Russian miner Mechel OAO has signed an agreement with Vnesheconombank, allocating the first tranche of the project financing for Elga Coal Complex’s first stage totalling $2.5 billion.

The agreement for the $150 million tranche was signed by Vnesheconombank’s Chairman Vladimir Dmitriyev and Chairman of Mechel OAO’s Board of Directors Igor Zyuzin on the sidelines of the session of the government committee on the Far East’s social and economic development, in the presence of Russian Prime Minister Dmitry Medvedev.

“Currently development of the rich Elga deposit is a priority for Mechel. We are grateful to our country’s leaders for their attention and support for such an important project. Vnesheconombank’s financing will give a powerful stimulus not only to our efforts on completing construction of Elga Coal Complex’s first stage, but also to the social and economic development of the Republic of Sakha (Yakutia) and the Far East as a whole. The project’s implementation will create more than 5,000 jobs. I am sure that thanks to the state’s support, we will successfully continue our work on creating a new industrial cluster in this region,” Zyuzin said.

The loan has a tenor of 13.5 years with a grace period until 2017. According to the transaction’s conditions, Vnesheconombank’s funds will be used to complete construction of Elga Coal Complex’s first stage. The first stage includes construction of a railroad and a mining and washing complex with an annual capacity of 11.7 million metric tons (mt) of run-of-mine coal by 2017. The Elga coal deposit is Russia’s largest and one of the world’s largest deposits of high-quality coking coal, and is located in Southern Yakutia. Its reserves total some 2.2 billion mt, according to JORC standards.

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