Mechel reports 1Q 2012 operational results

Production and sales for 1Q 2012

Production:

Product name 1Q 2012, thousand tonnes 1Q 2011, thousand tonnes  1Q 2012 vs 1Q 2011, % Coal (run-of-mine) 6,413 5,985 +7 Pig iron 1,023 1,013 +1 Steel 1,655  1,588 +4

Product sales:

Product name 1Q 2012, thousand tonnes 1Q 2011, thousand tonnes 1Q 2012 vs 1Q 2011, % Coking coal concentrate 3,181 2,803 +14 Including coking coal concentrate supplied to Mechel enterprises 628 825 -24 PCI 503 138 +265 Anthracites 614 488 +26 Including anthracites supplied to Mechel enterprises 58 84 -31 Steam coal 1,504 1,855 -19 Including steam coal supplied to Mechel enterprises 355 459 -23 Iron ore concentrate 1,118 1,068 +5 Including iron ore concentrate supplied to Mechel enterprises 150 462 -68 Coke 889 899 -1 Including coke supplied to Mechel enterprises 669 576 +16 Nickel 4.2 3.6 +19 Including nickel supplied to Mechel enterprises 0.6 1.2 -49 Ferrosilicon 18 23.9 -25 Including ferrosilicon supplied to Mechel enterprises 7.2 6.9 +5 Chrome 17.2 11.3 +52 Including chrome supplied to Mechel enterprises 2.5  3.3 -26 Flat products 214 189 +14 Including those produced by third parties 141 125 +13 Long products 937 837 +12 Including those produced by third parties 196 168 +16 Billets 540 681 -21 Including those produced by third parties 268 480 -44 Hardware and welded mesh 213 207 +3 Including those produced by third parties 11 9 +15 Forgings 18 15 +21 Stampings 28 27 +5 Electric power generation (thousand kWh) 1,213,029  1,150,318 +5 Heat power generation (Gcal) 3,140,876 2,704,464 +16

Mechel OAO’s Chief Executive Officer Yevgeny Mikhel commented on the company’s Q1 2012 operational results:

“In the mining segment, despite a temporary halting of mining at Southern Kuzbass Coal Company OAO’s New-Olzherassk and Sibirginsk mines, production of run-of-mine coal throughout Mechel Group grew by 7% compared to the same period last year, with sales of coking coal up by 14% and sales of anthracites up by 26%. Our strategy of increasing production and sales of high value-added products resulted in a 256-percent increase in PCI sales and a 19-percent decrease in steam coal sales.

“This year Mechel continued to expand its mining division’s resource base and won subsoil licenses for Southern Yakutia’s Sutamsky and Sivaglinsky iron ore deposits with reserves estimated at 1.38 billion tonnes under Russian standards. These licenses will enable us to profit more fully from these deposits’ proximity to both Yakutugol Holding Company OAO’s existing assets as well as the Elga coal deposit’s transport, production and social infrastructure which is currently being built.

“In the steel division, steel and pig iron production showed stable growth. The sales volume for long and flat rolls increased by 12% and 14%, respectively, due to our service and sales network Mechel Service Global’s expanding client base. The decrease in billet sales in the first quarter of 2012 compared to the same period last year was due to shrinking the share of products produced by third parties, Mechel’s traditional partners.

“In the ferroalloys division, several positions showed improvement in the first quarter of 2012 relative to the same period last year. Chrome sales in the first quarter increased by 52% due to a production boost at Tikhvin Ferroalloy Plant as iron ore’s structural content improved. Nickel production remained stable, with the increase in sales volumes largely due to ownership transfer periods. Modernization and equipment replacement at Bratsk Ferroalloys Plant led to a temporary decrease in ferrosilicon production. At the same time, in March 2012 the plant launched a reconstructed ferroalloy electric furnace, which will enable the enterprise to successfully increase production as early as this year’s second quarter.

“In the power division we consistently met our internal needs in electricity and heat as well as the growing demand on the external markets. Through modernization and implementation of advanced management practices for the production process, we improved the efficiency of our most important power assets.

“On the whole, the results of 2012’s first quarter show positive dynamics. Thanks to our program of modernization and cost-cutting, production and sales of our key products increase and the company’s position on the market is further consolidated.”