core sector communique

Mechel Announces Launch of a New High Quality and Stainless Steel Production Complex by the Russian Prime Minister Vladimir Putin at Chelyabinsk Metallurgical Plant

Moscow, Russia – July 23, 2010 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces that Russian Prime Minister Vladimir Putin launched a high quality and stainless steel production complex in the arc-furnace melting shop #6 of Chelyabinsk Metallurgical Plant (CMP). While launching the new production complex in the arc-furnace melting shop #6, the Russian Prime Minister was accompanied by Igor Sechin, Vice Prime Minister, Victor Khristenko, Minister of Industry and Trade, Nikolay Vinnichenko, the Plenipotentiary of the President of Russian Federation in Ural Federal Region, Mikhail Yurevich, Governor of the Chelyabinsk Region, Igor Zyuzin, the Chairman of the Board of Directors of Mechel OAO, Andrei Deineko, Chief Executive Officer of Mechel Steel Management OOO, and Sergey Malyshev, Managing Director of CMP. The Russian Prime Minister’s introduction to the plant started with a presentation of CMP and the project for renovation of the arc-furnace melting shop #6 which includes just-commissioned complex for production of high quality and stainless steel. Sergey Malyshev, Managing Director of CMP, described current situation at the plant, focusing on investment programs being implemented as well as CMP’s capacities utilization level, which currently exceeds precrisis levels by 10%. Then the Prime Minister pushed the start button of the high quality and stainless steel production complex. Mr. Putin examined production sites of the three machines constituting the complex. Mechel’s management described the production process of the two machines for out-of-furnace steel processing – ladle furnace # 2 and vacuum degasser as well as the main machine of the complex – slab concaster #2 that produced its first slab today. Commissioning of the new complex would result in improvement of casted steel quality, boost in annual output of slabs from 600 thousand tonnes to 1.2 million tonnes, significant product range expansion and decrease in consumption of raw materials and power. The new equipment will not only ensure better quality of products but would also allow CMP to increase output of plates and coils of corrosion-resistant steel grades, competing in quality with the products of the leading European producers, after reconstruction of the plant’s rolling facilities. Investments in the project totaled 3.6 billion rubles. Igor Zyuzin, the Chairman of the Board of Directors of Mechel OAO’s, commented on the event: “Implementation of this project would allow CMP to start production of new types of stainless flat long products used in the most important industries of our country such as defence, transport machinery, construction. At the present moment these products are not manufactured by Russian metallurgical plants. Thus, commissioning of this new complex would result in the decrease in the share of the imported products and complete elimination of import in a number of product groups.” Mechel is one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.