core sector communique

Mechel Announces Commissioning a New Out-of-Furnace Steel Processing Equipment at Chelyabinsk Metallurgical Plant

Moscow, Russia – July 16, 2010 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces commissioning the out-of-furnace steel processing equipment within the first stage of the arc-furnace melting shop #6 upgrade at Chelyabinsk Metallurgical Plant (CMP). The official commissioning of the ladle furnace No. 2 (LF-2) and the vacuum degasser was attended by Mikhail Yurevich, Chelyabinsk Region Governor, Sergei Komyakov, First Deputy Governor, Vladimir Myakush, Chairman of the Legislative Assembly of Chelyabinsk Region, Boris Vidgof, First Vice Chairman of Chelyabinsk City Duma, Ugo Tozo, Vice President of Danieli and other guests. Mechel OAO was represented by Igor Zyuzin, Mechel OAO’s Chairman of Board of Directors, Andrei Deineko, Chief Executive Officer of Mechel Steel Management OOO and Sergei Malyshev, Managing Director of CMP. The commissioned equipment at the arc-furnace melting shop #6 includes the LF No.2 for out-of-furnace steel processing and a vacuum tank degasser for molten metal degassing. Thus, at the arc-furnace melting shop #6 a full complex of modern high-technology equipment for out-of-furnace steel processing is commenced. The steel produced at the out-of-furnace processing unit is casted into billets at continuous-casting machine. The new LF-2 allows significant improvement of the casted steel quality. The vacuum degasser with the appropriate infrastructure would allow CMP to extend a range of steel grades manufactured at the arc-furnace melting shop #6, save costs at this processing stage and improve quality of finished rolled products. The annual designed capacity of LP-2 is as high as 1.2 million tonnes, and the vacuum degasser is expected to process up to 650 thousand tonnes of steel per annum. The project has been implemented within the reconstruction of the arc-furnace melting shop #6. In addition to the out-of-furnace steel processing equipment the project also includes reconstruction of the continuous casting machine #2 which is nearly completed and a large complex of environmental protection measures. Thus, the new out-of-furnace steel processing equipment is supported with effective gas purifying system. The continuous casting machine No.2 gas purifier will be modernized as well. “The arc-furnace melting shop #6 is being reequipped in order to increase output of concasted slabs up to 1.2 million tonnes per year which are used for production of high quality flat products. Also the project’s implementation would allow us to further enlarge the range of steel grades and products manufactured by CMP. Additionally introduction of the new complex would allow us to increase overall production efficiency of our steel segment due to decrease in consumption of raw materials and power. The equipment of the arc-furnace melting shop #6 matches the best examples of the world stainless steel producing plants. The new equipment ensures increasing quality of our products and would allow us to increase output of plates and rolls of corrosion-resistant steel grades after reconstruction of our rolling facilities to compete with the leading European producers”, noted Andrei Deineko, Chief Executive Officer of Mechel Steel Management