OREANDA-NEWS. July 07, 2010. In the course of negotiations regarding possible cooperation and joint efforts to tackle the consequences of the world economic crisis, Ilyich Iron and Steel Works (I&SW) and Metinvest Group decided to combine their assets. The integration will result in reaching a total production capacity of 20 mln. t. of steel per annum.

This partnership will involve all assets of Ilyich I&SW, and the following enterprises of Metinvest Group: JSC Inguletskiy GOK, JSC Krasnodoncoal, JSC Avdeyevka Coke & Chemical Plant, JSC Khartsyzsk pipe plant, as well as investments in development and modernising the production facilities of Ilyich I&SW OJSC with expenditure of USD 2 bln. The share of Metinvest Group in this partnership will comprise 75% on completion of the integration process, whereas 25% will remain under control of Ilyich I&SW under the leadership of Mr. Vladimir Boyko. The next steps and final format of the partnership will be determined following the completion of due diligence and receipt of approvals from the corresponding regulatory Ukrainian and international authorities. Execution of the agreements reached will be formalized fully in accordance with the requirements of the current legislation.

One of the first steps in the course of the partnership will involve the participation of Metinvest Group in the acquisition of additionally issued of shares of Ilyich Stal CJSC and Ilyich I&SW OJSC.

"Partnership with Ilyich I&SW is an important phase in the implementation of our long-term strategy aimed at strengthening Metinvest’s vertical integration and achieving maximum growth in high quality, while at the same time, increasing low cost steel volumes in Ukraine, — stated Igor Syry, CEO of Metinvest Holding, LLC. — We anticipate gaining major synergies, mainly through optimisation and the modernisation programs of our iron and steel assets, improving production efficiency and strengthening our market position. According to our estimates, total production capacity will reach 20 mln. t. of steel per annum. The partnership will allow us to strengthen the position of Ukrainian metallurgy in world markets, which is the foundation for Ukrainian economy growth and raising the level of it’s economic security".