Vnesheconombank (VEB), the Russian development bank, has agreed to provide project finance to Mechel’s Elga coal project near Yakutia, in Russia’s far north-east.

VEB confirms to GTR that today (September 18), the bank agreed to open three credit lines with a combined worth of US$2.654bn: the first with a limit of US$150mn; the second with a limit of US$2.85bn; the third with a limit of US$418.7mn.

It has been speculated that VEB would take a minority shareholding position in the project in exchange for funding.

The bank confirmed, via email, that the transaction is structured to allow it to purchase shares in Elgauol, a subsidiary of Yakutugol (the division of Mechel which is sponsoring the project). However, the shares will amount to just 0.01% of project value.

The Elga coal deposit is one of the top three largest undeveloped coal deposits in the world. It’s estimated that it contains coal reserves of 2.1billion tonnes. The first stage will allow for the extraction of 11.7million tonnes of coal a year.

To access the remote site, 300km of railway track have been laid.