This is the only plant in Romania manufacturing special profile (bulb bar) which is used in shipbuilding. All types of products have European quality certificates. Bulb bars manufactured by the plant are certified by the international sea registers such as DNV, BV, LR, ABS, GL and the Russian Sea Register.

In 2009 the plant manufactured more than 50 thousand tonnes of structural shapes. 65% of the plant’s products are delivered to Western and Eastern Europe and the rest is consumed at the domestic market of Romania. Laminorul Braila is sourced with billets supplied by Mechel Targoviste steel plant, a one more Romanian subsidiary of Mechel. The plant employs more than 570 people.

Victor Dyshlevich, CEO of East-European Steel Division, commented on the event:

“The acquisition of Laminorul Braila is a one more step in implementation of Mechel’s steel business development strategy, particularly aimed at increasing the share of high margin products in the group’s product portfolio. The plant allows producing downstream products from Mechel’s billets and increase synergies of all Romanian assets of the group. The products manufactured at Laminorul Braila are a good supplement to the product portfolio of Mechel’s steel plants in Romania. The new products – structural shapes and bulb bars – will undoubtedly expand our positions on the market of Romania and other countries of the European Union and also would allow diversifying distribution of our products. The company plans to increase production volume for the future”.

Mechel’s East-European Steel Division consists of the following steel plants: Mechel Targoviste, Mechel Campia Turzii, Ductil Steel Buzau, Otelu Rosu and Mechel Targoviste.