OREANDA-NEWS. On January 22, 2009 Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announced operational results for 2008, reported the press-centre of Mechel.

Vladimir Polin, senior vice-president of Mechel OAO, commented on corporate 2008 operational results, “In the first nine months of 2008 our company performed at a very high level and some results were outstanding. Mechel subsidiaries showed overall stable operational results in 2008 despite negative trends in economy at the end of the year.

The year saw an increase in our production of both coke and steam coal and coal concentrate resulting from the acquisition of Yakutugol in October 2007.

A new impetus for the development of the ferroalloy division of our business was provided with the Oriel Resources acquisition. One of the main characteristics of our ferroalloy facilities is their own source of raw materials required for their operations and development. To ensure efficient management of our ferroalloy business, we established the dedicated ferroalloys division that includes both ore mining and ferronickel, ferrosilicon, and ferrochrome production facilities.

The acquisition of Ductil Steel in Romania allowed us to enhance our presence in the steel market of Eastern Europe. Successful results at Mechel Targoviste and Mechel Campia Turzii integrated mills, in which their operations became profitable through the incorporation into Mechel Group, show the effectiveness of our strategy to perform modernization and technical upgrades in our facilities. The Eastern European steel division incorporating all of the four Mechel subsidiaries in Romania is in charge of raising the efficiency and profitability of these facilities.

At the same time, a decline in the production volume in the machinery, automotive, and construction industries resulted from the global financial crisis, which caused a decrease in demand for our products. It included a temporary reduction in market demand for ferroalloys, resulting in a small reduction of ferroalloys output and impacted flat products and stampings output. We have reduced production of billets offsetting the increase in long products output thus implementing the strategy to increase the output of high-margin downstream products.

Coke output was affected by the scheduled major repairs at Chelyabinsk Metallurgical Plant (CMP) coking battery No. 6 and suspension of Moscow Coke and Gas Plant coking battery (not cooled).

The reduction in pig iron output resulted from the shutdown of CMP blast furnace No. 4 due to scheduled repairs.

Power production has increased as a result of the incorporation of the Southern Kuzbass State Regional Power Station and improving efficiency of power generating capacities at the subsidiaries. In particular, we have revised our repairs and investments plan, broadened the clientele, and increased power sales in wholesale markets, which was favorable in the pricing environment.

In 2008, we implemented several projects included in the investment plan, such as major repairs with upgrades, installation of new equipment and processes, and development of corporate sales and distribution chains. I am sure the results we achieved in 2008 will act as a basis for successful development of Mechel in the future.

We are constantly monitoring the markets, revising our operations program and performing all necessary activities for equipment maintenance to be able to increase output most efficiently as soon as the markets recover.”