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Evraz Group Invites Japanese to Yakutia
Evraz Group signed an agreed yesterday with the Japanese Mitsui Co. to form an independent enterprise to develop the Denisovskoe coal deposit in Yakutia. Under the agreement, Mitsui will receive 30 percent of Evraz's Neryungiugol Co, which holds the license to the Yakatia deposit. Japanese sources say that the deal was worth $70 million, which is an acceptable price for Japanese entry to the Russian coal market and a gain for Evraz, which paid $11.9 million for the deposit in March of this year. The Denisovskoe deposit holds 70-85 million metric tons of known reserves of K brand coke coal. Mitsui is active in 75 countries around the world. In Russia, it is already involved in the Sakhalin 2 project and in the renovation of the Yaroslav oil refinery. In also sells non-ferrous metal, oil and steel pipe in this country.
About $240 million in investment will be necessary to construct shafts and infrastructure at the deposit, which is now completely undeveloped. That investment is expected to be recouped quickly, for, according to statements by Evraz, the coal produced there will mainly be exported to Japan. Coke coal sells for $60 per ton more in Japan than in Russia. Production is expected to begin in the second half of 2006 and come into full force in 2008 at 2.4 million tons per year. This is the first time that a Japanese company has acquired coal assets in Russia, after several unsuccessful attempted by various Japanese companies. Most coal consumed in Japan now comes from Australia, so Russian coal also represents a considerable savings in shipping costs. The Elginskoe deposit, also in Yakutia, will come on the market before the end of the year, and may also find a Japanese buyer.
www.kommersant.com
All the Article in Russian as of Sep. 22, 2005
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