Russia's Medvedev Gives Boost to Mechel's Owner

President Dmitry Medvedev gave a boost to the owner of Russian miner Mechel on Monday by taking part in a symbolic launch of one of its plants, in a sign that tensions around the company are easing.

New York-listed Mechel lost over a half of its market value in July after Prime Minister Vladimir Putin attacked its owner Igor Zyuzin for price fixing, scaring investors and helping spur capital flight from Russia.

In a sign that such issues are being put aside, Medvedev, Kazakhstan President Nursultan Nazarbayev and Mechel head Igor Zyuzin together toured a company exhibition in the Kazakh city of Aktobe on the Russian border.

At one point Medvedev and Nazarbayev were invited to take part in a video link with the town of Khromtau some 130km (85 miles) away, where a ceremony launching Mechel's renovated Voskhod Khrom ore processing plant was under way.

"Good luck," said a smiling Medvedev, pressing a button simultaneously with his Kazakh counterpart Nazarbayev to launch the new plant, to the applause of a group of officials.

Putin's July attack on Mechel - when he promised to send a doctor and a prosecutor to Zyuzin, who failed to attend an industry meeting due to illness - revived investor memories of a 2003 Kremlin-orchestrated campaign against oil major YUKOS and its politically ambitious head Mikhail Khodorkovsky.

YUKOS ended up in the hands of state-controlled oil firm Rosneft and Khodorkovsky was sentenced to eight years in jail for fraud, an outcome which dealt a blow to Russia's stock market and prompted some Western investors to pull out.

But since Putin's July attack on Mechel, government officials have said the issue had been settled with the help of the anti-monopoly agency which ordered the company to cap its domestic coking coal prices and pay a relatively small fine.

Mechel's new plant, in which the company has already invested $250m, is also an important project in Russia's efforts to step up economic integration with ex-Soviet neighbours.

The company's vice president, Alexei Ivanushkin, told reporters Mechel was planning to build a ferroalloy plant in Khromtau costing up to $800m.

The Khromtau plant would have an annual capacity of 240,000 to 250,000t a year, twice as much as Mechel's similar plant in Russia.

By Denis Dyomkin, Reuters