Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Mechel Readies $2.2Bln for Steel Privatization

Mechel Steel Group, Russia's fifth-largest steelmaker, is willing to spend as much as $2.15 billion on a stake in Magnitogorsk, the country's No. 2 steel mill, at an auction being held next month.

The federal government on Dec. 22 will auction 23.8 percent of the voting shares in the low-cost production base in the Urals that smelts 10 million tons of steel a year.

In a notice to shareholders posted on its web site, Mechel said it would pay as much as $2.15 billion for the Magnitogorsk stake, almost triple the starting price of $790 million.

Alexei Sotskov, a Mechel spokesman, wouldn't give any further information in a telephone interview.

Magnitogorsk and Novolipetsk, Russia's fourth-biggest steel producer, have said they will take part in the auction. Mechel is already Magnitogorsky's third-biggest shareholder with a 17 percent holding in the company.

Russia's steelmakers, led by Yevrazholding Group, are benefiting from rising demand as the economy heads for its sixth straight year of expansion.

Net income at Magnitogorsk rose 56 percent to 15 billion rubles ($516 million) in the year's first six months, as sales jumped 40 percent to 59.5 billion rubles. Export prices for benchmark hot-rolled steel coil from Russia have risen by almost 60 percent since the beginning of the year.