MECHEL ANNOUNCES ACQUISITION OF DONETSK ELECTROMETALLURGICAL PLANT

Donetsk, Ukraine — December 23, 2011 – Mechel OAO (NYSE: MTL), one of the
leading Russian mining and metals companies, announces closure of the
transaction for the acquisition of 100% of the shares of Donetsk
Electrometallurgical Plant (DEMZ AO).
On December 23, 2011, Mechel completed the acquisition of 100%  of Donetsk
Electrometallurgical Plant. As previously communicated, the acquisition was
approved at Mechel OAO’s annual shareholders’ meeting and by the Mechel’s Board
of Directors. The acquisition is valued at $537 million.
Payment for DEMZ AO’s shares will be made in installments over 7 years. At the
time of Mechel’s annual shareholders’ meeting, payment was expected to be paid
in installments over 4 years, but over the course of completing  the
acquisition, the term was extended by 3 years without increasing the total
consideration.
DEMZ is one of Ukraine’s most modern steelmaking plants with an annual capacity
of over 1 million tonnes. The plant focuses on the production of
continuously-cast billets as well as rolls of specialty steels, including
thermally treated. The enterprise has a firm market standing as a producer of
high-quality rolls, resuming production of large-diameter specialty-steel pipe,
which is exported to the United States and Europe. The plant’s advantageous
geographic location, well-developed railway network and proximity to major
seaports at Mariupol (115 kilometers) and Odessa (900 kilometers) enables it to
make efficient deliveries of steel products to more than 30 countries.
The plant’s electric furnace smelting facilities are currently working at their
full capacity, producing up to 90,000 tonnes of steel per month. In 2011, steel
production is expected to total over 1 million tonnes.
Production of hot-rolled products is planned this year to top 145,000 tonnes.
Equipment at the plant’s rolling mill enables it to produce rolls using various
types of thermal treatment, including hardening and tempering, annealing and
normalization. These products are in demand on the international market in
high-tech industries, engineering and shipbuilding.
DEMZ’s quality management system is compliant with the international ISO
9001:2008 standard as certified by Lloyd’s Register Quality Assurance, while the
ecological management system is compliant with the ISO 14001:2004 standard as
certified by TUV NORD CERT.
With Mechel’s support, the plant began implementing investment programs, created
over 1,000 new jobs, mastered the manufacture of high-tech products and is
expanding its markets.
Commenting the deal, Mechel OAO’s Chairman of the Board of Directors Igor Zyuzin
noted: “Acquisition of Donetsk Electrometallurgical Plant is a logical step for
the company as we pursue our strong partnership and investment ties with the
Ukrainian plant. This is a new level of development for Mechel Group’s steel
division, aimed at increasing the Group’s total production volume and, which is
particularly important, the share of high margin products in the group’s product
portfolio.”
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Mechel OAO
Ekaterina Videman
Tel: + 7 495 221 88 88
ekaterina.videman@mechel.com

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Mechel is one of the leading Russian companies. Its business includes four
segments: mining, steel, ferroalloy and power. Mechel unites producers of coal,
iron ore concentrate, nickel, ferrochrome, ferrosilicon, steel, rolled products,
hardware, heat and electric power. Mechel products are marketed domestically and
internationally.
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Some of the information in this press release may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Mechel, as defined in the safe harbor provisions of the U.S.
Private Securities Litigation Reform Act of 1995. We wish to caution you that
these statements are only predictions and that actual events or results may
differ materially. We do not intend to update these statements. We refer you to
the documents Mechel files from time to time with the U.S. Securities and
Exchange Commission, including our Form 20-F. These documents contain and
identify important factors, including those contained in the section captioned
“Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in our
Form 20-F, that could cause the actual results to differ materially from those
contained in our projections or forward-looking statements, including, among
others, the achievement of anticipated levels of profitability, growth, cost and
synergy of our recent acquisitions, the impact of competitive pricing, the
ability to obtain necessary regulatory approvals and licenses, the impact of
developments in the Russian economic, political and legal environment,
volatility in stock markets or in the price of our shares or ADRs, financial
risk management and the impact of general business and global economic
conditions.