Metinvest, part of the sprawling empire of Ukrainian billionaire Rinat Akhmetov, said on Thursday it has acquired miner United Coal, following Russian metal and mining companies that have already bought into the U.S. market.
Metinvest ranks United Coal as the sixth largest coking coal company in the United States with confirmed reserves of 160 million tonnes of coal concentrate.
Metinvest, the largest steel company in Ukraine which is also involved in mining, named no price for the deal.
But analysts have said the deal should be worth between $1 billion and $1.4 billion -- lower than previous estimates of up to $2.4 billion half a year ago when Metinvest filed antitrust papers in Bulgaria as part of its plan to acquire United Coal.
We have completed the deal, said Anna Terekhova, spokeswoman for System Capital Management, a holding company of Akhmetov.
Metinvest follows, amongst others, Severstal and Mechel, Russian companies that have bought coking coal and steel assets in the United States. Steelmaker Severstal paid $1.3 billion for coal miner PBS Coals Corp to give it access to raw materials for its steel assets in the United States. Miner Mechel agreed to buy the coking coal assets of Bluestone Coal Corp for $436 million.
Metinvest's Ukrainian, Bulgarian, Italian and British units produce about 10.8 million tonnes of crude steel, 11 million tonnes of steel products, 40 million tonnes of iron ore and 5.7 million tonnes of coking coal a year.
Ukraine is the world's eighth largest steel producer and steel accounts for 30 percent of the country's exports.
COAL FOR GAS
Its steel industry has been hit hard, however, by lower demand and prices for metals as the global financial crisis bites. Steel output has fallen over 40 percent in the first quarter compared with a year ago.
Analysts have said Metinvest is in a slightly better position to cope than other steel companies -- including ArcelorMittal's Kryvorizhstal unit -- because it also owns iron ore production units.
Many steel firms have also begun to switch from gas to coal as gas prices have risen steeply in recent years.
We have always been interested in raising the effectiveness of our business and improve the quality of our production, Igor Syry, director general of Metinvest, said in a statement.
The quality levels of coke are especially important to us today as the company has stopped using natural gas in pig iron production, due to price rises for gas..
Russia has raised gas prices every year since 2005. Ukraine paid $360 per 1,000 cubic metres in the first quarter of this year against $179.50 in 2008. It will pay less -- $270.95 -- in the second quarter of this year.
(Writing by Sabina Zawadzki; Editing by Greg Mahlich)
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