Yuzhuralnickel to be shuttered for extended period
ORENBURG. Dec 18 (Interfax) - The board of directors of Southern Urals Nickel Plant (Yuzhuralnickel) , a division of the Mechel steel and coal group, has decided to shut down production for an extended period, the company said in a statement.
The decision was made in order to "prevent a further increase in the plant's losses in light of the unfavourable situation on the markets for Yuzhuralnickel products and absence of prospects of it improving in the economic conditions forecast for 2013," the statement said.
The company said the shutdown of production would be carried out "with compliance of mandatory procedures prescribed by Russian legislation."
It was reported earlier that Mechel was in talks with the government of Orenburg Region and the union committee of Yuzhuralnickel on an agreement to mothball the plant, including the issue of finding employment for laid-off workers.
Yuzhuralnickel suspended production in all divisions on October 1 to conduct equipment repairs, after which a decision was to be made on the plant's future.
Yuzhuralnickel management has said that nickel production has been loss-making for the past few years due to low prices for the metal, the heavy energy costs of producing it, and high transportation costs, the regional government said.
At a meeting with Orenburg Region's governor in early November, Alexei Ivanushkin, CEO of Oriel Resources Limited, which consolidates Mechel's ferroalloy assets, said that keeping production going at Yuzhuralnickel would require urgent measures of government support, including lower electricity and ore transport prices, and lower taxes.
Yuzhuralnickel has two nickel ore mines - Sakharinsk and Buruktalsk - that provide it with a supply of raw materials. The plant exports 80% of the alloy it produces. The plant also supplies products to Mechel's other enterprises that produce alloyed steel, structural and other types of steel.