16 November 2016

Russian Metallurgical Company sold its stake in Fortescue

According to press reports, it became known that OJSC «Magnitogorsk Iron and Steel Works» got rid of shares of the Australian mining company Fortescue. The news was also confirmed by the company’s management.

It is worth remembering that previously the metallurgical holding invested 162 million dollars in securities. Investments in securities were made with a view to their subsequent implementation.

«At the end of the reporting period in 2016, the sale of securities was fully implemented. The shares that were subject to sale belonged to the Australian mining company Fortescue «- is listed in the materials of the MMK report.

Trading in Fortescue shares Magnitogorsk began at the beginning of this year. It should be recalled that in the first quarter, only 2 percent of the shares held on the balance sheet were sold. The subsequent periods, namely the second and third quarters were more successful, the company sold the remaining 3.37 percent of shares.

«The total revenue from the sale of shares for the Magnitogorsk Iron and Steel Works amounted to $ 15 million from January 2016» — from MMK’s report.

Magnitogorsk Iron & Steel Works is one of the leaders in Russia and the world steelmaking market. For this year, the metallurgical company was able to produce and sell more than 12 million tons of finished steel. Such a result brought the plant revenue of $ 5.8 billion.

Fortescue Metals Group (FMG), a company with a long history, is considered the largest exporter of iron in Australia. Magnitogorsk Iron and Steel has redeemed its shareholding in 2006. Then, the purchase of 4.71% of shares cost the metal plant $ 170 million. During this period, the Russian company increased its stake to 5.37%.

The Russian combine is the only Russian enterprise that does not have its own coal and ore. Therefore, earlier it was assumed that the company would gradually increase its stake in Fortescue to twenty percent. This would allow the combine to be entitled to nine million tons of mined ore.

But in connection with the global economic crisis, the Russian company abandoned the original plan. Since that time, the Australian Fortescue has grown in price. And according to the data for November 7, its cost is 13 billion dollars.

For ten years of ownership of the shares, the company received a 300% profit, that is, almost 30% annually. And this year, JSC «Magnitogorsk Iron and Steel Works», sowing profits, is likely to reach pre-crisis levels.

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