Russias Severstal, Renova target China coal mkt

Russia’s second-largest steel producer and major coking coal miner, Severstal , is to target China as the main market for coking coal produced in a Mongolia joint venture, a senior Severstal official said on Thursday.

“We are really looking to target the Chinese market for coking coal,” the Severstal official said. “The deposit in Mongolia contains low-volatile, high calorific value, hard coking coal, which is ideal for the steel industry in China and also Japan,” he said.

The three-party consortium made up of Severstal, Russia’s largest asset management company Renova Group and Russian investment management company Basic Element, plans to develop the Tavan Tolgoi coking coal deposit in the South Gobi region of Mongolia.

Tavan Tolgoi contains estimated coking coal reserves of around 6 billion tonnes, he said.

The consortium plans to rail coking coal to Chinese customers and eventually rail to Chinese ports for export to other Asian markets, such as Japan, he said.

“But to begin with, the market for us will be China — this is a long-term, 10-year project,” he said.

The partners will be looking at investing jointly with the Mongolian government in infrastructure improvements such as increased rail capacity.

Renova Group, which had net assets of $9 billion at the end of 2005, is a shareholder in numerous mining and industrial entities worldwide.