Mechel Launches Screening Complex in India, Shares Up - Analyst Blog

Russian miner Mechel OAO MTL announced that its subsidiary Mechel Somani Carbon Private Ltd. has launched a screening facility at the Visakhapatnam coal terminal in the east coast of India to expand its capacity for marketing coal in the region. Mechel's shares rose as much as 14% during the trading hours following the announcement.

Mechel Somani's screening facility, which has a project capacity of 250,000 tons a year, will allow the company to sort anthracites supplied by Mechel's mining enterprises. Mechel aims to increase the sale of coal to India and is planning to market 250,000 tons of anthracites, which will constitute 20% of India's anthracite market.

The Indian market is very promising for Mechel as the demand for coal continues to grow in that market. Currently, India buys 110 million tones of steam coal and 40 million tons of coking coal on a yearly basis and it has been estimated that by 2020 India will be importing up to 120 million tons of coking coal of various grades. Mechel considers this as a good opportunity and plans to build relations with all kinds of clients as well as construct necessary infrastructure.

Mechel Somani Carbon is a joint venture between Mechel Carbon and India's Somani Group, with Mechel Carbon holding a 51% stake. The company distributes metallurgical coal in the Indian market.

Mechel currently retains a Zacks Rank #4 (Sell).

Other companies in the steel and related industries with favorable Zacks Rank are AK Steel holding Corporation AKS, Worthington Industries, Inc. WOR and Timken Co. TKR. While AK Steel retains a Zacks Rank #1 (Strong Buy), both Worthington Industries and Timken carry a Zacks Rank #2 (Buy).