Mechel OAO announced the signing of a contract between its Chelyabinsk Metallurgical Plant OAO (CMP OAO) subsidiary and Russian Railways OAO (RZhD OAO) for the supply of rail products from 2010 to 2030.
The agreement is in line with the long-term partnership agreement the two companies entered into earlier this year. Pursuant to that agreement, Mechel OAO will supply a minimum total annual volume of 400,000 tonnes of rail products following achievement of the rail and structural steel mill's full production capacity.
The new products will include high quality railroad rails up to 100 meters in length manufactured with state-of-the-art technologies for steel melting, rolling, tempering, straightening, finishing, and rail quality control. Technical solutions will enable the manufacture of rails that surpass their world equivalents in a number of key parameters, , as determined by the climate conditions of the rails service in Russia.
As previously announced, Mechel will obtain the necessary certificates for safe use of the rails in the railway system and performance of proving-ground tests. Mechel is also to work toward continued development of rail production technology.
To ensure a smooth production process at Mechel's subsidiaries, RZhD OAO plans to continuously deliver the rolling stock. RZhD OAO will also supply its own rail carrying cars for shipping the finished products.
"Signing the contract to supply rail product to RZhD OAO is the next step in implementing our long-term partnership program,” commented Mechel OAO Chief Executive Officer Igor Zyuzin.
“To ensure its successful implementation of the program, Mechel collaborates with one of the world leaders—Danieli, (an) Italian manufacturer of equipment, and Minmetals, China's state-owned industrial corporation,” continued Zyuzin. “In collaboration with these companies, Mechel is constructing a rail and structural steel mill at its Chelyabinsk Metallurgical Plant subsidiary and implementing unique technology, unparalleled in Russia, to produce high-quality rails that conform to the most stringent requirements set by RZhD OAO.
“Mechel plans to invest more than US$500 million in the new production development,” concluded Zyuzin.
Mechel, one of the leading Russian mining and metals companies, unites producers of coal, iron ore, nickel, steel, rolled products, and hardware. Its business includes three segments—mining, steel, and power—and its products are marketed domestically and internationally.