Open / Close Advertisement

Minmetals to Construct Rail and Structural Steel Mill for Mechel

10/30/2008 - Mechel OAO signs contract with China-based Minmetals to construct a rail and structural steel mill at its Chelyabinsk Metallurgical Plant OAO subsidiary.

Mechel OAO has signed a contract with Minmetals, one of China's largest state-owned industrial corporations, to construct a rail and structural steel mill at its Chelyabinsk Metallurgical Plant OAO subsidiary.
 
Minmetals’ contract comprises construction of a rail and structural steel mill at Mechel's Chelyabinsk Metallurgical Plant OAO subsidiary on a turn-key basis with a tied loan being granted. Minmetals will construct the workshop, install the mill's equipment, and commission the technologies, which are to be provided by Danieli. The contract total value is approximately US$300.0 million.
 
Once in operation, the new rail and structural steel mill will produce structural shapes in a wide range of sizes and sections, with the main output comprising railroad rails up to 100 meters in length. The facility will supply rails to Russian Railways (RZhD OAO) through its partnership with Mechel.
 
The facility will feature state-of-the-art technologies for rolling, tempering, straightening, finishing, and rail quality control. Technology solutions will enable the manufacture of products that surpass their world analogues in a number of key parameters, as determined by the climate conditions of the rails service in Russia.
 
Pursuant to the long-term partnership agreement signed with RZhD OAO in February of this year, the minimum rail manufacturing volume for RZhD OAO will be 400 thousand tonnes annually, which will include various types of rails specifically designed for compatible traffic, high-speed operation, enhanced durability and contact wear resistance, and for operation in low-temperature environments.
 
"China has been successful in constructing rail and structural steel mills worldwide,” noted Mechel Management OOO Chief Executive Officer Vladimir Polin. “Domestically, China commissioned five similar mills, which enabled them to become the largest exporter of rails to various countries, including the U.S.
 
“This contract to construct the rail and structural steel mill is the largest Russian and Chinese agreement in metallurgy history,” continued Polin. “Collaboration with Minmetals Engineering will allow Mechel to complete the mill project efficiently and on time. The project has national importance given that through its agreement with RZhD OAO, Mechel will be the first to supply 100-meter rails to Russia.”
 
This commercial agreement is the first such agreement under the Memorandum of Intent signed between Mechel OAO and Minmetals on October 28, 2008 at the Third Russian-Chinese Economic Forum in Moscow. Mill construction is scheduled for completion by late 2010.