core sector communique

Mechel Announces Key Accomplishments at Yakutugol and Its Subsidiary Elga Coal Complex

Neryungri, Sakha Republic (Yakutia), Russia – August 29, 2011 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces reaching full production capacity at the Nerungrinskaya processing plant of Yakutugol Holding Company OAO and gives an update on the construction of Elga Coal Complex. In July, Yakutugol Holding Company OAO’s Nerungrinskaya washing plant processed 783,000 tonnes of coking coal and produced 536,000 tonnes of concentrate and 197,000 tonnes of middlings. This is the highest monthly result the plant achieved in its 26-year history. These results were made possible by the well-coordinated work of the plant’s team, as well as the plant reaching its full production capacity. The Company achieved more success in construction of Elga Coal Complex, a subsidiary of Yakutugol Holding Company OAO. Sakha Republic’s Agency for Use of Mineral Resources gave permission to launch the first stage of the open pit development at the Elga deposit. Separately, construction of the Ulak-Elga railway link was completed up to the 209 km point ahead of schedule. A coal reloading facility at this site will allow the company to ensure shipments of Elga coal by trucks until the railway is completed. This represents another critical milestone toward development of the coal deposit which is Mechel’s largest project for producing coking coal. As previously announced, annual production capacity at Elga Coal Complex will reach 27 million tonnes by 2021 according to the subsoil license’s conditions. With that production volume, the saleable production at Elga is expected to be over 8 million tonnes of high-quality coking coal concentrate, some 5 million tonnes of steam coal concentrate which is produced from oxidized coal, and some 6 million tonnes of middlings, which are a by-product of the coking coal washing process and are used for the power industry’s needs. According to the IMC-reviewed mine plan, by 2030 and beyond, when deeper seams are mined at the Elga open pit, the same annual run-of-mine production volume is expected to yield over 11.5 million tonnes of coking coal concentrate. The larger amount of coking coal concentrate from the same run-of-mine production will be achieved due to the natural decrease in the share of oxidized coal which lies closer to the surface. 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.