Prime Minister Dmitry Medvedev is meeting executives of Russia’s largest metal and mining companies today to discuss steps to support the industry amid slumping commodities and stock prices.
Participants scheduled to attend include OAO Mechel owner Igor Zyuzin, Evraz Plc’s Chairman Alexander Abramov, United Co. Rusal chief Oleg Deripaska, OAO TMK owner Dmitry Pumpyansky and OAO GMK Norilsk Nickel owner Vladimir Potanin, according to the meeting agenda, seen by Bloomberg.
Shares in Mechel, among the most indebted mining companies in Russia, fell 41 percent in Moscow on Nov. 13 on speculation the company may default on the $9.55 billion it owes. The price for hot-rolled coil steel exported from the former Soviet Union fell in July to the lowest level since December 2009, while Russia’s coking coal prices have dropped 20 percent this year.
“Debt relief measures can be useful for Mechel and Rusal in their talks with lenders,” George Buzhenitsa, a Moscow-based Deutsche Bank AG analyst, said by phone. Rusal had about $10 billion in net debt by the end of September and is having talks with lenders over debt refinancing.
The government is ready to discuss some compensation to the companies for interest-rate costs they incur in funding development projects, the document shows. It also may consider granting state guarantees for loans and ease rules on the central bank accepting the companies’ bonds as collateral.
The government is looking into steps that will stimulate the industry, helping to shut excess production and measures to limit imports of some products, it shows.
“We do not think there will necessarily be any immediate drastic steps from the government, but having said that the attention is clearly positive and could eventually lead to longer-term support,” Igor Lebedinets, a VTB Capital analyst, said in a report today.
Metal and mining companies may seek support in limiting imports and boosting local metal demand, Kirill Chuyko, BCS Financial Group’s head of equity research, said by phone today.
Aluminum dropped as low as $1,765 a metric ton in June, the weakest level in four years, prompting Rusal to cut production. The price of nickel touched the lowest in four years in July, data compiled by Bloomberg show.
Spokesmen for Mechel, Evraz, Rusal, TMK, and Norilsk declined to comment. Natalya Timakova, a spokeswoman for Medvedev, declined to comment. Vedomosti newspaper reported on the talks earlier.