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Mechel's buyback option on top Russian coal mine lapses

Russian coal and steel producer Mechel PAO decided not to exercise its right to buy back a 34% stake in the Elga coal mine, Reuters reported Jan. 21, citing AO Gazprombank, the company's creditor.

In 2016, Gazprombank acquired a 49% stake in the mine for 34.3 billion Russian rubles as part of Mechel's debt restructuring process. In September 2019, the miner reportedly accepted the bank's offer to return a 34% stake for 30 billion rubles.

Mechel had until Jan. 20 to exercise its preemptive right to buy back the stake. A company representative said Mechel abandoned the option because it received an alternative offer.

No further details were provided on the offer, which Mechel is reportedly studying. The company still owns 51% of Elga.

The report said Gazprombank will consider options for the stake, including a possible sale to an external buyer. Reuters noted that in 2018, the bank received an offer from investor Albert Avdolyan and his A-Property group.

Elga is said to be one of the world's largest coking coal deposits, with reserves of about 2.2 billion tonnes. In 2018, the mine produced 4.9 million tonnes of coal.

As of Jan. 20, US$1 was equivalent to 61.63 Russian rubles.