RUSSIA – London listed Globaltrans Investment has used its subsidiary company OJSC New Forwarding Company to acquire the freight interests of Metalloinvest, the largest Russian iron ore producer. Globaltrans taken over all the equipment of LLC Metalloinvesttrans (MIT) for around $540 million, including a fleet of in excess of 8,000 cargo wagons. The purchase is scheduled for full confirmation by the end of May.
Last September Globaltrans withdrew from the bidding for Freight One and the new acquisition also includes a service contract for the rail traffic of the former owners for the next three years with Globaltrans shifting all of Metalloinvest’s ore next year and a guarantee to carry at least 60% of freight for the two following years.
Metalloinvest is the fifth biggest ore producer globally and a statement said the funds from the sale would be used to free up capital whilst the deal will increase the Globaltrans fleet to around 60,000 rail wagons and assure it of substantial tonnages, last year totalling about 40 million tonnes. Sergey Maltsev, Chief Executive Officer of Globaltrans, commented:
“The freight rail industry has undergone significant changes in the past few years and this acquisition marks a further step-change for the sector. It is increasingly important to have the scale and resources to maximize efficiency and profitability, and be able to meet the needs of large cargo owners.
“We have made it clear that we are looking to capitalize on market opportunities such as MIT which is a high-quality business that, combined with the service contract with Metalloinvest, provides a low risk path to grow our business and consolidate our position in the market.
“Our extensive expertise in the operation of railcars and detailed understanding of transportation requirements of metals and mining companies is expected to enable operational efficiencies benefitting both Globaltrans and Metalloinvest. The transaction brings Globaltrans’ market share in metallurgical cargoes, on a pro-forma basis for 2011, to an estimated 15%.”