Bloomberg News

Mechel Declines in U.S. as Russia Probe to Last Until Next Week

March 27, 2012

OAO Mechel (MTL) headed to the lowest closing price in three weeks in U.S. trading after Russia’s environmental watchdog said a review into a unit will only be completed next week.

American depositary receipts of Moscow-based Mechel (MTLR), Russia’s largest producer of coal for steelmakers, fell 2.1 percent to $9.73 by 2:10 p.m. in New York, set for the lowest close since March 6, data compiled by Bloomberg show.

The environmental watchdog said it will complete a review of Mechel’s Yakutugol coal division only next week, after the Natural Resources Ministry reported “significant” license violations were found. The watchdog is preparing a report and will submit it to the Subsoil Resource Agency, which oversees licensing, after the inspections are completed on April 4, the regulator known as Rosprirodnadzor said today in a statement on its website. Both oversight bodies are part of the ministry.

Rosprirodnadzor replaced an earlier statement on its website, removing a line that said reports of “significant” license violations at the coal-mining unit were “erroneous.”

Mechel didn’t see where it could have significant violations and expected to resolve any issues after getting the report, Ekaterina Videman, a company spokeswoman, said March 22.

The stock is trading at a 2.6 percent discount to the company’s Moscow shares, the widest since March 5, data compiled by Bloomberg show. Mechel (MTLR) rose 1.4 percent to 290 rubles, or $9.99, in Moscow today. One New York-listed ADR is equal to one ordinary share traded on Russia’s Micex Index.

To contact the reporters on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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