Russian businessman eyes Gazprombank’s stake in Elga coal project

Image from Mechel via twitter.

Russia’s A-property group, owned by businessman Albert Avdolyan, has requested approval from the country’s antimonopoly service to buy 49% of the Elga coal project from Gazprombank, the group said on Friday.

Elga is one of the world’s largest coking coal deposits with reserves of 2.2 billion tonnes. In 2016, Gazprombank purchased the 49% stake in Elga from coal and steel producer Mechel , which owns the remaining stake in the project.

Gazprombank is also one of Mechel’s main creditors, along with Sberbank and VTB. Mechel is currently in talks with the creditors requesting more time to make its debt repayments.

“The bank considered and is considering Elga as an investment asset. Investors have been interested in buying a stake in Elga for a number of months. As of now, an offer has been received from one of them,” Gazprombank told Reuters.

The bank did not disclose the terms of the possible deal but said that they were beneficial for it. Mechel declined to comment.

The request by A-property to Russia’s antimonopoly service was originally reported by Vedomosti newspaper. Representatives of Russia’s antimonopoly service confirmed the request when contacted by Reuters.

The possible purchase of the stake in Elga is a logical step in Avdolyan and his business partner Sergei Adonyev’s strategy to create an industrial cluster in Siberia and the far east of Russia, A-property said in an emailed comment.

The cluster includes gas producing Yakut Fuel and Energy Company, Ogodzha coal project and the Vera coal terminal, the group said.

(By Anastasia Lyrchikova, Gabrielle TĂ©trault-Farber and Polina Devitt; Editing by Jane Merriman and Emelia Sithole-Matarise)

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