12 June 2003 18:23
RUSSIA: MDM, SEVERSTAL DIVVY UP COAL SPOILS
Energy holding MDM Group and steel producer Severstal have reached an agreement to split up coal producer
Kuzbassugol, RBC reported on 4 June. MDM and Severstal owned 48 percent and 52 percent of Kuzbassugol, respectively.
Under the terms of the deal, the companies will split up Kuzbassugol's 13 mines, with MDM getting eight mines that
produce power-generating coal, and Severstal five mines that produce coking coal. The companies did not release further
details on the deal. The division of production assets fits the two companies' profiles, with each getting what it
needs for its primary business. Aton analyst Aleksandr Agibalov told "Vedomosti" of 5 June that the deal is
difficult to evaluate with so little information available, but it appears to be mutually beneficial. Prospect analyst
Nikolai Ivanov told "Kommersant" of 5 June, however, that Severstal "spent significant funds ($80
million-120 million) to gain control of Kuzbassugol, yet it remains unclear whether it broke even." According to
RBC, Kuzbassugol is the third-largest coal company in Russia and holds 35 percent of the country's reserves. DK
Copyright (c) 2003. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty
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