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Mechel buys Yakutia coal assets for $2.3 bln -1

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MOSCOW, October 5 (RIA Novosti) - Mechel [NYSE: MTL], a leading Russian steel and alloy producer, bought coal assets in the northeastern Republic of Yakutia for 58.19 billion rubles ($2.3 billion), the tender organizer said Friday.

The tender offered 68.86% of shares in the coal company Elgaugol, 75% minus one share in Yakutugol and an unfinished 320-km (199-mile) section of the Ulak-Elga railway. The prospective buyer undertakes to put the railway into operation no later than September 30, 2010, the federal property fund said.

The lot's starting price was 47.4 billion rubles (about $1.89 billion) with a bid increment of 100 million rubles ($4 million), the fund said.

The tender commission denied the company Kolorprofil, which represents the interests of the world's largest steel company Arcelor Mittal, admittance to the tender, saying it would give the reasons for the refusal later.

Mechel estimates investment in the development of the Yakutian coal assets acquired at a tender Friday at $3 billion over 7-10 years, the company's managing director said.

"Investment will depend on the cost of the railway and the market situation," Alexei Ivanushkin said.

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