Mechel reports finishing laying railway tracks to Elga Coal Complex

Mechel, one of the leading Russian mining and metals companies, announces that it has finished laying tracks along the entire route of the railway link from Ulak station to the Elga coal deposit which is being developed by Mechel Mining's subsidiary, Yakutugol Holding Company.

The last section of track of the railway link to the Elga deposit was laid in December 2011. This has opened traffic along the entire route from Baikal-Amur Mainline’s Ulak station to the Elga deposit. The railway track’s construction has thus far required investment of some 40 billion rubles (1.25 billion US dollars*).

Construction involved laying 321 kilometers of tracks.

Mechel began constructing the railway link to the Elga coal deposit in February 2008. During this time, some 70 contracting parties from various Russian regions were involved in construction works. Metallurgshakhtspetsstroy, Mechel Mining’s subsidiary, is the project’s general contractor. The railway was built in difficult climatic and geological conditions. A total of 76 bridges were built in the course of the railway’s construction. As earlier reported, mining at the Elga open pit began in August 2011, producing some 200,000 tonnes by the year’s end.

“The railway’s completion is one of the most complicated and important stages in implementing the unique project of developing the Elga coal deposit, which is one of the world’s largest coking coal fields. The launch of direct railway access to Elga Coal Complex will in 2012 significantly facilitate delivery of materiel necessary to increase production at Elga, as well as allow rail transportation of coal mined at the deposit. It must be noted that this project’s scale is unique for the mining industry. Completion of railway construction together with the launch of mining at the deposit in such a short time, considering the 2008-2009 crisis, once again proves that Mechel is one of the few companies with the potential to handle a project of such magnitude,” Mechel’s Chairman of the Board of Directors Igor Zyuzin noted.

* According to the Russian Central Bank exchange rate of 31.87 RUR/$ as of January 11, 2012.