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Mechel (MTL) Temporarily Halts Steelmaking Facilities in Romania, Ukraine

 November 23, 2012 12:46 PM

(By Balaseshan) Mechel OAO (NYSE: MTL), a Russia-based integrated mining and steel company, reported a temporary suspension of steelmaking facilities in Romania and Ukraine due to unfavorable conditions for raw materials and finished steel products.

The company temporarily halted production at Donetsk Electrometallurgical Plant (DEMZ), which is part of Mechel's steel division, and the scheduled temporary suspension of production at the group's Romanian steel-making facilities that are part of Mechel's Eastern European Steel Division.

Starting on November 21 and 22, electric smelting facilities at Mechel Targoviste and Ductil Steel Otelu Rosu were temporarily halted. Rolling production at Mechel Targoviste will also be temporarily suspended starting November 27 once production plans are met. Starting December 15, rolling and hardware production is planned to be temporarily halted at Ductil Steel Buzau, Laminorul Braila and Mechel Campia Turzii.

[Related -Mechel (MTL): Mechel Bluestone Mining Facilities Halted On Accumulated Inventories]

Temporary suspension of production facilities will not affect sales volumes. All contractual supplies will be made from warehouses as normal. The company is closely monitoring market conditions, so that once they normalize, production could promptly resume.

While production at these steel-making facilities is temporarily suspended, all necessary measures will be undertaken to retain the affected facilities' operational capability and to conduct winter maintenance.

[Related -Mechel (MTL) Temporarily Halts V.I. Lenina Underground Mine Work]

All employees involved in those works will be paid their full salary. In order to preserve jobs, the remaining personnel that are not involved in the scheduled works will be either paid for idle time or placed on leave, according to labor laws.

The expected economic effect from the temporary suspension of production will enable the plants to use their financial resources more efficiently while demand for finished products is low and scrap prices are high. It will enable them to minimize financial risks and ensure protection for the company's long-term interests in the steelmaking sphere.

MTL is trading up 3.11 percent at $6.29 on Friday. The stock has been trading between $5.08 and $12.37 for the past 52 weeks.

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