Mechel Reports Temporary Suspension of Steelmaking Facilities in Romania and
MOSCOW, Russia, Nov. 23, 2012 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), one
of the leading Russian mining and metals companies, reports temporary halting
of production at Donetsk Electrometallurgical Plant (DEMZ), which is part of
Mechel's steel division, and the schedule for temporary suspension of
production at the group's Romanian steelmaking facilities that are part of
Mechel's Eastern European Steel Division, in both cases due to unfavorable
conditions on markets of raw materials and finished steel products.
Due to unfavorable prices in European steel markets linked to rising ferrous
scrap prices and weak demand for finished products, production at Mechel's
Romanian steelmaking facilities is being temporarily halted. The decision was
made in order to cut costs and synchronize production with market demands. The
decision was partly helped by the fact that Romanian plants have already
completed their production plans for the year.
Starting on November 21 and 22, electric smelting facilities at Mechel
Targoviste and Ductil Steel Otelu Rosu respectively were temporarily halted.
Rolling production at Mechel Targoviste will also be temporarily suspended
starting November 27 once production plans are met, and starting December 15,
rolling and hardware production is planned to be temporarily halted at Ductil
Steel Buzau, Laminorul Braila and Mechel Campia Turzii.
Production at Donetsk Electrometallurgical Plant has been temporarily
suspended due to rising production costs and reduced profitability linked to a
steady increase in prices for the plant's primary raw material — ferrous scrap
— as Ukraine's steelmakers are making seasonal stock pile-ups.
While production at these steelmaking facilities is temporarily suspended, all
necessary measures will be undertaken to retain the affected facilities'
operational capability and to conduct maintenance works in winter. All
employees involved in those works will be paid their full salary. In order to
preserve jobs, the remaining personnel that are not involved in the scheduled
works will be either paid for idle time or placed on leave, according to labor
Temporary suspension of production facilities will not affect sales volumes.
All contractual supplies will be made from warehouses as normal.
The company is closely monitoring market conditions, so that once they
normalize, production could promptly resume.
The expected economic effect from the temporary suspension of production will
enable the plants to use their financial resources more efficiently while
demand for finished products is low and scrap prices are high. It will enable
them to minimize financial risks and ensure protection for the company's
long-term interests in the steelmaking sphere.
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.
The Mechel OAO logo is available at
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
CONTACT: Mechel OAO
Tel: + 7 495 221-88-88
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