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Metalloinvest to Spend $850 Million to Build Hot-Briquette Plant

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June 27 (Bloomberg) -- Metalloinvest, Russian billionaire Alisher Usmanov’s mining company, said it plans to spend $850 million to build the biggest hot-briquetted iron plant, raising by 75 percent its capacity in the steelmaking material.

It will invest the funds in the “the world’s largest HBI plant” with annual capacity of 1.8 million metric tons by 2015 at its LGOK unit in central Russia, said Chief Investment and Strategy Officer Dmitry Babkin at a Metal Bulletin conference.

HBI is used as an alternative to producing steel from scrap in electric-arc furnaces. Unlike iron-ore, the material doesn’t require the use of coking coal to make steel. Metalloinvest decided to expand production of the value-added material because of the risk of a possible “sharp correction” of iron-ore prices at some point, Babkin said in Moscow.

Steel producers in Russia including OAO Severstal and OAO Novolipetsk Steel are building mini-mills that use scrap as a primary raw material. Russia may see a shortage of scrap, making it profitable for steelmakers to switch to HBI, Babkin said.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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