OREANDA-NEWS. December 16, 2010. Mechel (NYSE: MTL), a leading Russian mining and steel group, today announced financial results for the 2010 nine months.

MECHEL REPORTS 2010 NINE MONTHS FINANCIAL RESULTS

Revenue amounted to USD 7.0 billion

Consolidated adjusted EBITDA amounted to USD 1.4 billion

Net income attributable to shareholders of Mechel amounted to USD 462 million

Mechel’s CEO Yevgeny Mikhel commented on the third quarter of 2010 results: “The achieved results are a legitimate reflection of the effort we have invested during this period to strengthen the Group’s position and expand the scale of its business. All this time we have been working hard at increasing production figures, cutting expenses, optimizing the debt portfolio and perfecting the marketing structure. This allowed us to make good use of favorable market environment and significantly improve financial performance as compared with the same period last year”, reported the press-centre of Mechel.

Recent Highlights
In October 2010 Mechel reported that Sberbank has opened a credit line for Chelyabinsk Metallurgical Plant (CMP). The credit facilities provided will have a 5-year maturity and a 3-year grace period and will be used to refinance the short-term debt.

In October 2010 Mechel announced that Bratsk Ferroalloy Plant, which is a part of Mechel group, and Siberian Plant of Electrothermal Equipment have signed contracts to supply four ferroalloy electric furnaces with the capacity of 33 MVA each to replace the existing furnaces. In addition Sibelectrotherm undertakes to supervise installation and commissioning works. The reconstruction will take place during 2011-2012. The contracts’ total value exceeds 1.9 billion roubles.

In November 2010 Mechel announced that it has signed an Agreement of Intent with a South Korean company Posco within the framework of the official visit of the President of the Russian Federation Dmitry Medvedev to the Republic of Korea. The Agreement was signed in order to establish mutually beneficial strategic partnership between the companies. In the document the companies express their intention to examine and possibly implement projects in steel, mining and logistics in Russia, the Republic of Korea and third countries.

In November 2010 Mechel announced establishing its official representative office in Kiev, Ukraine. The representative office of the company will contribute to the development of Mechel’s business in Ukraine, including supports of its export activities and contacts with state authorities, conducting market research, arranging meetings with business community and searching new business partners.

In November 2010 Mechel announced acquisition of 51% stake in the charter capital of Toplofikatsia Rousse AD (TPP “Rousse”), located in the Republic of Bulgaria. As the result Mechel has increased its stake in the charter capital of the power station up to 100% from the previously owned stake of 49%. Consolidation of 100% stake in Toplofikatsia Rousse AD is implemented in line with Mechel’s power segment development strategy.

In December 2010 Mechel announced launch of construction of a grinding-mixing complex for Portland blast-furnace slag cement production with 1.6 mln tonnes per annum capacity by its subsidiary, Mechel Materials. The construction is held on the premises of Chelyabinsk Metallurgical Plant. The amount to be invested is estimated at 110 mln euros. The commissioning of a complex is planned for the 2nd quarter of 2012.

In December 2010 Mechel announced the launch of its U.S.-based subsidiary Mechel Bluestone’s newest coal processing plant for washing coal mined at the Keystone Operations near Keystone, West Virginia. The K2 plant, worth 12 million dollars in investments, can process annually up to 3 million tonnes of run-of-mine coal. Annual production volume at the first stage is expected to exceed 1 million tonnes. The launch will allow Mechel Bluestone to double its production of low-volatile coking coal.

Yevgeny Mikhel concluded: “The current trends of the Group’s operational and financial results, which we have witnessed this year, indicate that we’ve managed to recover after the crisis, restored operations and brought them to profitable levels. The expected strengthening of demand and improvement in the pricing environment for our main products will also help the company to continue large-scale financing of our strategic investment projects, optimization of the debt portfolio and entering new distribution markets, thus increasing the company’s shareholder value.”

Financial Position
Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the nine months of 2010 amounted to USD 669.4 million, of which USD 392.5 million was invested in the mining segment, USD 236.7 million was invested in the steel segment, USD 33.1 million was invested in the ferroalloy segment and USD 7.1 million was invested in the power segment.

In the nine months of 2010, Mechel spent USD 22.5 million on acquisitions, including USD 18.3 million spent on acquisition of minority interest in our subsidiaries.

As of September 30, 2010 total debt was at USD 6.9 billion. Cash and cash equivalents amounted to USD 282.4 million at the end of the nine months of 2010 period and net debt amounted to USD 6.6 billion (net debt is defined as total debt outstanding less cash and cash equivalents).

The management of Mechel will host a conference call today at 10:00 a.m. New York time (3:00 p.m. London time, 6:00 p.m. Moscow time) to review Mechel’s financial results and comment on current operations. The call may be accessed via the Internet at http://www.mechel.com, under the Investor Relations section.