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Mechel Invests In Technical Revamping of Mining Facilities

Zacks Equity Research

Russian miner, Mechel OAO (MTL) announced that it is investing a total of RUB2.9 billion (roughly $80 million) in the technical revamping program for Mechel Mining OAO's facilities. As part of this program, equipment worth RUB1.2 billion has already arrived at Southern Kuzbass Coal Company OAO and Korshunov Mining Plant OAO's facilities.

Equipment that arrived at Southern Kuzbass Coal Company include a dragline worth RUB1 billion ($28 million) which was produced by Uralmashplant OAO and will be used for overburden mining. Its assembly, commissioning and start-up and launch are expected to be complete by the end of 2014. It also includes a tunneling machine produced by Korum Rus OOO that will enable the company to mine and transport raw coal from horizontal and slanting mine openings depending on a mine's geological specifics.

Also a new Scharf ZL 200-130-900D diesel locomotive arrived at Southern Kuzbass Coal Company OAO's New-Olzherassk mine. The locomotive was acquired as part of the facility's second-line construction and will be used to transport personnel and cargo to mine openings. In addition an ESH-20/90 walking excavator and a Liebherr R9250 mine excavator with a monthly capacity of over 200,000 cubic meters of rock mass were assembled at Korshunov Mining Plant's Rudnogorsky mine.

Mechel is focusing on modernizing its mining segment's production facilities in order to curtail expenses and production costs.

Mechel is a leading domestic steel and coal producer with a strong position in key businesses, including production of specialty steel and alloys. It currently carries a Zacks Rank #4 (Sell).

Other companies in the steel industry with favorable Zacks Rank include Grupo Simec S.A.B. de C.V. (SIM), POSCO (PKX), and ThyssenKrupp AG (TYEKF). While Grupo Simec sports a Zacks Rank #1 (Strong Buy), POSCO and ThyssenKrupp carry a Zacks Rank #2 (Buy).

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