Nov. 29 (Bloomberg) -- Russia’s OAO Magnitogorsk Iron & Steel rose to the highest in more than a week after agreeing to buy Adelaide, Australia-based Flinders Mines Ltd., an acquisition analysts say will secure the steelmaker an exclusive iron-ore supply.
Shares in MMK, as the company controlled by billionaire Victor Rashnikov is known, climbed 1.9 percent to 13.48 rubles on the Micex index in Moscow, the highest closing price since Nov. 17.
MMK agreed to buy Flinders for about A$554 million ($555 million), according to a Nov. 25 statement released by Regulatory News Service. The acquisition will give MMK ownership of an iron ore deposit in Western Australia’s Pilbara region with 917.3 million metric tons of ore, the filing said. The deal still needs to be approved by 75 percent of Flinders’ shareholders in March and by Australian regulators, the company said in a separate statement to the Australian Stock Exchange on Nov. 25.
“The market is starting to realize the benefit of future entry into Flinders Mines,” Oleg Petropavlovskiy, a metals and mining analyst at Moscow’s Broker Credit Service, said by phone today. “This will make Magnitogorsk one of the leaders by profit in steel manufacturing not only in Russia but in the world.”
MMK’s profitability has suffered because of a lack of access to raw materials and the Flinders deal will give the company entry to their own iron-ore deposit, Petropavlovskiy said. Currently, MMK produces 30 percent of its own ore, he said.
--Editor: Emma O’Brien
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