core sector communique

Mechel OAO Announces Signing Contracts to Reconstruct Bratsk Ferroalloy Plant

Bratsk, Irkutsk region, Russia – October 25, 2010 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces that Bratsk Ferroalloy Plant OOO, which is a part of Mechel group, has signed contracts to purchase four ferroalloy electric furnaces. Bratsk Ferroalloy Plant OOO and Siberian Plant of Electrothermal Equipment (Sibelectrotherm JSC, Novosibirsk) have signed contracts to supply four ferroalloy electric furnaces with the capacity of 33 MVA each to replace the existing furnaces. In addition Sibelectrotherm undertakes to supervise installation and commissioning works. The reconstruction will take place during 2011-2012. After the project’s completion Bratsk Ferroalloy Plant’s production capacity will increase by 30% and its power consumption will be reduced by 10-13%. The contracts’ total value exceeds 1.9 billion roubles. The project allows keeping the entire existing infrastructure resulting in substantial cost cutting and time saving. Bratsk Ferroalloy Plant produces ferrosilicon – a ferroalloy used in quality steel production. At the present moment the plant’s annual capacity is 91 thousand tonnes of ferrosilicon. Sibelectrotherm is one of the largest Russia’s enterprises specializing in production of electrothermal equipment for ferroalloy, steel and titanium manufacturing. The project will be financed via credit facility provided by Sberbank.