NEW YORK/MOSCOW, April 10 (Reuters) - Russian mining and steel group Mechel said it has been in negotiations with potential buyers about disposing of a minority stake in its Mechel Mining unit, Chief Financial Officer Stanislav Ploschenko said on Wednesday.
Asked if Mechel was in talks with China's Baoshan Iron and Steel (Baosteel), Ploschenko said, 'We have talked to different investors about disposing a minority stake in Mechel Mining but we haven't reached any fixed agreement as of today.'
Ploschenko, who spoke with Reuters on the sidelines of a VTB Capital event in New York, did not specifically address if Baosteel is one of Mechel's potential suitors for the stake.
Russia's financial newspaper Vedomosti first reported that Baosteel was in talks with Mechel to buy a 25 percent stake in Mechel Mining for up to $1.25 billion. The entire unit may be valued at $5 billion, with a blocking stake worth $1.25 billion, Vedomosti said.
Baosteel, China's biggest steelmaker by market value, could not immediately be reached for comment.
ELGA COAL DEPOSIT
Mechel had previously said it might sell up to a 25 percent stake in Mechel Mining to a strategic partner to speed up the development of Siberia's Elga coal deposit during the first half of 2013.
'As an alternative to the divestment of minority stake in Mechel Mining, the other alternative is project financing which we are currently negotiating with VEB,' referring to Russia's state bank Vnesheconombank.
Asked how much Elga-related funding Mechel sought from VEB, Ploschenko said 'I can't give you the number because we haven't finished negotiations ... but it will be sufficient to complete to the first phase of Elga - the mining facilities of up to 12 million tonnes a year.'
Ploschenko said the huge Elga coal deposit, which is estimated to have proven reserves of 2.3 billion tonnes, is expected to come to production by 2016.
Earlier on Wednesday, Mechel said it had signed a 40 billion rouble ($1.28 billion) agreement with Russian investment bank VTB, refinancing loans due for repayment this year and buying time to dispose of assets.
Mechel has had to cut investment and put non-core assets on the market to service the $9.1 billion debt it amassed while expanding operations before the 2008 financial crisis sent steel and coal prices tumbling.
Mechel's ADR shares listed on the NYSE was up 32 cents, or 7 percent, at $4.87 per share in afternoon trade on Wednesday.
(Reporting by Frank Tang in New York and Maria Kiselyova in Moscow; Editing by Muralikumar Anantharaman and Nick Zieminski) Keywords: MECHEL BAOSTEEL/STAKE
(Frank.Tang@thomsonreuters.com)(+1 646 223 6126)(Reuters Messaging: firstname.lastname@example.org)
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