— Revenues increased 64.1% to $2.3 billion —
— Operating income increased 112.3% to $642 million —
— Net income increased 162.2% to $500 million, or $1.20 per ADR /diluted share —

Moscow, Russia – July 14, 2008 – Mechel OAO (NYSE: MTL), a leading Russian integrated mining and metals group, today announced financial results for the first quarter ended March 31, 2008.

Igor Zyuzin, Chief Executive Officer, commented, “Our final results for the 2008 first quarter came in as we expected, and reflect strong operational and financial performance.  Conditions in the markets we serve continue to be favorable and are driven by a combination of growth factors.  We are very pleased to have reported record revenue and we remain focused on the successful execution of our operating strategy.”

US$ thousand 1Q 2008 1Q 2007 Change Y-on-Y Revenues 2,328,201 1,418,590 64.1 % Net operating income 642,139 302,489 112.3 % Net operating margin 27.58% 21.32% - Net income 500,009 190,709 162.2 % EBITDA * 853,097 339,772 151.1 % EBITDA margin1 36.6% 24.0% -

* See Attachment A.

Consolidated Results

Net revenue in the first quarter of 2008 rose by 64.1% to $2.3 billion from $1.4 billion in the first quarter of 2007. Operating income rose by 112.3% to $642.1 million, or 27.58% of net revenue, in the first quarter of 2008, compared to operating income of $302.5 million, or 21.32% of net revenue, in the first quarter of 2007.

For the first quarter of 2008, Mechel reported consolidated net income of $500 million, or $1.20 per ADR / diluted share, an increase of 162.2% over consolidated net income of $190.7 million, or $0.46 per ADR / diluted share, in the first quarter of 2007.

Consolidated EBITDA rose by 151.1% to $853 million in the first quarter of 2008, compared to $340 million in the first quarter of 2007.

Mining Segment Results

US$ thousand 1Q 2008 1Q 20071 Change Y-on-Y Revenues from external customers 856,033 409,259 109.2 % Intersegment sales 194,095 168,421 15.2 % Operating income 416,182 176,606 135.7 % Net income 302,728 106,969 183.0 % EBITDA* 512,899 198,305 158.6 % EBITDA margin2 48.8% 34.3% -

* See Attachment A.

1 - 1Q 2007 results have been recalculated to reflect the separate reporting for the power segment.
2 - EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Mining Segment Output

Product 1Q 2008, thousand tonnes 1Q 2008 vs. 1Q 2007 Coal 7,279 + 60 % Coking coal 4,313 + 94 % Steam coal 2,966 + 27 % Iron ore concentrate 1,163 + 6 % Nickel 4.4 + 7 %

Mining segment revenue from external customers for the first quarter of 2008 totaled $856 million, or 36.8% of consolidated net revenue, an increase of 109.2% over segment revenue from external customers of $409 million, or 28.8% of consolidated net revenue, in the first quarter of 2007.

Operating income of the mining segment in the first quarter of 2008 increased by 135.7% to $416.2 million, or 39.6% of total segment sales, compared to operating income of $176.6 million, or 30.6% of total segment sales, in the first quarter of 2007. EBITDA in the mining segment in the first quarter of 2008 increased by 158.6% to $512.9 million compared to EBITDA of $198.3 million in the first quarter of 2007.  The EBITDA margin in the mining segment was 48.8% for the first quarter of 2008, compared to 34.3% in the first quarter of 2007. 

Steel Segment Results

US$ thousand 1Q 2008 1Q 20073 Change Y-on-Y Revenues from external customers 1,278,720 990,223 29.1% Intersegment sales 66,172 22,398 195.4% Operating income 197,825 130,708 51.3% Net income 183,981 89,543 105.5% EBITDA* 329,538 146,275 125.3% EBITDA margin4 24.5% 14.5% -

* See Attachment A.

3 - 1Q 2007 results have been recalculated to reflect the separate reporting for the power segment.
4 - EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Steel Segment Output 

Product 1Q 2008, thousand tonnes 1Q 2008 vs. 1Q 2007 Coke 917 - 4 % Pig iron 970 + 4 % Steel 1,563 + 5 % Rolled products 1,366 + 7 % Hardware 183 + 16 %

Steel segment revenue increased by 29.1% in the first quarter of 2008 to $1.28 billion, or 54.9% of consolidated net revenue, from $990 million, or 69.8% of consolidated net revenue, in the first quarter of 2007.

Operating income for the steel segment in the first quarter of 2008 increased by 51.3 % to $197.8 million, or 14.7% of total segment sales, compared to operating income of $130.7 million, or 12.9% of total segment sales in the first quarter of 2007.  EBITDA for the steel segment for the first quarter 2008 increased by 125.3% to $329.5 million compared to segment EBITDA of $146.3 million in first quarter of 2007. The EBITDA margin for the steel segment was 24.5% in the first quarter of 2008 compared to 14.5% in the first quarter of 2007.

Power Segment Results

US$ thousand 1Q 2008 1Q 20075 Change Y-on-Y Revenues from external  customers 193,448 19,108 912.4%   Intersegment sales 98,661 21,116 367.2% Operating income 27,585 3,498 688.6% Net income / (loss) 15,049 2,522 496.7% EBITDA* 33,508 3,667 813.8% EBITDAmargin6 11.5% 9.1% -

* See Attachment A.

5 - 1Q 2007 results for the power segment were previously reported as part of the mining and steel segments.
6 - EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Revenue from Mechel’s power segment in the first quarter of 2008 totaled $193.4 million, or 8.3% of consolidated net revenue, an increase of 912.4% compared to revenue from sales to external customers of $19.1 million or 1.3% of consolidated net revenue, in the first quarter of 2007.

Operating income for the power segment in the first quarter of 2008 was $27.6 million, or 9.4% of total segment revenues, an increase of 688.6% compared to operating income of $3.5 million, or 8.7% of total segment revenues, in the first quarter of 2007.  EBITDA for the power segment in the first quarter of 2008 increased  by 813.8% to $33.5 million, compared to EBITDA of $3.7 million in the first quarter of 2007.  The EBITDA margin in the segment was 11.5% in the first quarter of 2008, compared to 9.1% in the first quarter of 2007.

Recent Highlights

• In June 2008, Mechel announced that a groundbreaking ceremony marking the commencement of railroad construction was held at the 60th kilometer landmark of Verhny Ulak Station of the Baikal-Amur Mainline together with Transstroy Engineering Corporation ZAO. This spur-track will connect the Elga deposit with the Baikal-Amur Mainline.  The total length of the railroad will be approximately 315 kilometers. The railroad’s design includes approximately 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 is expected to commence before September 30, 2010.
• In July 2008, Mechel 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. The mill’s capabilities will enable low cost production of 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 and a wide range of other products with steady geometric section parameters and lower metal consumption due to its precision and thermal strengthening.

Financial Position

Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the first quarter of 2008 amounted to $175.5 million, of which $41.2 million was invested in the mining segment, $126.9 million in the steel segment and $7.4 million in the power segment.

For the first quarter of 2008, Mechel spent $0.7 million on the acquisition of minority interests in subsidiaries.

As of March 31, 2008, total debt amounted to $3.2 billion. Cash and cash equivalents amounted to $145.4 million and net debt amounted to $3.0 billion (net debt is defined as total debt outstanding less cash and cash equivalents) as of March 31, 2008.

The management of Mechel will host a conference call today at 3:00 p.m. New York time (8:00 p.m. London time, 11:00 p.m. Moscow time) to review Mechel’s financial results and comment on current operations.  The call may be accessed via the Internet at https://www.mechel.com, under the Investor Relations section.

To listen to the conference call via phone, please call the number below approximately 10 minutes prior to the scheduled time of the call, quoting Mechel, and the chairperson’s name, Alexander Tolkach.

Conference Call Phone Numbers:   US Toll: +1 913 312 1269 UK Toll Free:  0 800 051 7166 Russia Toll Free: 810 800 2544 1012  

A replay of the call will be available until 11:59PM New York time on July 22nd.  To access, please dial, US: +1 719 457 0820; UK: 0 808 1011 153, Russia: 810 800 270 210 12.  From all areas, enter: 2498919# to access.