Considered to be among the largest coking coal deposits in the world, the Elga coal project produced 4,318 thousand tonnes of coal in 2019
The Elga coal project produced 4,318 thousand tonnes of coal in 2019. (Credit: PАО «Mechel»)
Mechel, a Russian mining and steel company, has reportedly confirmed that it is in talks to offload its stake in the Elga coal project in Sakha Republic, Russia in a move to cut down its debt.
Considered to be among the largest coking coal deposits in the world, the Elga complex produced 4,318 thousand tonnes of coal in 2019.
Mechel did not disclose the names of the potential buyers. However, in January 2020, a Russian company called A-Property formally sought permission from the country’s competition regulator to acquire a 100% stake in the Elga coal project, reported Reuters.
According to the publication, Mechel had a net debt of RUB400bn ($5.11bn), as of the end of last year. The company reportedly is not able to complete repayments or make investments towards exploiting the 2.2 billion tonnes reserves in place at the Elga coal mine.
Mechel, has been quoted by the publication, as saying: “In January 2020 the group began negotiations with potential buyers over the sale of the Elga coal complex, which will allow it to reduce its debt burden.”
A deal is yet to be reached regarding the sale of the coal asset.
Mechel is partnered by Gazprombank in the Elga coal project
Mechel, currently, has a 51% stake in the Elga coal project. The remaining 49% stake in the Russian coal project was sold by the mining and steel company in mid-2016 to its main creditor Gazprombank.
The Elga coal project is located in south-eastern Yakutia, about 415km east of Neryungri. Mining at the coalfield began in 2011 and subsequently the first phase of the project was developed, which included construction of a mining facility which can produce 11.7 million tonnes of coal per year.