ArcelorMittal's coal mines in Russia may be confiscated

The governor of the Kemerovo in the Siberian region of Russia, where the world's largest steelmaker, ArcelorMittal has three coking coal mines, has threatened to confiscate two of those mines if it fails to boost production.

In a telegram sent to ArcelorMittal's chief executive, Lakshmi Mittal, and a letter posted on the Kemerovo website on Thursday, the governor of Kemerovo, Aman Tuleyev says, "If your team is not able to stabilise production at these facilities, then we propose that you hand them over without compensation.''

ArcelorMittal had acquired the three Russian mines in Kemerovo, about 1,850 miles east of Moscow from Russian steel giant Severstal in 2008 for $718 million.

The company acquired a 97.9-per cent stake in the Berezovskaya mine, a 99.46-per cent stake in Pervomayskaya mine along with coal and enrichment plant, which is attached to the Berezovskaya mine, and the rights to the Zhernovskaya-3 coal field.

ArcelorMittal also acquired a 100-per cent stake in the steam-coal Anzherskaya mine from a company affiliated to but not owned by Severstal for an undisclosed sum.

In October 2007, ArcelorMittal, together with Russian diamond monopoly ZAO Alrosa, was expected to bid in an auction for the world's largest untapped coking coal deposits in Siberia, but Russian authorities excluded it from the auction in Moscow for two Siberian mining assets, which it had awarded it to Russia's OAO Mechel for $2.29 billion. (See: Moscow bars ArcelorMittal from bidding for Siberian coalfields)