The acquisition is in line with Mechel’s strategy of further developing its mining segment, expanding company’s presence in coal and coke-chemical markets and strengthening synergetic effects.

Moscow Coke and Gas Plant OAO, located in the central region of Russia, boasts economically advantageous geographical location and stable sales markets. The Plant’s annual production capacity is about 1.5 million tonnes of coke. Products are successfully sold domestically, mainly to Russia’s central region manufacturers, as well as shipped abroad, in particular to Ukraine and European Union countries.

Mechel acquired a controlling stake in Moskoks from its management and other shareholders. Effective ownership rate is about 77%. The amount of transaction is approximately $300 million. Based on Russian Accounting Standards (RAS) in 2005 Moskoks’ revenue was approx. $111 million, net income - approx. $25 million. Moskoks’ net assets (RAS) as of July 30, 2006 were approx. $190.5 million.

Inclusion of Moskoks into Mechel Group’s structure will enable Moskoks to fully satisfy its needs in coking coal. Annual shipments of coking coal from the Southern Kuzbass Coal Company will be around 1.5-2 million tonnes. Moskoks’ competitive advantage is self-sufficiency in electricity, which is produced by its own power plant with a capacity of 30 MW.

Alexey Ivanushkin, Mechel’s Chief Operating Officer, commented: “We continue to implement our strategy of further developing our mining segment. The acquisition of Moscow Coke and Gas Plant OAO allows for an increase of Mechel’s competitiveness as we enter new sales markets for coal and its byproducts.