Moscow, Russia– November 19, 2019 – Mechel PAO (MOEX: MTLR, NYSE: MTL), one of the leading Russian mining and metals companies, announces 9M2019 operational results.

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on operational results:

“In 3Q2019, due to our upgrade of mining equipment as well as fruitful cooperation with contractors, all our mining facilities boosted stripping and mining volumes. In this accounting period we mined a total of 5.3 million tonnes of coal, which is 15% more than in the previous quarter. Stripping volumes went up by 17% quarter-on-quarter. This is an important result for us, as these works ensure a future increase in our mining facilities’ output.

“In this accounting period, Mechel’s sales networks inked several long-term contracts with major European and Asian customers, which guarantees us stable sales of our mining division’s output in the future periods.

“As for prices for our key product — coking coal concentrate — as well as other metallurgical coals, starting in 3Q2019 our key markets were highly volatile and demonstrated a major slump in prices, down 20% on average and occasionally dropping by 30% compared to the beginning of the quarter. However, in our opinion — which coincides with consensus forecasts of leading international investment banks — demand and price indicators in the next few years will remain fairly stable due to customers in Asia Pacific.

“The 10-percent decrease in coking coal concentrate quarter-on-quarter was due to necessary planned repairs at Neryungrinskaya Washing Plant as well as a temporary decrease in sales to South Korea, as we ship coal to this country according to a schedule set by an annual contract with a major client. At the same time, we increased output at Southern Kuzbass Coal Company, with PCI and anthracite sales up 37% and 51% accordingly.

“Iron ore mining and concentrate output at Korshunov Mining Plant are growing steadily, with sales up 23% in 3Q2019. This product is mostly shipped to Chelyabinsk Metallurgical Plant, with some of it sold to third parties.

“Overall coke sales went up by 6%, with sales to third parties up by 52% due to sales of released output on the domestic market.

“In this accounting period we began large-scale repairs of Chelyabinsk Metallurgical Plant’s blast furnace #4, which reflected on our pig iron (down 8%) and steel production (down 5%) quarter-on-quarter. In July-September we boosted rail sales by 75% to fulfill our contractual obligations to Russian Railways, Moscow Metro and Mosinzhproekt, as well as increased sales of various sections produced by the plant’s universal rolling mill by 5%. Sales of Izhstal’s long rolls went up by 7% — primarily due to increased demand from military and automobile industries. The overall four-percent slump in long roll sales was due to a decrease in rebar output at Chelyabinsk Metallurgical Plant as the blast furnace underwent repairs. The same also caused a five-percent decrease in sales of flat rolls. At the same time, we continued to implement our strategy of expanding Mechel’s share of the domestic stainless market, increasing sales of our stainless flats by 15% quarter-on-quarter.

“The 19-percent decrease in sales of Bratsk Ferroalloy Plant’s ferrosilicon quarter-on-quarter was due to continuing reconstruction of one of the plant’s four furnaces. These repairs are due to be completed by this year’s end.

“Forgings sales went up by 11% quarter-on-quarter due to exports of stainless forgings ensured by long-term contracts — those went up by 17%. The 19-percent decrease in stampings sales was due to an early shipping of railroad axles — they were dispatched in the second quarter instead of the third quarter as originally planned. It must be noted that in this accounting period, Urals Stampings Plant upped sales of expensive stainless stampings for the aviation industry by 72%.

“The 14-percent decrease in electricity generation quarter-on-quarter was due to planned equipment repairs. The slump in heat generation in the third quarter has a seasonal nature.”

Production and sales

Production:

Sales:

Key investment projects progress

Universal rolling mill:

Elga coal complex:

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Mechel PAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com