OREANDA-NEWS. June 23, 2008. Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces that on June 22nd at the 60th kilometer landmark of Verhny Ulak Station of Baikal-Amur Mainline, together with Transstroy Engineering Corporation ZAO, a ceremony for the railway construction start-up was held. This spur-track will connect the Elga deposit with the Baikal-Amur mainline.

Construction of the spur-track to the Elga deposit started in February 2008 after the signing of the contract with Transstroy Engineering Corporation for the design and construction of a spur-track to connect the Verhny Ulak Station of Baikal-Amur Mainline with Elga coal deposit (Yakutia). The contractors were previously rebuilding an auto-road near the track, subgrade formation, track superstructures and engineering structures on 60 kilometers of railway which was built by the Ministry of Communication Lines before 2002. Designing, engineering and prospecting works as well as construction divisions mobilization were also held there.

On June 22nd, the first section of the rail track was set at the 60th kilometer landmark to the Elga deposit. The ceremony was attended by the President of the Sakha Republic (Yakutia) Vyacheslav Shtyrov , Acting Governor of Amurskaya Oblast Viktor Martcenko, State Duma Deputy, Chairman of the North and the Far East Regions Problems Committee Valentina Pivnenko, management of the Mechel Company headed by its CEO Igor Zyuzin and Transstroy Engineering Corporation ZAO, representatives of the Khabarovskaya Oblast Government and Sakha Republic (Yakutia) Government and heads of Zeysky and Neryungrinsky Regions. Greeting telegrams from the Deputy Chairman of the Russian Federation Government I. Sechin and Khabarovsky Region Governor V. Ishaev were also addressed to the management of Mechel.

Igor Zyuzin, CEO of Mechel, and Ivan Kuznetsov, General Director of Transstroy Engineering Corporation ZAO, cut a symbolical red ribbon and gave a command to set the first section. The set of a silver section symbolizing the beginning of the railroad construction was a culmination moment at the Railroad Construction Opening Ceremony. The total length of the railroad will be approximately 315 kilometers. The railroad’s design comprises about 420 engineering structures, including 194 bridges. The railroad’s throughput capacity after completion of all construction stages will be approximately 25.0-30.0 million tonnes annually. Commissioning of the railroad for permanent operations will be expected to commence before September 30, 2010. By that time completion of projecting works for the coal and the washing production complex is planned that is needed for quality product manufacturing. Mechel is planned to invest about US\\$1.3 billion in this project, which is in line with its capital expenditure program for 2008-2012.

“Construction of the spur-track to the Elga deposit is one of the first great scale projects being implemented by a private business. Concurrently with the railroad Elga deposit development will start. This would enable Mechel to transport coal from the Elga deposit since the first stage of construction completion. Building up of this spur-track is in line with the national “Strategy of Railroad Communications in Russian Federation to 2030” and will make its contribution to the development of Far East Region and Siberia. At the completion of the Elga deposit development project, Mechel would increase the Baikal-Amur Mainline density load with more than 20 million tonnes, create additional employment and develop the railroad’s infrastructure in the Far East, that would be beneficial for the region’s economy as well as the Russian economy,” Igor Zyuzin commented.