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Mechel

February 19, 2013

Mechel reports disposal of Romania steel assets

Moscow, Russia– February 19, 2013 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, reports that it has disposed of its Romanian steel assets.

Mechel OAO announces that it has signed a series of agreements for the disposal of uits Romanian steel assets - Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A - to a privately held Romanian group, Romania’s Invest Nikarom SRL. The transaction terms will result in Mechel receiving a nominal contribution.

Mechel notified investors in November 2012 that due to unfavorable prices in European steel markets linked to rising ferrous scrap prices and weak demand for finished products, production at Mechel’s Romanian steelmaking facilities were temporarily halted. While production at these steelmaking facilities was temporarily suspended, all necessary measures were undertaken to retain the affected facilities’ operational capability and to conduct maintenance works in an orderly manner.

The disposal of the Romanian steel assets is fully aligned with Mechel OAO’s strategy aimed at development of its core businesses, particularly consolidating the group’s leading position as a metallurgical coal producer.

Mechel OAO’s Chief Executive Officer Evgeny Mikhel commented: “This transaction is yet another step in implementing Mechel OAO’s revised strategy aimed at focusing on our key production lines and disposal of non-core businesses. We have earlier announced our intention to exit steel production in Europe which is chronically loss-making both currently and, in our view, the foreseeable future. Our Romanian steel assets have had a negative impact on the Group’s financial results and cash flow for some period of time. We are strongly committed to concentrating on directing our resources on those projects that offer the greatest return to our shareholders, i.e. Elga coal deposit and the universal rolling mill. With the Romanian assets’ planned loss of 2.4 billion rubles in 2013, this transaction will have a marked financial effect for our shareholders. The freed cash flow will be used for operational activities as well as decreasing the company’s leverage.”

 

 

 

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