Russia's Kemerovo region has notified ArcelorMittal that it will seize two of the world's largest steel maker's coal mines if production levels do not increase, the Siberian region said in a statement.

If your team is not able to stabilize production at these facilities, then we propose that you hand them over without compensation, Kemerovo governor Aman Tuleyev said in a telegram addressed to the multinational's chief executive, Lakshmi Mittal, and cited in the statement on the Kemerovo website.

ArcelorMittal acquired three Siberian coal mines from Russia's Severstal in 2008, becoming one of the few foreign companies to enter the market.

In an emailed statement on Friday, the company said it was in talks with local officials over the Anzherskaya mine, but it did not comment on Pervomayskaya, the second mine mentioned in the telegram.

Due to the exceptional economic environment, ArcelorMittal is in discussion with potential investors and the local government over the future of the Anzherskaya mine only, the company said. The discussions are ongoing.

Russian coking coal producers have cut back output sharply in response to weak demand from the crisis-hit steel sector. ArcelorMittal is running at about half capacity due to the downturn, which has hit key customers such as automakers and construction firms.

In March, ArcelorMittal said it might temporarily close the Anzherskaya and Pervomayskaya mines if a cost-cutting program did not have a satisfactory effect.

It also introduced a voluntary retirement program at the two facilities.

The Kremlin is pressuring regional authorities to maintain stability after Prime Minister Vladimir Putin in June traveled to Pikalyovo, around 270 km (170 miles) from St Petersburg, and forced billionaire Oleg Deripaska to restart operations at several of his factories following protests from unpaid workers.

I, as governor, am stating in a responsible manner that I will not allow the closure of our mines, Tuleyev wrote in the telegram.

It seems to me that, today, the mines have sufficient supplies of coal and a market can be found for them, and most importantly, experienced labor collectives are working here.

The governor added in the telegram that if the chief executive did not reply, Keremovo would seek to revoke its licences.

(Reporting by Alfred Kueppers and Natalya Shurmina; editing by Mark John)

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