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Mechel Buys Controlling Stake in Vanino Sea Trade Port

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Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, reports acquiring 55% (73.33% of common shares) of Vanino Sea Trade Port OAO. The acquisition was made in line with the company's strategy of developing its mining division in a bid to expand its export capacities and reduce transport costs in line with planned increases in coal mining volumes.

On December 29, 2012, the Government of the Russian Federation issued the decree #2608-r with respect to the disposal of federally owned shares of Vanino Sea Trade Port OAO (55% of share capital / 73.33% of common shares) whereby the buyer and the cost of the share package were confirmed. Mechel OAO logistics subsidiary Mecheltrans OOO was confirmed as the buyer. The sum of the transaction totalled some 15.5 billion rubles. Earlier Mecheltrans OOO won the auction for the port's controlling stake, which was held on December 7, 2012.

Port Vanino is located in naturally deep Vanina Bay in the Strait of Tartary which links the Pacific Ocean's Sea of Okhotsk and Sea of Japan. Vanino is the largest transport hub in the Khabarovsk Region and one of Russia's ten largest ports. Its cargo turnover in 2012 totalled some 6 million tonnes. Vanino handles cargo bound for Russia's North-East, Japan, South Korea, China, Australia, the United States and other Pacific states. Navigation at the port is open year round. Vanino is a universal port that fits ideally into the logistics of Mechel's deliveries to Asia Pacific. Using its capacities will enable the company to consolidate its position as one of the world's largest producers of metallurgical coals and significantly expand its customer base.

Port Vanino can process vessels up to 45,000 tonnes deadweight. Its infrastructure comprises 16 berths, storehouses and open storage space. Vanino is equipped with 64 cranes of 6 to 100 tonne hoisting capacity. The port also has a specialized container terminal. Open storage space totals 160,000 square meters, with usable storehouse area of some 37,000 square meters. Besides coal, the port can also handle ferrous and non-ferrous metals, ferroalloys, timber, mineral fertilizers, alumina, containers and other cargo.

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