OREANDA-NEWS. June 17, 2010. The largest Ukrainian flat rolled steel producer, Mariupol Ilyich Steelworks <MMKI UK U/R>, is negotiating a merger with the country's largest vertically integrated steel group Metinvest after the matter of ownership of its controlling interest has been out of the way, the press-release of the Company says. 'We are talking to Metinvest firstly because it is a Ukrainian holding, and, secondly, because it has a captive raw materials base, – iron ore, pellets, and coke,' Mr. Boyko, the CEO of the Company, admits.  Metinvest Holding confirmed that negotiations with the management of Ilyich are in progress. 'Both the parties are considering possible scenarios of co-operation and of combining resources in order to strengthen the position of Ukrainian steelmakers on international markets,' says the statement of the Holding.

Millennium Capital: the MMKI stocks gained 19.4% on the background of this news yesterday because the news is undoubtedly POSITIVE for the Company. The Company will get access not only to the raw materials but also to the Group financial resources for modernization implementation and will improve the corporate governance too. On the other hand, Metinvest will also benefit from the impending merger. Firstly, it will joint the top 20 biggest steel producers in the world, with a crude steel production capacity of more than 17m tonnes/year, which will have a positive effect on the prospects of its long discussed IPO. Secondly, the assortment of the Holding production will increase and, thirdly, the capacity utilization will increase of the Holdings OMEPs and of coke plants, Avdiyivka Coke Processing works <AVDK UK BUY> in particular. Things look promising, with the only thing that remains outstanding being the resolution of litigation about the ownership of MMKI stocks.