MMKI Wins Tender For 38.14% Stake In Limestone Producer

Mariupol Ilicha (MMKI: U/R) won a tender for a 38.14% stake in Komsomolsk Lime Stone. The company paid USD 21.8 mln for the stake. Of the auction’s three bidders two were connected to MMKI, and the third to Smart Group. Eugene Cherviachenko: Although the purchase of the stake will strengthen Mariupol Ilicha’s access to vast limestone reserves we doubt it will decrease the company’s cash cost much as limestone accounts for less than 1% of total costs. Moreover, we are skeptic about Mariupol Ilicha’s chances to consolidate the limestone maker by 2009. The steel smelter has controlled Komsomolsk Lime Stone since 2004, when it agreed to rent a 60% stake in the limestone producer from the state; however the rent agreement expires in 2009 and it is not clear whether this agreement will be extended or not.