Metalloinvest, the Russian miner founded by billionaire Alisher Usmanov, plans to quadruple output of hot-briquetted iron used in steel making with the aim of supplying over a fifth of world output by 2015.

Chief Executive Maxim Gubiyev said Metalloinvest would build several new HBI plants to raise annual output to 8.8 million tonnes by 2015, much of it for export to Asia, as part of a $10 billion-plus investment in its iron and steel production.

We have the intention eventually to increase HBI capacity to 10.5 million tonnes per year, he told reporters visiting the company's Lebedinsky mine, Russia's largest iron ore mine, late on Friday. The price of HBI, a freely traded form of processed iron fed directly into electric steel furnaces, has increased sixfold in the last five years as benchmark world iron ore prices have soared in response to China's hunger for the raw material.

Metalloinvest accounted for 8 percent of world HBI production last year and, after launching its second plant this year, plans to increase this share to 12 percent in 2008.

We supply mainly to Ukraine and the Far East, but we see prospects for future sales within Russia. Potential clients are already in place but unfortunately we don't yet have enough HBI to satisfy demand, Gubiyev said.

Metalloinvest runs two HBI plants at Lebedinsky, with total annual capacity of 2.4 million tonnes. Gubiyev said the company would this month select the supplier of the third plant, a 34 billion-rouble ($1.4 billion) project set to launch in 2011.

Among the potential suppliers is U.S. firm Midrex Technologies Inc, whose executives were visiting Lebedinsky to celebrate the launch of the second HBI plant.


Metalloinvest plans to float up to a quarter of its shares in an initial public offering this autumn. Gubiyev declined to estimate the firm's market value, although he said in February he expected it to be worth $30 billion by the end of 2008.

Usmanov, who owns 50 percent of Metalloinvest, also last week agreed an asset swap with Norilsk Nickel shareholder Vladimir Potanin that could result in Potanin acquiring a 25 percent stake in Metalloinvest. [ID:nL28692466]

Metalloinvest's two steel mills rank it fifth in Russia in terms of steel output. Gubiyev said the firm as a whole had earmarked over $10 billion in investments over the next decade.

He declined to supply a specific figure for HBI investment.

The company's HBI growth is premised on increasing iron concentrate output by 50 percent to over 60 million tonnes a year by 2015, Gubiyev said.

He said HBI production would rise to 4.5 million tonnes a year by 2011, 5.2 million tonnes by 2012, 8.0 million tonnes by 2013 and 8.6 million tonnes by 2014.

Though production will be concentrated on the Lebedinsky mine, the company will also build HBI capacity at Mikhailovsky GOK, Russia's second-largest iron ore mine.

(Editing by Christopher Johnson)

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