Evraz Group said Monday that it had renounced the right to purchase the license to develop the Mezhegeiskoye coal deposit, which it won in a hotly contested auction last year, because of weakening market conditions. Evraz unit Yuzhkuzbassugol had offered 16.9 billion rubles ($510 million) to win the right to the license in July, beating out competitors including Oleg Deripaska's Basic Element for the deposit in the Tuva region.
The starting price for the auction was 350 million rubles, and some analysts said at the time that the winning price might have been too high.
Mezhegeiskoye has estimated reserves of 213.5 million tons of hard coking coal, and mining was scheduled to begin in 2014.
Evraz is struggling to preserve cash during the ongoing credit crunch. The company said last month that stockholders could receive part of their interim dividend in discounted shares to save $276 million.
The group has built up considerable debt in recent years through acquisitions in Africa, Europe and North America. In November, it obtained $1.8 billion from state lender VEB to refinance debt.
The steelmaker also said Monday that it would continue to develop its coal resources using existing licenses and coal production facilities in the Kuzbass region.