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By John Helmer in Moscow

The Russian steelmaking group Evraz announced today that it has cancelled the sale of its Connecticut-based vanadium producer, Strategic Minerals Corporation (Stratcor). Without giving a reason, the announcement says the company “notes the recent publications regarding the possible sale of…Stratcor…Following a comprehensive analysis of Evraz’s strategic options in relation to its US vanadium subsidiary Stratcor, Evraz has terminated negotiations regarding the possible divestment.”

A fortnight ago, sources close to the company told CRU Steel News the sale had been decided by the Evraz board of directors last January, and would be announced officially in October.

Stratcor, one of the largest producers of vanadium alloys and chemicals in the world, was first acquired by Evraz in April 2006 when it paid $110 million to buy a 73% stake of the company; the remainder of the shares were held by the Japanese trading company, Sojitz. At the time, Evraz said it wanted to “benefit from Stratcor’s advanced technical know-how and outstanding marketing expertise”.

According to Evraz’s latest financial report, vanadium segment sales jumped by 110.1% to $290 million in the first six months of 2010, compared with $138 million in the first six months of 2009, reflecting increased sales volumes and improvement in the prices of vanadium products. Sales volumes for Evraz’s vanadium division increased from 7,400 tonnes of pure vanadium in the six months ending 30 June 2009 to 10,900 tonnes of pure vanadium in the six months ended 30 June 2010. Other vanadium producing units held by the Evraz group include the newly acquired Vanady-Tula in Russia.

Calling off the sale abruptly, without explanation, appears to be a reaction to speculation that the Stratcor sale would be going to a related party of the Evraz group, possibly one of the major shareholdings which are controlled by Roman Abramovich, Eugene Shvidler, and Alexander Abramov.

Speculation in the US about the attempt to sell off Stratcor has also focused on potential liability for ground and sub-surface contamination stemming from vanadium mining operations in the past, before Evraz took over Stratcor. The statute applying liability to US mine companies is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which is under the administration of the US Environmental Protection Agency (EPA). Evraz says it cannot comment on the liability issue.

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