RUUKKI GROUP SIGNS FRAMEWORK

RNS Number : 9293R

Ruukki Group PLC

01 September 2010

 



07:00 London, 09:00 Helsinki, 1 September 2010 - Ruukki Group Plc, Stock Exchange Release

RUUKKI GROUP SIGNS FRAMEWORK AGREEMENTS WITH MCC FOR CONSTRUCTION OF TWO DC CHROME FURNACES AND 250MW Power Plant in south africa

Ruukki Group Plc ("Ruukki" or the "Company") (LSE: RKKI, OMX: RUG1V) announces the signing of two framework agreements with Metallurgical Group Corporation Ltd ("MCC") for the construction of two DC chrome furnaces and a 250 megawatt ("MW") power plant in South Africa.  This forms part of Ruukki's stated strategy to grow its Minerals Business in South Africa through increasing production capacity and expanding market share.

DC Chrome Furnaces

Under the framework agreement, MCC will be the procurement and construction contractor for the construction of two 70MW, single electrode submerged arc DC furnaces with two tap holes.  GLPS is the design and engineering company and are currently in the process of design works and detailed engineering.  These are expected to be completed by fourth quarter 2010. Once the detailed design and engineering has been completed, negotiations to convert the framework agreement into a formal contract between Ruukki and MCC will start and are expected to be concluded by the end of June 2011. Ruukki is currently conducting a site selection exercise and expects to make a final decision by the end of 2010.

Power Plant

Ruukki intends to build a 250MW power plant in South Africa to expand its energy options for its expanding operations.  Under the framework agreement, MCC will be the engineering, procurement and construction contractor for the project and will also conduct the project's Feasibility Study ("FS").  The FS is due to commence during the fourth quarter 2010, during which the most appropriate technology either coal gasification combined cycle, conventional coal fired boiler or fluidised bed boiler / gasifier will be determined in light of South Africa's limited water supply.  The FS is expected to be completed by the end of the second quarter 2011. Upon completion of the FS, negotiations to convert the framework agreement into a formal contract will take place.

Commenting on the agreements Alwyn Smit, CEO of Ruukki, said "I am pleased to announce a major step forward towards our objective of expanding our South African production capacity with the signing of these agreements. MCC is a well known and respected leader in the field of construction projects for the mining industry and has been operating in Africa over the past 40 years. We believe that owning a power plant is critical for our growth plans as it will ensure a consistent supply of power to our furnaces at a competitive rate.  We look forward to updating shareholders on this as we seek to convert these framework agreements into formal contracts."

RUUKKI GROUP PLC

Alwyn Smit

CEO

Ruukki Group is an industrial group focusing on minerals and wood processing businesses. Ruukki Group Plc's shares are listed on NASDAQ OMX Helsinki and the London Stock Exchange.

For additional information, please contact:

Ruukki Group Plc

Alwyn Smit, CEO: [phone]

www.ruukkigroup.fi

Investec Bank plc

Stephen Cooper: [phone]

Pelham Bell Pottinger

Charles Vivian: [phone]

James MacFarlane: [phone]

Note to Editors:

Metallurgical Group Corporation Ltd ("MCC") is a leading state-owned Chinese enterprise involved in engineering, procurement and construction for the mining industry, equipment manufacture, papermaking and real estate development.  The Company has been building construction projects across Africa for the past 40 years and has developed a strong reputation.

 

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