Moscow, Russia – June 7, 2005 – Mechel OAO (NYSE: MTL) reports the shutdown of an obsolete blast furnace at its leading steel enterprise – Chelyabinsk Metallurgical Plant OAO.

The shutdown of Blast Furnace No. 2 is in line with Mechel’s strategic investment program targeted at curtailing production using outdated equipment and switching to more efficient technologies.

The shutdown of the blast furnace will not lead to a decline in rolled production in 2005 as compared to 2004 as a result of an improved steel-per-rolled-product usage ratio. A decline in production of steel and pig iron is expected to be about 4% in steel and about 9% in pig iron.

In the environment of a global decline in prices for steel products and a sharp rise in prices for iron ore on the domestic market, Mechel’s main goal is to optimize existing production, reduce usage and cost ratios, and continue transition to efficient resource-saving technologies. In line with this, the share of steel produced at the Chelyabinsk Metallurgical Plant through continuous casting has increased from 22.8% in 2004 to 39.4% currently. Overall, the main principles of Mechel’s development strategy continue to focus on further optimization of operations and the strengthening and development of its mining business.

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Mechel OAO
Irina Ostryakova
Phone: 7-095-258-18-28
E-mail: Irina.Ostryakova@mechel.com