Mechel Reports 9M 2011 Operational Results

Mechel OAO’s Chief Executive Officer Yevgeny Mikhel commented on the company’s 9M 2011
operational results:

“Over these nine months, the company demonstrated good results, significantly increasing its sales on  several key points as compared to the same period last year. For example, favorable pricing in the foreign markets allowed us to increase coking coal concentrate sales by 14% and anthracite sales by 31%. Our iron ore business also proved itself well, with iron ore concentrate sales going up by 16%. A sharp increase in PCI sales — by 341% as compared to the same period last year — is a result of the company’s strategy of increasing production and sales of metallurgical coals. “Coke sales over the period of 9 months declined by 7% as compared to the same period last year because of Chelyabinsk Metallurgical Plant’s decreased demand due to temporary halting of the blast furnace #5 for scheduled repairs.  

“In the steel division, over these nine months we managed to increase steel product sales by 16%  compared to the same period last year, including sales of steel flats and longs which went up by 69% and 18%  spectively thanks to our maintaining production volumes at the company’s plants and gaining partnership ties with third parties. Also, on the back of favorable market conditions the company increased hardware sales by 19% as compared to last year’s figures.  

 “In the ferroalloys division, production and sales volumes remain largely stable. Ferrosilicon  production declined in the 3 rd quarter due to the modernization process launched at Bratsk Ferroalloy Plant, which includes replacing the furnace #4. The decline in nickel sales quarter-on-quarter is due to increased export sales which have longer ownership transfer periods. 

“In the power division, heat generation was stable over these nine months as compared to the same  period last year. The decline in electricity generation was due to the repairs campaign aimed to prepare for fall-winter season of 2011-2012 as well as lower electricity prices on the wholesale market. In the 4th quarter we expect an improvement in the division’s operating and financial performance.” 

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, ferrochrome, ferrosilicon, steel, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.