OREANDA-NEWS. On July 08, 2008 Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announced the signing of a contract between its Chelyabinsk Metallurgical Plant OAO (CMP) subsidiary and Danieli, to supply technology and equipment to construct a rail and structural steel mill at CMP, reported the press-centre of Mechel.

Italian-based Danieli, a world leader in developing technologies and manufacturing equipment for steel production, and Chelyabinsk Metallurgical Plant OAO have signed the contract for the supply of technology and equipment for a rail and structural steel mill, which has over 1.0 million tonne annual production capacity.

The rail and structural steel mill is capable of producing structural shapes of a wide range of size and grade. Its basic product mix will include narrow, mid, and wide flange beams; parallel flange edge channels; equal and unequal angles; and special profiles, such as Larssen sheet pile, pit props, Z-sections.

The mill will primarily manufacture high quality railroad rails up to 100 meters in length using state-of-the-art technologies for steel rolling, hardening, straightening, finishing, and rail quality control.

The new rail and structural steel mill will be equipped with universal stands enabling the highest rolling preciseness. The mill’s capabilities will enable low cost production of category “V” (superior quality) rails and a wide range of other products with steady geometric section parameters and lower metal consumption due to profiles’ precision and thermo strengthening.

Mechel Management OOO Chief Executive Officer Vladimir Polin commented: “We have been successfully working with Danieli for many years and strengthened our relationship with them in April 2008 with the signing of a long term agreement. Under the agreement, Danieli has developed special technologies to Mechel’s technical specifications enabling us to manufacture rails that meet all requirements of Russian and European railroaders.

The execution of the contract to supply equipment and technology for the rail and structural steel mill is a crucial stage in the project to manufacturing structural shapes and 100 meter railroad rails at CMP. Once the mill is commissioned, which we expect in 2010, Mechel will become the main manufacturer of long rails in Russia. We expect that long rails produced at CMP will outperform any world analogues in a number of necessary characteristics that are determined by the climate conditions of rail exploitation in Russia.”

Mr. Polin continued, “In February 2008, Mechel OAO and Russian Railways (RZhD OAO) signed a on a long-term, mutually beneficial agreement to supply railroads in Russia with rolled products for transportation purposes manufactured at Mechel’s subsidiaries. Thus, already today, we have secured a guaranteed market for no less than 400,000 tonnes of our rails annually.”