Magnitogorsk Iron & Steel Works (MMK) decided to form a strategic alliance with Belon, a large coal mining company. This alliance was made possible after MMK bought 50% of Onarbay Enterprises Ltd’s shares (the latter owns 82.6% of Belon’s share capital). MMK was thus able to increase its indirect participation in Belon’s management by 41.3%. The sum of the transaction came to $230.4m.


Belon is expected to raise its coal output by 2.3 times, or up to 10.8 million tons a year, by 2012 using some investments.


Investing in Belon will provide MMK with 55% of all coke-coal concentrate and 60% of power station coal the enterprise needs in four years’ time.


‘This transaction is the company’s important strategic step towards ensuring long-term stability of supply. MMK will also be able to share in Belon’s profits and take part in developing its coal-mining activity. This alliance is bound to give us some extra competitive advantages,’ says MMK Chairman Viktor Rashnikov.