Chelyabinsk Metallurgical Plant, a subsidiary of Russian mining and steel producing group Mechel is to take over management of ESTAR's Zlatoust Metallurgical Works (ZMZ) under a trilateral strategic partnership agreement reached between the two companies and the regional administration in Chelyabinsk region, the regional government said. The legal agreement is currently being drawn up and is expected to be signed in the nearest time.
According to the governor of Chelyabinsk region Pyotr Sumin, the situation at ZMZ continues to be complicated. "The plant needs a strong strategic partner. There were several different options, but we but decided on Chelyabinsk Metallurgical Plant," Mr. Sumin stated adding that, "It is the best solution for ZMZ and for the economy of the region."
The Chelyabinsk region administration has been managing ZMZ since March 2009, when workers staged a hunger strike over unpaid wages. Later in April, the plant suspended its operations due to lack of orders. As SteelOrbis previously reported, in June 2009, ZMZ restarted operations at four of its nine electric furnaces and at its blooming and rolling mill No. 280. Having a monthly output capacity of 54,000 mt of steel, in July 2009, ZMZ produced only 8,700 mt of steel and 5,700 mt of rolled steel products, says the Chelyabinsk administration statement.
Analysts doubt that Mechel will have some benefits from the partnership in question, and say that the deal was driven more by political than economic considerations.