Mechel Announces Launch of Coking Battery #6 at Mechel-Coke

Mechel Announces Launch of Coking Battery #6 at Mechel-Coke

Mechel OAO, a leading Russian mining and steel company, announces the launch of the reconstructed coking battery #6 at Mechel Mining OAO's subsidiary, Mechel-Coke OOO.

The launch will enable the company to step up production of coke and chemical products and ensure production demands are met, as well as provide an independent supply for sand making machine Mechel's Chelyabinsk Metallurgical Plant OAO and Southern Urals Nickel Plant OAO.

Due to the reconstruction, the battery nearly tripled its capacity to 470,000 tonnes of coke annually .

The project cost 1.369 billion rubles (48.5 million US dollars*).

The reconstruction involved not only the construction waste recycling aggregate itself but also supplementary equipment. An automated workflow control system was implemented. Special attention was paid to environmental protection measures, which include an autonomous system for dustless discharge of coke with dry cleaning, a smokeless furnace loading system and pneumatic seals on ascension-pipe lids. This will enable the plant not only to increase production but also to significantly improve ecological safety.

Launch of the coking battery #6 allows Mechel-Coke to begin reconstruction of the coking battery #5 while increasing production volumes by 5% in 2011 compared to the same period last year.

* According to the Russian Central Bank exchange rate of 28.2237 RUR/$ as of March 28, 2011.

Mechel is coal mill one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.

The PEA study using Indicated Mineral Resources of 7,231,000 tonnes grading 1.10 g/t gold at a 0.35 g/t gold cut-off grade shows on LaPava stand-alone basis an undiscounted pre-tax cash flow totals $139.5 million over the mine based on a production rate of 1.8 million tonnes per year. The internal rate of return ("IRR") for the project is 69%. The LaPava Target gold mineralization is a viable project with the current Mineral Resource estimates. The ongoing 6,000 m drilling campaign has the potential to enhance the project's economics if it increases the compliant Mineral Resources and production profile that could result in higher Net Present Value and extend the mine life. This PEA has an accuracy of +/- 30%, which is considered industry standard for preliminary capital and operating cost estimates.

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