-- Revenues in the first nine months amounted to $ 4.03 billion --
-- Operating income in the first nine months amounted to $114.3 million --
-- Net loss in the first nine months amounted to $339.8 million --

Moscow, Russia – December 8, 2009 – Mechel OAO (NYSE: MTL), a leading Russian integrated mining and steel group, today announced financial results for the nine months ended September 30, 2009.

Igor Zyuzin, Mechel’s Chief Executive Officer, commented on the third quarter results: “Third quarter of 2009 appeared to be a good evidence of the fact that Mechel had successfully overcome the most difficult period of the world financial crisis and proved that our decisions were correct and we were able to change and adopt in a very difficult situation. We have stabilized our cash flows, restructured major part of our debt with international syndicate of banks, and moreover in the beginning of the fourth quarter we also restructured VTB loan, we totally recovered our steel production and most of it in mining. Hard work in the beginning of the year helped us to end third quarter with positive operational income and net income and significant EBITDA margin.”

Consolidated Results for the nine months of 2009

(1) See Attachment A.
(2) For comparison convenience the EBITDA is also provided without correction of Forex gain/loss

(1) See Attachment A.
(2) For comparison convenience the EBITDA is also provided without correction of Forex gain/loss

Net revenues in the third quarter of 2009 increased by 22.9% to $1.57 billion compared to $1.28 billion in the second quarter of 2009. Operating income amounted to $155.2 million versus operating loss of $54.7 million in the second quarter of 2009.

In the third quarter of 2009, Mechel reported consolidated net income of $131.6 million which is 40% lower compared to consolidated net income of $219.3 million in the second quarter of 2009.

Consolidated EBITDA in the third quarter of 2009 increased by 13.5% compared to consolidated EBITDA in the second quarter and amounted to $420.0 million. Depreciation, depletion and amortization in the third quarter were $107.7 million, an increase of 11.1% over $97.0 million in the second quarter of 2009.

Mining Segment Results

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

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

Mining Segment Output

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

Mining segment revenues from external customers for the third quarter of 2009 totaled $415.8 million, or 26% of consolidated net revenue, an increase of 25.8% over net segment revenue from external customers of $330.6 million in the second quarter of 2009.

As of June 30, 2009, Mechel's acquisition of Bluestone Coal Group companies was accounted for on a tentative basis subject to the finalization of assets appraisals and consideration paid measurement. Specifically, the Group has not yet determined the appropriate values of the Preferred Shares issued, the CVR and the Drilling program related contingent payments (the components of the consideration paid); and the allocation of the purchase consideration to the assets of the BCG companies acquired and liabilities incurred has not been completed. As of the appropriate acquisition date, the estimated amounts of Bluestone Coal Group companies non-current assets were $180.2 million, and total assets and liabilities amounted to $232.6 million and $205.4 million, respectively. Assets and liabilities are currently accounted for based on their historic values rather than appraised amounts.

Goodwill arising on the acquisition of Bluestone Coal Group companies tentatively amounted to $994.4 million. Specifically the majority of the existing goodwill is expected to be primarily allocated to mineral licenses based on the ongoing third-party valuation.

Operating income in the mining segment in the third quarter of 2009 increased by 475.4% to $72.7 million, or 15.0% of total segment revenue, compared to operating income of $12.6 million in the second quarter of 2009. EBITDA in the mining segment in the third quarter of 2009 totaled $282.5 million, an increase of 102.5% over segment EBITDA of $139.5 million in the second quarter of 2009. The EBITDA margin for the mining segment increased from 36.4% in the second quarter of 2009 to 58.5% in the third quarter of 2009. Depreciation, depletion and amortization in mining segment amounted to $53.7 million, an increase of 9.4% over $49.1 million in the previous quarter.

Mechel’s Senior Vice-president Vladimir Polin commented on the mining segment operating results: “A number of significant contracts with Chinese, Japanese and South Korean companies, as well as active development of spot sales, allowed us to greatly increase our capacity utilization in coking coal concentrate and continue their restoration to pre-crisis levels. At Bluestone we even managed to overcome historical maximums in production of coking coal concentrate. Growth in production resulted in ability to significantly decrease cash costs per tonne of product, bringing them back to pre-crisis levels. Today we can state with confidence that for our mining segment the worst period of 2009 is already behind us. Supported by the successful implementation of a new financing system, we also actively continue the construction of the railway link to Elga coking coal deposit, simultaneously preparing necessary steps to start construction of the mine itself in 2010. Those steps will allow us to mine first coal at this deposit, strategic for the company, already next year. The market conditions we witness today give us reason to expect further growth in prices of coal and iron ore, which, together with increased production in 2010, will improve segment’s performance even better”.

Steel Segment Results

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

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

Steel Segment Output

Mechel’s steel segment revenues from external customers in the third quarter of 2009 increased by 22.8% compared to the second quarter of 2009 and amounted to $926.5 million, or 59% of consolidated net revenue.

In the third quarter of 2009 the steel segment operating income was $68.0 million, versus operating loss of $73.5 million in the second quarter of 2009. EBITDA in the steel segment in the third quarter of 2009 amounted to $157.6 million, an increase of 98.3% compared to EBITDA of $79.5 million in the second quarter of 2009. The EBITDA margin of the steel segment increased to 16.1% in the third quarter of 2009 compared to 10.1% in the second quarter of 2009. Depreciation, depletion and amortization in steel segment increased by 6.3% from $28.8 million in the second quarter of 2009 to $30.6 million in the third quarter of 2009.

Commenting on the results of the steel segment Vladimir Polin noted: “Followed by the recovery of production almost to pre-crisis levels of 2008, and some plants are even exceeding those, steel segment continued to improve its financial performance. Significant work took place in terms of optimization of steel distribution system and introduction of new products better demanded by the market. As a result we improved our operating income and decreased accounts receivables. All of the above positively effected operating cash flow in this period. In the third quarter demand continued to grow almost in all major export positions of Mechel steel products both in Middle East and in Southeast Asia and Europe. We are working on modernization of our metallurgical facilities, thus lowering costs and improving our products quality. All this gives us reason to speak about good perspectives in steel segment in 2010”.

Ferroalloy Segment Results

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

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

Ferroalloy Segment Output

Ferroalloy segment revenue from external customers for the third quarter of 2009 amounted to $119.1 million, or 8.0% of consolidated net revenue, an increase of 54.4% compared with segment revenue from external customers of $77.1 million in the second quarter of 2009.

Operating income in the ferroalloy segment in the third quarter of 2009 was $11.2 million, versus operating loss of $5.5 million in the previous quarter.

EBITDA in the ferroalloy segment for the third quarter of 2009 decreased by 86.0% and amounted to $21.5 million, compared to segment EBITDA of $153.2 million in the second quarter of 2009.

The EBITDA margin of the ferroalloy segment in the third quarter of 2009 comprised 15.3%. For ferroalloy segment depreciation, depletion and amortization in the third quarter of 2009 was $19.2 million, an increase of 23.9% over $15.5 million in the second quarter of 2009.

Vladimir Polin noted: “In the third quarter of 2009 an environment on Mechel’s ferroalloys segment key distribution markets stayed stable positive. Considering that ferroalloys plants worked with 100% capacity utilization, the segment demonstrated good financial results and came out with operational profit. We also continued to increase production of chromites ore concentrate at Voskhod Mining Plant, currently not only covering needs of Tikhvin Ferroalloy Plant in those, but starting sales of this high marginal product to the third parties. In fact, we expect that in 2010 the segment will be able to reveal its true potential, and will significantly contribute in overall financial results of Mechel.

Power Segment Results

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

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

Power Segment Output

Mechel’s power segment revenue from external customers for the third quarter of 2009 decreased by 4.8% compared to previous quarter and amounted to $112.6 million, or 7% of consolidated net revenue.

Operating income in the power segment in the third quarter of 2009 was $4.3 million, an increase of 1934.8% compared to operating income of $213 thousand in the second quarter of 2009. EBITDA in the power segment in the third quarter of 2009 increased by 34.0% totaling $6.9 million, compared to EBITDA of $5.1 million in the second quarter of 2009. The EBITDA margin for the power segment grew from 2.7% to 3.4%. Depreciation, depletion and amortization in power segment in the third quarter of 2009 increased by 20.0%, compared to the second quarter of 2009, from $3.5 million to $4.2 million.

Vladimir Polin noted: “In the third quarter electricity and heat energy consumption increased due to both seasonal factors and overall recovery of Russia’s economics. As we simultaneously continued to work on costs reduction and fuel factor decrease, the company’s energy sector also showed good results and increased operational profit in the third quarter”.

Recent Highlights

· In November 2009 Mechel announced placing of its stock secured non-convertible interest-bearing documentary bonds of BO-01 series with an obligatory centralized care of securities at MICEX Stock Exchange ZAO by providing 1st rate coupon competition. The total number of the placed bonds is 5,000,000 (100% of the stock bonds issue volume), the nominal value of the bonds is 1000 roubles each.

· In November 2009 Mechel announced commissioning of the integrated steel processing facility (ladle furnace) # 3 that is the second technological part of the continuous casting machine No.4 complex project at the oxygen-converter shop of its Chelyabinsk Metallurgical Plant (CMP) OAO subsidiary.  The ladle furnace #3 is planned to process about 1.2 million tonnes of steel per year that would enable to raise continuous caster efficiency at the continuous casting machine No.4 in the oxygen-converter shop up to 120 thousand tonnes per year. Investments for construction and commissioning of the ladle furnace #3 amounted to 1.05 billion roubles.

· In November 2009 Mechel announced completion of several investment projects at Mechel Campia Turzii plant, which is a part of Mechel OAO’s East-European Steel Division. Three new production lines launched at the plant include: metal fiber production and packing line, reinforcing wire coils extension, enlargement line and steel wire production shop. Total investments in the projects amounted to 7 million Euro.

· In December 2009 Mechel announced agreement with VTB Bank about 3 year prolongation of the 15 billion rubles loan given to Mechel in 2008. Prolongation agreement provides for interest payment during the first 2.5 years only with further monthly repayment of the principal debt. This prolongation is a one more step within a framework of the Agreement on Long-term Mutually Beneficial Cooperation entered into by the companies in April 2008, with a view of implementing Mechel's projects and development plans.

Igor Zyuzin concluded: “The third quarter showed increase of Mechel’s financial and operational results that was a logical outcome of hard-working that the company started from the beginning of the global crisis. Due to realized measures and continuing program of production growth and optimization, widening of distribution areas, restructuring of debt portfolio and financial flows, today the company is able to use the world economics’ stabilization to continue increasing its shareholder value and to create background for the further rise”.

Financial Position

Capital expenditure on property, plant and equipment and acquisition of mineral licenses for the nine month of 2009 amounted to $345.9 million, of which $187.5 million was invested in the mining segment, $130.3 million was invested in the steel segment, $23.9 million was invested in the ferroalloy segment and $4.3 million was invested in the power segment.

For the nine months of 2009 Mechel spent $15.5 million on acquisitions, including $11.4 million spent on acquisition of minority interest in other subsidiaries.

As of September 30, 2009 total debt was at $5,608.4 million. Cash and cash equivalents amounted to $408.9 million at the end of nine month period of 2009 and net debt amounted to $5,199.5 million (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.

Attachment A

Non-GAAP financial measures.This press release includes financial information prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP, as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with US GAAP.

Earnings Before Interest, Depreciation and Amortization (EBITDA) and EBITDA margin. EBITDA represents earnings before interest, depreciation and amortization. EBITDA margin is defined as EBITDA as a percentage of our net revenues. Our EBITDA may not be similar to EBITDA measures of other companies; is not a measurement under accounting principles generally accepted in the United States and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of operations. We believe that EBITDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions and other investments and our ability to incur and service debt. While interest, depreciation and amortization are considered operating costs under generally accepted accounting principles, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Our EBITDA calculation is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the metals and mining industry. EBITDA can be reconciled to our consolidated statements of operations as follows:

EBITDA margin can be reconciled as a percentage to our Revenues as follows: