Moscow, Russia– August 23, 2017 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading Russian mining and metals companies, announces 1H2017 operational results.

Production and sales for 1H2017 

Production:

Product Name 1H2017, thousand tonnes 1H2016, thousand tonnes % 2Q2017,   thousand tonnes 1Q2017, thousand tonnes % Run-of-mine coal  10,331 11,528 -10 5,257 5,074 +4 Pig iron 2,038 2,044 0 991 1,046 -5 Steel  2,217 2,108 +5 1,096 1,121 -2

Sales:

Product Name 1Í2017 thousand tonnes 1Í2016, thousand tonnes % 2Q2017, thousand tonnes 1Q2017, thousand tonnes % Coking coal concentrate 4,072 4,470 -9 2,076 1,996 +4 Including coking coal concentrate supplied to third parties 2,470 2,910 -15 1,256 1,214 +3 PCI 682 934 -27 341 341 0 Including PCI supplied to third parties 682 934 -27 341 341 0 Anthracites 810 908 -11 362 448 -19 Including anthracites supplied to third parties 695 775 -10 309 385 -20 Steam coal 3,165 3,575 -11 1,576 1,589 -1 Including steam coal supplied to third parties 2,812 3,031 -7 1,453 1,360 +7 Iron ore concentrate 1,400 1,342 +4 749 652 +15 Including iron ore concentrate supplied to third parties 12 8 +44 8 4 +119 Coke 1,382 1,446 -5 660 722 -9 Including coke supplied to third parties 414 484 -14 178 235 -24 Ferrosilicon 30 40 -24   17 14 +22 Long rolls 1,466 1,500 -2 761 705 +8 Flat rolls 304 254 +20 151 153 -1 Hardware 332 331 0 178 154 +16 Forgings 27 19 +40 12 14 -13 Stampings 47 37 +27 23 24 -7 Electric power generation (thousand kWh) 1,678,382 1,714,766 -2 746,466 931,916 -20 Heat power generation (Gcal) 3,091,129 3,105,575 0 1,003,762 2,087,367 -52

Key investment projects progress

Universal rolling mill: 

Product Name 1H2017, thousand tonnes 1H2016, thousand tonnes % 2Q2017, thousand tonnes 1Q2017, thousand tonnes % Rails, beams and shapes 313 213 +47 156 157 0

Elga coal complex:

Product Name 1Í2017, thousand tonnes 1Í2016, thousand tonnes % 2Q2017, thousand tonnes 1Q2017, thousand tonnes % Run-of-mine coal 1,934 2,011 -4 1,097 837 +31

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the 1H2017 operational results:

“Early in the second quarter, correction in the coking coal market which we observed since last December changed to a dramatic price hike as the powerful storm Debbie hit Australia’s key coal producing state of Queensland. We made every effort to take maximum advantage of this beneficial situation and to boost coking coal exports to Asia Pacific. In 2Q2017, the volume of our coking coal concentrate exports went up by over 20% quarter-on-quarter, and that included nearly quadrupling our Elga coal supplies. As a result, our sales of coking coal concentrate, which is our key product, to third parties went up by 3%.

“PCI sales remained at the last quarter’s level due to stable demand.

“The 19-percent decrease in anthracite sales was due to a decrease in export orders, primarily from Europe, and several shipments to South-East Asia being shifted from the second to the third quarter.

“Steam coal sales mostly remained on the same level. We have, however, increased shipments to our clients in China, South Korea and Vietnam, with our supplies to these countries totaling some 900,000 tonnes of steam coal in 2Q2017.

“As a whole, the export share in our sales structure for all kinds of coal sold to third parties amounted to 83% in 2Q2017.

“As for iron ore concentrate, the Group’s priority still lies with uninterrupted supply of Chelyabinsk Metallurgical Plant.

“In 2Q2017, Mechel decreased coke sales by 9% due to an unstable market situation.

“The company’s steel division decreased production of pig iron by 5% and steel by 2% quarter-on-quarter due to major planned repairs in Chelyabinsk Metallurgical Plant’s agglomeration and blast furnace facilities.

“We continue to implement our strategy aimed at increasing the share of high-margin steel products in our sales structure. In 2Q2017 sales of all types of long rolls went up by 8%. This increase was partly due to the increase in production at Izhstal and mastering of new bar profile types at Chelyabinsk Metallurgical Plant’s universal rolling mill. Two our rail profiles were certified as compliant with European TSI standard, which enables us to expand our sales geography. As of today, the universal rolling mill has reached a monthly load equal to 80% of the mill’s maximum capacity.

“In this accounting period, due to a traditional seasonal hike in demand for rebar from construction companies, we managed to increase sales of this product by 14%. The seasonal factor also had its impact on the 16-percent increase in hardware sales.

“Sales of Bratsk Ferroalloy Plant’s ferrosilicon went up by 22% in this accounting period, mostly due to an increase in the group’s internal demand.

“The 7-percent decrease in stampings sales in 2Q2017 was due to our fulfilling several contracts ahead of schedule, in 1Q2017. The 13-percent decrease in forgings sales was due to repairs at Urals Stampings Plant’s Chelyabinsk facility.

“The 20-percent decrease in electricity generation was due to planned equipment repairs at Southern Kuzbass Power Plant. The 52-percent decrease in heat generation was due to the fact that the heating season ended in May and thus the heat load went down significantly.” 

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Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com