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. Last Updated: 07/27/2016

Steelmaker Mechel Mulls Cement Plant

New York-listed miner and steelmaker Mechel is planning to build a cement plant to supply fast-growing Russian demand for construction materials, Kommersant reported last week.

Mechel, the country's sixth-largest steelmaker, plans to build the 1-million-ton-per-year plant in the republic of Bashkortostan, close to its Beloretsk Metallurgical Plant, the newspaper said, citing a source in the local government. Mechel officials were not immediately available for comment. Kommersant reported that the plant would produce clinker, a product from which cement is made, using limestone from its existing Pugachyov quarry. Production would begin at the end of 2008 or early 2009, the newspaper said.

"The cement market in Russia is likely to remain in deficit in the medium term, leading to high cement prices and hence high profitability," UBS said in a daily note.

"The existence of the limestone raw materials base should make the project more attractive from an investment cost point of view and shorten the time to commission the plant. In our view, diversification into the cement business has the potential to add value for Mechel."

Mechel, majority owned by billionaire Igor Zyuzin, plans to invest $2.7 billion by 2011 to boost steel and coal output. A large chunk of this investment will be channeled toward raising the quality of steel products used in construction.

Mechel has also acquired a ferro-silicon producer in Siberia, Bratsk Ferro-Alloy Plant, and this month won an auction for large coal fields in the republic of Sakha.