Mechel Unit Plans $4Bln Floatation

Mechel, a coal and steel producer controlled by billionaire Igor Zyuzin, plans to raise about $4 billion selling shares of its mining unit to the public and may do the same for its power and metals assets.

Mechel values its coal, nickel and iron-ore mining assets at more than $20 billion and is ready to sell shares in the "near term," after market conditions improve, Zyuzin said Tuesday.

The company will sell about 20 percent of the unit, which will be "less than a blocking stake," Mechel vice president Mukhamed Tsikanov said. The company will also consider IPOs for its power and metal units, he said.

Zyuzin's comments come on the same day Gazprom said it would hold an IPO of its new coal and power unit.

Metalloinvest, the country's biggest producer of iron ore, said last week that it would be ready to hold an IPO this year, after coal and iron ore prices climbed to record highs.

Mechel won an order to supply rails to Russian Railways for 20 years, ending rival Evraz Group's domestic monopoly in the market.

Mechel will invest more than $500 million to build a rail-making mill at its main steel plant in Chelyabinsk, Zyuzin said Tuesday. The company will supply state-owned monopoly Russian Railways, or RZD, one-third of its needs from 2010 to 2030.

"As a monopoly, we're very sensitive to price movements," RZD president Vladimir Yakunin said.