UPDATE 1-Russian state bank approves $2.5 bln loan to miner Mechel
* VEB loan matures in 13-1/2 years, grace period until 2017
* Mechel may still seek partner for Elga
MOSCOW, Sept 18 (Reuters) - Russian state development bank Vnesheconombank (VEB) agreed on Wednesday to lend $2.5 billion to debt-laden miner Mechel, a move the firm said would enable it to keep seeking partners to develop its ambitious and costly Elga mining project.
Mechel, saddled with debts of over $9 billion, applied to VEB in March for help financing Elga, one of the world's largest coking coal reserves whose development has for decades been blighted by inadequate transport links.
The loan, which matures in 13.5 years with a grace period until 2017, will be used to complete the first phase of development at Elga which includes the construction of raw coal complex with a capacity of 11.7 million tonnes, Mechel said.
Neither Mechel nor VEB disclosed what interest the miner would pay on the funding.
The firm had first considered selling a minority stake in its mining unit, worth up to $1.25 billion, in order to finance Elga but appeared to shelve plans when no attractive offers were forthcoming.
That option is still on the table, Mechel's chief financial officer Stanislav Ploshchenko told Reuters.
"We do not reject the idea," he said. "Moreover, we believe that it would be much more interesting to investors now we have the certainty of funding.
"Of course acquiring a partner ... would require the agreement of VEB, but we have already discussed it with them, so I do not see any obstacles," he added.
Last year, facing a toxic combination of poor demand and uncertain markets, Mechel put non-core assets up for sale, but its debt has remained stubbornly high.
Shares in Mechel, which have tumbled over 85 percent since their peak in 2011, were little-changed on the day, closing up 0.2 percent.
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