Magnitogorsk: No Plans To Sell Fortescue Stake

Russian steelmaker OAO Magnitogorsk Iron & Steel Works (MAGN.RS) said Monday it doesn't plan to sell its stake in Fortescue Metals Group Ltd. (FMG.AU), the world's fourth-largest iron ore miner, as it believed the company's value will shoot up in the next few years.

Magnitogorsk expects the company's value to increase "dramatically" in the next few years on its production growth, Dmitry Usanov, acting chief financial officer of Magnitogorsk's managing company, said on a conference call.

Some analysts have suggested Magnitogorsk could sell its Fortecue stake of about 5% to finance the purchase of Flinders Mines Ltd.(FMS.AU) for A$554 million ($569 million), the deal the steelmaker announced on Nov. 25. The purchase is subject to approval by an Australian regulator and the Flinders shareholders.

Magnitogorsk has said it will use its own cash as well as borrowed funds to finance the Flinders deal, without elaborating.

Separately, Usanov said Magnitogorsk's 2012 capex will stand at up to $800 million. The company spent $973 million in capex in the first nine months of this year.

-By Nadia Popova, Dow Jones Newswires; [phone], [e-mail]