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Mechel

July 14, 2009

Mechel announces the visit of Sergey Stepashin, Chairman of the Accounts Chamber of the Russian Federation to Chelyabinsk Metallurgical Plant

Chelyabinsk, Russia – July 14, 2009 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces that its Chelyabinsk Metallurgical Plant (CMP) subsidiary was visited by Chairman of the Accounts Chamber of the Russian Federation Sergey Stepashin on July 13, 2009.

Chelyabinsk Metallurgical Plant was the first position in the Accounts Chamber Chairman’s schedule of business trips to Chelyabinsk region enterprises. The meeting with CMP and Mechel management implied discussion of successful implementation of measures for industrial potential recovery and capacity utilization growth and the plant’s role in sustaining budget revenues at different levels as well.

The delegation visiting Chelyabinsk Metallurgical Plant included Chairman of the Accounts Chamber Sergey Stepashin, Governor of Chelyabinsk region Pyotr Sumin, Chief Federal Inspector for Chelyabinsk region Andrey Andrianov, First Deputy Governor of Chelyabinsk region Andrey Kosilov, Chairman of Control and Accounts Chamber of Chelyabinsk region Alfred Galimov, Minister of Industry and Natural Resources of Chelyabinsk region Evgeny Teftelev, First Deputy Chairman of Legislative Assembly of Chelyabinsk region Yury Karlikanov, and Deputy of State Duma Pavel Krasheninnikov. Mechel OAO was represented by Chief Executive Officer of Mechel Management OOO Andrey Deyneko, Chief Executive Officer of Oriel Resources Ltd. Alexey Ivanushkin, and Managing Director of Chelyabinsk Metallurgical Plant OAO Sergey Malyshev.

Participants of the delegation visited production site of continuous casting machine No. 3 of oxygen convertor shop that currently makes more than 75% of the total steel amount produced at the plant. They also visited construction site for continuous casting machine No. 5 ladle furnace. The ladle furnace construction is the first stage of the universal rail and structural steel mill construction, a priority investment project of Chelyabinsk Metallurgical Plant.

In the course of the meeting CMP’s Managing Director Sergey Malyshev briefed on current situation at the plant and crisis management activities’ results. As was mentioned, the crisis consequences treatment measures included more than 10% reduction of costs in all business areas, increase in production volumes, adequate level of salaries and highly professional staff retaining. Stable operation of CMP is witnessed by commissioning blast furnace No. 4 this April reflecting increased demand for steel products. Its productivity was 10% raised after capital repairs completion. In May sintering plant No. 2 output reached target level and keeps on this activity level thus supplying 377 thousand tons of sinter to the plant monthly. Increased pig iron production resulted in the plant’s recovered demand for coke: coking battery No. 4 was commissioned in June after capital repairs completion.

CMP’s capacities utilization in Q2 2009 has exceeded the level of the relevant period of last year allowing the plant not only efficient operation but tax payment to budgets as well.

After the CMP’s management presentation Mr. Stepashin noted that he got very optimistic about the plant’s management plans and crisis treatment measures that were taken. He also pointed to the effective state program in progress addressed to the national financial institutions and aimed at cheaper availability of loans for operating plants that would be additional incentive to implement investment projects.

 

 

 

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