OREANDA-NEWS. June 25, 2010. Mechel announced that its coal terminal in Vanino will be commissioned in three stages. The first stage will begin operations in 2014 with a capacity of 5mt, while the second stage will be started later (exact dates not provided by company), increasing capacity to 15mt. The coal terminal is scheduled to reach full capacity (25mt) by 2020. Previously, the company had planned to commission the first stage in 2012, with a capacity of 15mt., reported the press-centre of OTKRITIE Financial Corporation.

View: Mechel is building the Vanino coal terminal in order to increase its transshipment capacity for volumes that will come from its Elga coal project, which is slated to deliver its first coal in 4Q10. We estimate that production at Elga will reach 5mt only in 2013E, with a potential for delays, and we believe existing coal terminals are able to process this additional amount.  That said, we do not see the delay of 2 years in the commissioning of a new terminal as critical for the company.

Valuation and Action: We reaffirm out positive view on Mechel. The stock trades on a 2010 EV/EBITDA of 6.4x