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Mechel

January 18, 2007

Mechel announces the closure of the privatization contract for Mechel Targoviste

Targoviste, Romania – January 18, 2007 – Mechel OAO (NYSE: MTL) announces the earlier closure of the privatization contract for its Romanian steel plant, Mechel Targoviste.

The Authority of State Assets Recovery of Romania has formally confirmed the fulfillment of all the investment obligations undertaken by Mechel in purchasing the Romanian company, Mechel Targoviste, which specializes in manufacturing commercial quality and special steel long bars.

The privatization contract for Mechel Targoviste was concluded in August 2002. Mechel has completely met all its investment obligations regarding the four investment years and fulfilled in advance its obligations regarding the fifth investment year ending on August 28, 2007, and also resolved all social issues with the trade union that have accounted for closing the contract nine month earlier than the date stipulated.

Mechel invested in Mechel Targoviste over US$38.0 million, as of August 31, 2006, including investments in its technical re-equipment, environmental protection, repayment of the arrears to the budget and to the gas and eclectic power suppliers.

The development program for 2006-2009 envisages US$35.0 million of investments in Mechel Targoviste. An upgraded electric furnace was started up as a part of its implementation early this year, which allowed for significant cost reduction while increasing its performance. The upgraded continuous caster is planned to be put into operation early next year with the production capacity of about 500 thousand tonnes of billets annually, which will allow the company to put its operations completely on track of continuous casting technology.

The company’s steel output amounted to 466 thousand tonnes and rolled products to 385 thousand tonnes for 2006.

“The earlier closure of Mechel Targoviste privatization contract is very important stage in the Company’s activities in Romania. We have demonstrated the ability to fulfill our investment obligations not only within the stipulated framework but also exceeding them with the view of the soonest achievement of business success; and the state rendered us its support in that. The plant, for the first time, earned net profit in the third quarter of this year. Following the startup of the concaster and implementation of a number of technical arrangements, we see Mechel Targoviste as a steady operating and profitable enterprise,” - Mechel’s Chief Operating Officer Alexey Ivanushkin commented.

Mechel is currently arranging to file the documents to close the privatization contract of its second Romanian company – Mechel Campia Turzii.

 

 

 

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