— Revenues amounted to $5.75 billion —
— Operating income amounted to $245.6 million —
— Net income attributable to shareholders of Mechel OAO amounted to $73.7 million —

Moscow, Russia – April 21, 2010 – Mechel OAO (NYSE: MTL), a leading Russian integrated mining and steel group, today announced financial results for the full year ended December 31, 2009.

Mechel’s Senior Vice-president Vladimir Polin commented on the full year results: “All together we managed to work through 2009 in a worthy manner. First half, which was the worst time of the world’s economic crisis, was a serious challenge to Mechel, but also proved that we are capable of flexible reaction to complex obstacles. As a result we managed not only to keep stable cash flows, but also finalize restructuring of the biggest debt portion with the international bank syndicate, already in the first half to restore steel segment production and largely in the mining segment. The full restoration of the coking coal production thus becomes possible already in the spring of 2010.

In 2009 we created a fundament for further company’s growth, mastered new product lines. For example, we closed the deal to acquire assets of the US based coal mining group Bluestone, opened new steel service and retail centers of Mechel-Service in Russia and Europe, started new production lines and steel processing shops. We have signed a number of strategic agreements allowing us to expand our sales markets and improve competitiveness.

Besides, the positive dynamics of the word’s markets and improvement of Mechel’s performance allowed us to return to our investment plans, partially frozen before. We have again revised our capex program for nearest years. We are sure, that its implementation will give our company further impetus and open new opportunities for all segments of our business”.

Consolidated Results for the full year period of 2009

(1) See Attachment A.
(2) For comparison convenience the EBITDA is also provided excluding the effect of foreign exchange (loss) gain (FX)

Consolidated Results for the fourth quarter of 2009

(1) See Attachment A.
(2) For comparison convenience the EBITDA is also provided excluding the effect of foreign exchange (loss) gain (FX)

Net revenue in 2009 decreased by 42.2% and amounted to $5.75 billion compared to $9.95 billion in 2008. Operating income fell by 90.4% and amounted to $245.6 million or 4.3% of net revenue, compared to operating income of $2.6 billion or 25.7% of net revenues in 2008.

For 2009, Mechel reported consolidated net income attributable to shareholders of Mechel OAO of $73.7 million, a decrease of 93.5% compared to consolidated net income attributable to shareholders of Mechel OAO of $1.14 billion in 2008.

Consolidated EBITDA in 2009 decreased by 51.2% to $998.3 million in 2009, compared to $2.05 billion in the year ago period. Depreciation, depletion and amortization in 2009 for the Company were $406.7 million, a decrease of 12.2% compared to $463.3 million in 2008.

Mining Segment Results for the full year period of 2009

* See Attachment A.
**  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.
*** For comparison convenience the EBITDA is also provided excluding the effect of foreign exchange (loss) gain (FX)

Mining Segment Output

* The coal concentrate has been produced from the part of the raw coal output.

Mining Segment Results for the fourth quarter of 2009

*  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Mining Segment Output for the fourth quarter of 2009

* The coal concentrate has been produced from the part of the raw coal output.

Mining segment revenue from external customers in 2009 decreased by 53.5% over net segment revenue from external customers of $3.3 billion, or 33% of consolidated net revenue, for 2008, and totaled $1.5 billon, or 27% of consolidated net revenues.

 As of December 31, 2009, the Group completed purchase accounting of Bluestone Coal Group acquisition. Fair value of BCG net assets amounted to $1,447 million and equaled to the fair value of purchase price, which included $436 million of cash payment, about 83 million of Mechel OAO preferred shares and two contingent payments due in 5 years since the date of closing, which will depend on the market value of preferred shares, dividends flow related to them, and additional tonnage of coal reserves and resources confirmed by Seller on completion of 2-years Drilling Program.

Remeasurement of fair value of CVR contingent liability added $494.2 million to net income of the segment in 2009.

Operating income in the mining segment in 2009 decreased by 87.4% to $226.3 million or 12.4% of total segment revenue, compared to operating income of $1.8 billion, or 44.7% of total segment revenue, a year ago. EBITDA in the mining segment in 2009 went down by 41.6% and amounted to $1.1 billion compared to segment EBITDA of $1.9 billion in 2008. The EBITDA margin for the mining segment in 2009 was 60.7% compared to 47.0% a year ago. Depreciation, depletion and amortization in mining segment amounted to $225.1 million that is 19.7% less than $280.3 million in 2008.

Chief Executive Officer of Mechel Mining Management Company Boris Nikishichev commented on the mining segment operating results: “The world’s economic crisis resulted in a harsh decline in demand and prices for all kinds of steelmaking raw materials, thus affecting our mining segment performance in 2009. In the beginning of 2009 we had to drastically decrease coal output, especially in coking coal, lower the amount of maintenance investments for current and future works. To offset those effects, we have focused our efforts on optimizing costs and searching for new customers. Already in the second quarter 2009 we managed to sign a number of significant export contracts with Chinese, Japanese and Korean off takers, which together with increased spot sales allowed us to increase outputs and begin the restoration cycle to return to pre-crisis levels.

Due to successful work on organizing financing for our projects, we restarted construction of the railroad to Elga coal deposit.

Acquisition of the Bluestone group of companies allowed us to further increase Mechel’s coal production and significantly broaden the geography of our sales, converting Mechel into truly global coking coal player.

Through the second half of 2009 Mechel’s management worked hard to restore the levels of coking coal production which required increased investments in stripping works, purchasing of spare parts and equipment and so forth. Increased production together with the growing prices for coking coal concentrates and iron ore supported segment performance and allowed for improvement of quarter results.  Even though in the fourth quarter we have witnessed anomaly low winter temperatures, undermining production of our Russian assets, we still managed to demonstrate improved financial results of the segment.

In 2010 we witness further improvement of the market conditions. Because of that and due to achieving full pre-crisis capacities of the Russian coal mining assets of Mechel, expected  already in may 2010 and due to increasing mining volumes of Bluestone, the segment should finally overcome the crisis negative impact.”.

Steel Segment Results for the full year period of 2009

* See Attachment A.
**  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Steel Segment Output

Steel Segment Results for the fourth quarter of 2009

*  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Steel Segment Output for the fourth quarter of 2009

Mechel’s steel segment revenue from external customers in 2009 decreased by 39.8% and amounted to $3.3 billion or 57% of consolidated net revenue from $5.5 billion or 55% of consolidated net revenue in 2008.

In 2009 the steel segment operating loss was $54.0 million, versus operating income of $770.4 million in 2008. EBITDA in the steel segment in 2009 decreased by 91.4% and amounted to $54.2 million, compared to EBITDA of $629.6 million in 2008. The EBITDA margin of the steel segment was 1.6% for 2009, versus the EBITDA margin 10.9% for 2008. Depreciation, depletion and amortization in steel segment fell by 15.1% from $137.5 million in 2008 to $116.8 million in 2009.

Commenting on the results of the steel segment Andrey Deineko, Chief Executive Officer of Mechel-Steel Management Company, noted: “Despite difficult beginning of the year already by summer we managed to restore pre-crisis level of our steel segment capacity utilization. We worked hard on reducing expenses and optimization of our subsidiaries activities and used periods of equipment downtime to carry out scheduled repairs. 

After restructuring the bulk of our debt portfolio in summer of 2009 we diligently continued realization of our top-priority investment projects – project of Universal rolling mill construction at our Chelyabinsk Metallurgical Plant (CMP) and modernization of electric arc furnace shop at Izhstal, construction of continuous casting machine at CMP with capacity of 1.2 million tones of steel per year.

As the result in 2009 despite crisis at segment’s plants a number of new units and production lines were put into operation. We continued the sales structure optimization by means of widening the geography and implementation of new services by our sales and servicing company Mechel Service Global. All these actions on the back of demand strengthening and prices growth for our products allowed us to retain economical effectiveness of the segment and to maintain sustainable level of operating cash flow. Certainly, vigorous growth of commodity prices, started in the end of 2009, and traditional demand decline for construction product range in winter period exerted some negative influence on the fourth quarter figures, but, if we exclude non-cash components, financial result of the steel segment continued to improve. We consider the segment development trend as positive and with optimism estimate prospects of Mechel’s steel plants in 2010”.

Ferroalloys Segment Results for the full year period of 2009

* See Attachment A.
**  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Ferroalloys Segment Output

Ferroalloys Segment Results for the fourth quarter of 2009

*  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Ferroalloys Segment Output for the fourth quarter of 2009

Ferroalloy segment revenue from external customers in 2009 amounted to $363.7 million, or 6% of consolidated net revenue, a decrease of 16.2% compared with segment revenue from external customers of $434.0 million or 4% of consolidated net revenue in 2008.

In 2009 operating loss in the ferroalloy segment was $27.6 million, versus operation loss of $50.5 million a year ago. EBITDA loss in the ferroalloy segment in 2009 amounted to $135.4 million, compared to segment EBITDA loss of $420.1 million in 2008. The EBITDA negative margin of the ferroalloy segment comprised 31.4% in 2009. For ferroalloy segment depreciation, depletion and amortization in 2009 was $48.7 million, an increase of 114.5% over $22.7 million in 2008.

Gennadiy Ovchinnikov, Chief Executive Officer of Mechel Ferroalloys Management Company, noted: “Past year has become momentous for our ferroalloys segment. It was a year of its making-up and development as an important and self consistent Group’s business unit. Chromites ore mining and smelting plants, as well as ferrochrome plant, acquired in 2008 as part of Oriel Resources, were put into operation and reached planned targets of capacity utilization that positively influenced segment’s economical performance.

Despite general decline in steel and especially stainless steel demand witnessed in the beginning of 2009, and accordingly low ferroalloys demand, we managed to maintain 100% pre-crisis capacity utilization of Southern Urals Nickel Plant and Bratsk Ferroalloys Plant. We continued implementation of capital expenditures program aimed at adoption of radically new technology at our Southern Urals Nickel Plant.

Number of nonrecurring write offs and coke price growth in the fourth quarter of 2009 did not afford us to show improvement of the period’s financial results. Nevertheless, taking into account current improvements of the ferroalloys and stainless and specialty steel market, we highly appreciate outlook of the Group’s ferroalloys plants and expect that already in 2010 they will notably contribute to Mechel’s consolidated financial results”.

Power Segment Results for the full year period of 2009

* See Attachment A.
**  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Power Segment Output

Power Segment Results for the fourth quarter of 2009

*  EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Power Segment Output for the fourth quarter of 2009

Mechel’s power segment revenue from external customers in 2009 was $534.0 million, or 9% of consolidated net revenue, a decrease of 22.4% compared with segment revenue from external customers of $688.1 million or 7% of consolidated net revenue in 2008.

In 2009 operating income in the power segment was $40.7 million, or 4.7% of the total segment revenue in 2009, an increase of 38.4% compared to operating income of $29.4 million, or 2.9% of total segment revenue in 2008. EBITDA in the power segment in 2009 decreased by 1.0% totaling $51.3 million, compared to EBITDA of $51.8 million in 2008. The EBITDA margin for the power segment amounted 5.9% compared to 5.0% in 2008. Depreciation, depletion and amortization in power segment in 2009 decreased by 29.4% comparing with 2008 from $22.8 million to $16.1 million.

Viktor Gvozdev, Chief Executive Officer of Mechel Energo, noted: “Despite the global financial crisis which had a sound impact on the power demand in 2009, the segment came out with operational profit. In many respects it became possible due to range of measures implemented in this area which were directed to cost reduction, fuel factor decrease and reaching of synergy between segments. In the fourth quarter 2009 we increased electricity production almost by 70% compared to the third quarter 2009, and by 20% compared to the fourth quarter 2008. It allowed us to minimize the consequences of demand fall, which took place in the critical period of the crisis, and to demonstrate good results in 2009”.

Capital expenditures program

Considering the continuing improvement of market conditions in the main types of company’s products, and improvement of Group’s financial situation, the management of the Company took a decision to revise the capital expenditure program for 2010-2012. Apart from keeping implementing the key strategic projects, some projects that have been planned earlier were renewed, and new ones were accepted, that allow using possibilities and facilities of company’s assets to higher extent.

The overall program provides investments at the rate of about $3.7 billion in 2010-2012, including around $1.4 billion in 2010.

In the mining segment is expected to invest approximately $2.1 billion in 2010-2012. Within the framework of the segment we plan to develop such key projects as the Elga coal deposit development, construction of the second stage of Sibirginsk mine. 

In the steel segment is expected to invest approximately $1.4 billion in 2010-2012. Within the framework of the segment we plan to develop such key projects as construction of a universal rail and structural steel mill, bloom continuous casting machine #5 and slab continuous casting machine at Chelyabinsk Metallurgical Plant, reconstruction of arc-furnace melting shop and construction of a mill-250 at Izhstal, reconstruction of steelmaking facilities at Otelu Rosu, Mechel’s Romanian metallurgical plant, and reconstruction of the coke oven battery #6 at Mechel Coke and Gas Plant.

In the ferroalloy segment is expected to invest approximately $190 million in 2010-2012. The CAPEX program includes modernization of Bratsk Ferroalloy Plant with stage-by-stage increase of production volume almost by 1.5x by means of increasing capacity of the existing ovens and development of infrastructure, and also experimental industrial plant at Southern Urals Nickel Plant for switching it to technology of ferronickel production.

In the power segment is expected to invest approximately $78 million in 2010-2012.

The development of logistics capacity of the company will be continued, including modernization and widening of Port Posiet till 9 million tonnes of cargo shipment per a year. The total investments in the development of logistics are planned to be at the level of $97 million in 2010-2012.

Recent Highlights

· According to the reports released by Prommetiz, a Russian association of hardware producers, in October and November 2009 the two plants of Mechel’s steel division – Beloretsk Metallurgical Plant ÎÀÎ (BMK OAO) and Vyartsilya Metal Products Plant ZAO (VMZ ZAO) jointly produced more hardware than any other Russian companies-members of Prommetiz association. Thus, in Q4 2009 Mechel gained the first position in Russia by hardware production volume and in January and February, 2010 retained leading position among Russian hardware producers - the members of the association.

· In March 2010 Mechel announced prolongation of credit facilities for its subsidiaries obtained earlier from Gazprombank. Mechel’s subsidiaries and Gazprombank signed amendment agreements to the credit facility agreements. According to the amendment agreements the credit maturity extends from three years to six years. Additionally, the parties have agreed to reduce both the interest rate and the security amount. Repayment of the credit body will be started in three years and will be made by equal installments on a quarterly basis.

· In March 2010 Mechel announced establishing its representative office in the People’s Republic of China. The representative office will support Mechel’s business in China, cooperate on expansion of Mechel’s business in the country, work directly with Chinese partners, establish new business contacts and perform studies on the market dynamics.

· In March 2010 Mechel completed placement of its interest-bearing commercial papers of BO-02 series with an obligatory centralized custody at MICEX Stock Exchange ZAO. Placement was performed by public subscription through collection of offers for fixed-price purchase of commercial papers. The number of the commercial papers placed makes 5,000,000 pieces, the nominal value of the commercial papers is 1000 roubles each and the total nominal value of the placed commercial papers is 5,000,000,000 roubles. The 1st coupon rate of the commercial papers of BO-02 series is set at the level of 9.75 % per year.

· In April 2010 Mechel announced establishing Mecheltrans Management OOO. The company was established in order to increase efficiency of management of Mechel group’s logistic assets. Functions of the management company cover preparation of complex solutions for goods transportation; control over Mechel’s plants shipment schedules, as well as coordination, planning and analysis of the group’s transportation subsidiaries’ operations, development of logistic assets and capital development.

· In April 2010 Mechel announced that Igor Zyuzin, Mechel’s CEO participated in the official ceremony of a new blast furnace commissioning at Hyundai Steel’s steel mill in Dangjin.

Igor Zyuzin concluded: “Igor Zyuzin has concluded: "The end of the year 2009 has shown growth both financial and operating results of Mechel’s activity, this is owing to hard and meticulous work of the company from the very beginning of the world financial crisis. Due to the undertaken measures on optimization and product range improvement, expansion of sale geography, continuous optimization of a debt portfolio and cash flow, acquisition of new assets, today the company can fully use the new advantages of the world economy, continuing to increase shareholder value and create the base for future growth”.

Financial Position

Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the 2009 full year amounted to $612.7 million, of which $366.9 million was invested in the mining segment, $208.7 million was invested in the steel segment, $32.8 million was invested in the ferroalloy segment and $4.4 million was invested in the power segment.

For the 2009 full year, Mechel spent $11.5 million on acquisitions, including $8.0 million spent on acquisition of minority interest in other subsidiaries.

As of December 31, 2009 total debt was at $6.0 billion. Cash and cash equivalents amounted to $414.7 million at the end of the year 2009 and net debt amounted to $5.6 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 https://www.mechel.com, under the Investor Relations section.