Mechel acquires steel mill in Romania

Mechel, one of the leading Russian mining and steel groups, will soon add the Romanian steel mill Laminorul Braila to its East European Steel Division, as its Cypriot subsidiary Zoneline Limited nears the completion of the acquisition of the Austrian metal trader Donau Commodities, which owns an 87.81 percent stake in Laminorul. The transaction, the cost of which is expected to amount to $20 million, is currently being examined by the Romanian Competition Council.

According to the Russian newspaper Kommersant, the acquisition of Laminorul Braila will allow Mechel to significantly extend its product range and to achieve synergy with its other Romanian subsidiaries, namely, Mechel Targoviste, Mechel Campia Turzii, Ductil Steel Buzau and Otelu Rosu, which are specialized in the production of longs and hardware. However, steel demand in Europe, the main market for the products of Mechel's Romanian subsidiaries, is showing a slower recovery than in Russia or the US, with consumption in Europe at just 60 percent of the pre-crisis levels.

The Laminorul Braila steel mill was established in 1923 and is the only Romanian producer of flat bulb steel, which is used in shipbuilding. The plant also produces section steel, including I-beams, U-channels, unequal angles and equal angles and railway sections. Laminorul has two rolling mills, and also carries out cold and hot stamping. Its total rolling capacity amounts to about 400,000 mt per year. About 60 percent of Laminorul's products are exported.