OREANDA-NEWS. August 2, 2007. Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces the commencement of reconstruction of its Light-Section-Wire Mill 250, located at its Izhstal facility. After the reconstruction, the mill will be able to expand its metal product mix with regard to product grades and sections, improve quality, and reduce consumption ratios and production costs.

The reconstruction of Mill 250 is in line with Mechel’s overall capital expenditure program for 2007-2011. The development and technical re-equipment of Mechel’s steel subsidiaries is carried out aimed at improving their production performance, reducing costs, and improving product quality.

The work to design, manufacture and deliver equipment for the mill reconstruction is carried out by Siemens VAI Metals Technologies S.R.L. of Germany. The project duration is expected to be approximately 18 months and cost approximately US$45.0 million.

The reconstruction will include building a new heating furnace, replacement and installation of stands, replacement of the mill drivers and electric equipment, implementation of the automated control system, installation of the rolled product fast cooling unit and new cooling bank, and installation of the new facilities for cutting, packing, and weighing finished products.

The reconstruction is expected to result in significant reduction of the steel consumption ratio in rolled product manufacturing, consumption of natural gas, electric power, and metal for subsequent processing, improvement of product quality, and ensuring product compliance with the current international standards. After reaching its planned capacity, the mill is expected to produce 300,000 tonnes of products annually, a two-fold increase of its current capacity.

The mill will produce a variety of long products of carbon, alloyed, high-speed, and stainless steel, including thermostrengthened rebars. These products will be used in construction and engineering industries, as well as in hardware production at the Izhstal facility itself.

“The reconstruction of Mill 250 begins the large-scale technical re-equipment project at Izhstal. As the result of the modernization, the plant will be able to shut down obsolete open-hearth production, reduce rolled product cost, and achieve state-of-the-art steel and rolled stock production levels ensuring output of international quality standard products. Installation of a continuous casting billet line is planned with direct billet delivery to the mills avoiding additional processing. Increase of the total electric arc furnace steel output to 500,000 tonnes annually is planned. Total investments in the modernization of Izhstal will amount to $140.0 million during 2007-2011,” Mechel Management OOO Chief Executive Officer Vladimir Polin said.