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. Last Updated: 07/27/2016

Mittal and Alrosa in Coal Bid

ArcelorMittal will bid in an auction Friday for the world's largest untapped coking coal deposit in the Sakha republic together with diamond monopoly Alrosa, a regional government official said.

The two companies will participate in the auction via Yakutskaya Ugolnaya Kompania, said Nikita Prokopyev, spokesman for the Sakha regional government. They will compete against Mechel and Kolor Partner.

"It's understood Mittal might also build a steel plant here," Prokopyev said Wednesday. ArcelorMittal spokesman Jean Lasar declined to comment.

The starting price for the Elga field, which holds reserves of more than 2.7 billion tons of hard coking coal, is $1.8 billion. The field may produce 30 million tons per year for ArcelorMittal's mills and for export to Asian markets.

Elga, 800 kilometers south of Yakutsk, requires investment of $3 billion for a railroad and other infrastructure. It will be sold with the Yakut field, in which Mechel has a 25 percent stake. The federal government and Russian Railways own the rest of the fields.

Mechel will be partnered by Japan's Sumitomo, which loaned it $1 billion for the auction, Prokopyev said. "Sumitomo wants to participate in the Elga project," spokesman Hideyuki Terajima said Wednesday.

Kolor Partner may also be acting for ArcelorMittal, Prokopyev said. Kolor Partner was registered by Arcelor Construction France, Kommersant reported Tuesday.