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Mechel

April 16, 2007

Mechel announces completion of privatization contract for Mechel Campia Turzii

Campia Turzii, Romania – April 16, 2007, – Mechel OAO (NYSE: MTL) announces the early completion of its obligations under the privatization contract for its Romanian steel plant, Mechel Campia Turzii.

The Authority of State Assets Recovery of Romania has formally confirmed the fulfillment of all the investment obligations undertaken by Mechel under the privatization contract in purchasing the Romanian company, Mechel Campia Turzii, which specializes in manufacturing rolled and hardware products.

The privatization contract for Mechel Campia Turzii was originally signed on March 14, 2003. Transfer of ownership took place on June 20, 2003. Mechel has completely met all its investment obligations regarding the three investment years and fulfilled in advance its obligations regarding the fourth and fifth investment years ending on June 20, 2008. Mechel obtained from the trade unions their necessary consent, which allowed Mechel to meet the terms under the contract 13 months earlier than the date stipulated.

Since its acquisition, Mechel has invested US$34.0 million in Mechel Campia Turzii, including investments in its technical re-equipment, environmental protection, repayment of the arrears to the budget, and payment of the shares and working capital.

The long-term development program of the plant is currently being implemented, which includes significant investments in the modernization of its production capabilities. As a part of this implementation, a press filter to process neutralized pickling solutions was started up early this year, and the workshop for manufacturing and reconditioning of dies was upgraded in the autumn of 2006.

In 2006, the plant’s rolled product output was approximately 141.7 thousand tonnes and its hardware products output was approximately 86 thousand tonnes. In the coming years, Mechel plans to upgrade the capabilities of Mechel Campia Turzii’s steelmaking production and subsequent high value added steel product manufacturing.

“The early closing of the Mechel Campia Turzii privatization contract concludes Mechel’s fulfillment of its investment obligations to the Romanian Government, trade unions, and employees of the companies,” commented Mechel's Chief Operating Officer Alexey Ivanushkin. “Mechel also closed its privatization contract for its other Romanian steel plant, Mechel Targoviste, in December 2006. With these investments, Mechel is successfully executing its plans to transform formerly unprofitable assets into sustainable and profitable companies. Joint cooperation with the government of Romania enables Mechel to make future investments in the Company’s Romanian assets. A strategic investment program for further developing the Romanian plants in 2007-2011 is currently being developed. The objective of this program is significant cost reduction, further modernization, and improved performance across the entire production process.”

 

 

 

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