Mechel Reports the 9M 2012 Financial Results

Mechel Reports the 9M 2012 Financial Results

                       Revenue amounted to $8.8 billion

            Consolidated adjusted EBITDA amounted to $1.2 billion

 Net loss attributable to shareholders of Mechel OAO amounted to $550 million

MOSCOW, Dec. 12, 2012 (GLOBE NEWSWIRE) -- Mechel OAO (NYSE:MTL), a leading
Russian mining and steel group, today announced financial results for the 9M
2012.

Evgeny Mikhel, Mechel OAO's Chief Executive Officer, commented on the 9M2012
financial results:

"In this accounting period, the group focused on its key strategic tasks as
outlined by the Board of Directors in May. We focused our efforts on our core
businesses — mining and full-cycle steelmaking, and made significant headway
in cutting costs and maximizing sales. At the same time we have taken a series
of measures aimed at minimizing the impact loss-generating enterprises have on
the group's financial results. We cut down to a minimum manufacturing of those
products that are unprofitable in current economic conditions and prepared for
sale those assets earlier designated for divestment. Work on optimizing the
company's debt structure never stops, as demonstrated by the recent
refinancing of the syndicated loan as well as several long-term loans from
Russian banks taken out to repay short-term debt. Investment expenses are
subject to ever more rigorous control. Despite the fact that programs of
production cost cuts have always been in place at our enterprises, now we pay
extra attention to the issue. All these measures enabled us not only to
improve our profitability at the EBITDA level and achieve a net profit in the
3rd quarter, but also to demonstrate a maximum quarter operational cash flow
since the 2nd quarter of 2009*."

Consolidated Results For The 9M 2012

US$ thousand                  9M 2012 ^(1)    9M 2011 ^(1)    Change Y-on-Y
Revenue from external         8,750,831       9,617,126       -9.0%
customers
Intersegment sales            1,231,103       1,586,328       -22.4%
Operating (loss) / income     (29,868)        1,454,169       --
Operating margin              -0.34%          15.12%          --
Net (loss) / income
attributable to shareholders  (550,094)       526,730         --
of Mechel OAO
Adjusted net income ^(1) (2)  173,113         526,730         -67.1%
Adjusted EBITDA ^(1) (3)      1,223,696       1,856,763       -34.1%
Adjusted EBITDA, margin ^(1)  13.98%          19.31%          --
^(1) ^ See Attachment A.                                    
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.

*For the comparative purposes the operating cash flow for the 4th quarter 2011
is taken net of the effect of the repayment of receivables by the related
metallurgical plants.

US$ thousand                  3Q 2012 ^(1)    2Q 2012 ^(1)    Change Q-on-Q
Revenue from external         2,714,876       3,085,908       -12.0%
customers
Intersegment sales            353,676         408,864         -13.5%
Operating income / (loss)     126,712         (470,607)       --
Operating margin              4.67%           -15.25%         --
Net income / (loss)
attributable to shareholders  54,910          (823,023)       --
of Mechel OAO
Adjusted net income / (loss)  132,130         (177,037)       --
^(1) (2)
Adjusted EBITDA ^(1) (3)      374,848         385,446         -2.7%
Adjusted EBITDA, margin ^(1)  13.81%          12.49%          --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.

The net revenue in 3Q 2012 decreased by 12.0% and amounted to $2.7 billion
compared to $3.1 billion in 2Q 2012. The operating income amounted to $126.7
million or 4.67% of the net revenue, compared to the operating loss of $470.6
million or -15.25% of the net revenue in 2Q 2012.

In 3Q 2012, Mechel's consolidated net income attributable to shareholders of
Mechel OAO comprised $54.9 million compared to the net loss of $823.0 million
in 2Q 2012. Excluding the effects of impairment of long-lived assets and
goodwill and provision for amounts due from related parties (net of deferred
taxes related to non controlling interests) the adjusted net profit amounts to
$132.1 million in 3Q 2012.

The consolidated adjusted EBITDA in 3Q 2012 decreased by 2.7% to $374.8
million, compared to $385.4 million in 2Q 2012. Depreciation, depletion and
amortization in 3Q 2012 for the Company were $140.8 million, a decrease of
10.4% compared to $157.2 million in 2Q 2012.

Mining Segment Results For The 9M 2012

US$ thousand                  9M 2012 ^(1)    9M 2011 ^(1)    Change Y-on-Y
Revenue from external         2,591,167       3,078,513       -15.8%
customers
Intersegment sales            604,606         788,336         -23.3%
Operating income              668,394         1,193,968       -44.0%
Net income attributable to    428,245         630,826         -32.1%
shareholders of Mechel OAO
Adjusted net income ^(1) (2)  450,925         630,826         -28.5%
Adjusted EBITDA^(1) (3)       965,178         1,431,003       -32.6%
Adjusted EBITDA, margin ^(4)  30.20%          37.01%          --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

US$ thousand                  3Q 2012 ^(1)    2Q 2012 ^(1)    Change Q-on-Q
Revenue from external         777,246         881,180         -11.8%
customers
Intersegment sales            171,922         207,085         -17.0%
Operating income              200,256         192,570         4.0%
Net income / (loss)
attributable to shareholders  216,765         (30,024)        --
of Mechel OAO
Adjusted net income / (loss)  218,739         (9,318)         --
^(1) (2)
Adjusted EBITDA^(1) (3)       305,157         301,906         1.1%
Adjusted EBITDA, margin ^(4)  32.15%          27.74%          --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales

Mining Segment Output and Sales For The 9M 2012

Production:

                  9M 2012,        9M 2011,        9M 2012 vs.
Product name       thousand tonnes thousand tonnes 9M 2011, %
Coal (run-of-mine) 20,794          19,813          5%

Product Sales:

                                  9M 2012,        9M 2011,        9M 2012 vs.
Product name                       thousand tonnes thousand tonnes 9M 2011, %
Coking coal concentrate            9,029           9,305           -3%
Including coking coal concentrate  1,950           2,271           -14%
supplied to Mechelenterprises
PCI                                1,703           1,202           42%
Anthracites                        1,937           1,693           14%
Including anthracites supplied to  246             235             5%
Mechelenterprises
Steam coal                         4,490           5,036           -11%
Including steam coal supplied to   1,120           1,139           -2%
Mechelenterprises
Iron ore concentrate               3,219           3,294           -2%
Including iron ore concentrate     268             1,327           -80%
supplied to Mechelenterprises
Coke                               2,707           2,563           6%
Including coke supplied to Mechel  1,903           1,704           12%
enterprises

The mining segment's revenue from external customers in 3Q 2012 totaled $777.2
million, or 29% of consolidated net revenue, a decrease of 11.8% over the
segment's revenue from external customers of $881.2 million, or 29% of
consolidated net revenue in 2Q 2012.

Operating income in the mining segment in 3Q 2012 increased by 4.0% to $200.3
million, or 21.1% of the segment's total revenue, compared to an operating
income of $192.6 million, or 17.7% of total segment revenue for 2Q 2012. The
3Q 2012 adjusted EBITDA in the mining segment increased by 1.1% and amounted
to $305.2 million compared to segment's adjusted EBITDA of $301.9 million in
2Q 2012. The adjusted EBITDA margin for the mining segment in 3Q 2012 was
32.2% compared to 27.7% in 2Q 2012. Depreciation, depletion and amortization
in the mining segment amounted to $76.5 million which is 9.9% lower than $84.9
million in 2Q 2012.

Mechel Mining OAO's Chief Operating Officer Boris Nikishichev commented on the
mining segment's results:

"As the market situation has worsened for more than a year, our chief tasks
became maintaining the mining division's operational efficiency and ensuring
further development of Elga, the company's key strategic project. This year
the group's production and sales enterprises have made maximum effort to
increase production and shipment volumes as Southern Kuzbass's production
capacities were restored, which enabled us to partly smooth over the negative
impact of lower prices. The wide range of our coal products and our
streamlined distribution system, both on the domestic and the international
markets, ensure our company's strong competitive position, enabling it to
expand its client base even in these difficult conditions and enter new
markets, as well as diversify sales to its current customers and make up for
the lower demand for some types of coal by offering other coal grades.

"A tougher cost cutting program became another key instrument in improving the
efficiency of the mining division's enterprises. We made several management
decisions including limitations on operational and administrative expenses,
acquiring third-party supplies for lower prices, selling inventories and
planned reductions of production at several assets. As a result, production
costs were cut dramatically in the third quarter at all of our Russian mining
assets. Temporary suspension of some of our US-based mining facilities in
October due to increased inventories became another expense optimization
measure.

"The third quarter was also marked by another event in the development of Elga
Coal Complex — we completed construction of a washing plant and made the
technological launch of a full production cycle. Currently finishing and
insulating works are being conducted at the site, and when completed, the
plant will be able to work all year round reaching 3 million tonnes capacity.
Washing facilities next year will enable us to increase coal production at
Elga and increase Mechel Mining's supplies of coking coal concentrate. In
order to ensure a long-term off-take for Elga's steam coal, in September we
signed a long-term cooperation agreement with RAO Energy Systems of East OAO,
which provides for a gradual increase in coal supplies up to a total of 60
million tonnes over 15 years."

Steel Segment Results For The 9M 2012

US$ thousand                  9M 2012 ^(1)     9M 2011 ^(1)    Change Y-on-Y
Revenue from external         5,246,358        5,613,161       -6.5%
customers
Intersegment sales            195,156          234,296         -16.7%
Operating (loss) / income    (503,231)        277,921         --
Net loss attributable to      (751,830)        (38,217)        1867.3%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)    (188,192)        (38,217)        392.4%
Adjusted EBITDA ^(1) (3)      214,587          368,681         -41.8%
Adjusted EBITDA, margin ^(4)  3.94%            6.30%           --
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

US$ thousand                  3Q 2012 ^(1)     2Q 2012 ^(1)    Change Q-on-Q
Revenue from external         1,699,564        1,897,661       -10.4%
customers
Intersegment sales            49,629           66,538          -25.4%
Operating loss                (42,868)         (471,029)       -90.9%
Net loss attributable to      (110,989)        (625,277)       -82.2%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)    (35,740)         (136,888)       -73.9%
Adjusted EBITDA ^(1) (3)      74,746           91,251          -18.1%
Adjusted EBITDA, margin ^(4)  4.27%            4.65%           --
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

Steel Segment Output and Sales For The 9M 2012

Production:

            9M 2012,        9M 2011,        9M 2012 vs.
Product name thousand tonnes thousand tonnes 9M 2011, %
Pig iron     3,107           2,672           16%
Steel        5,101           4,501           13%

Product Sales:

                                  9M 2012,        9M 2011,        9M 2012 vs.
Product name                       thousand tonnes thousand tonnes 9M 2011, %
Flat products                      534             512             4%
Including those produced by third  303             308             -2%
parties
Long products                      3,107           2,925           6%
Including those produced by third  666             614             9%
parties
Billets                            1,950           1,723           13%
Including those produced by third  751             1,208           -38%
parties
Hardware and welded mesh           737             722             2%
Including those produced by third  39              39              0%
parties
Forgings                           39              45              -13%
Stampings                          83              88              -6%

Mechel's steel segment's revenue from external customers in 3Q 2012 amounted
to $1.7 billion, or 63% of the consolidated net revenue, a decrease of 10.4%
over the segment's revenue from external customers of $1.9 billion, or 61% of
consolidated revenue, in 2Q 2012.

In 3Q 2012, the steel segment's operating loss totaled $42.9 million, or -2.4%
of the segment's revenue, versus an operating loss of $471.0 million, or
-24.0% of total segment revenue, in 2Q 2012. The adjusted EBITDA in the steel
segment in 3Q 2012 decreased by 18.1% and amounted to $74.7 million, compared
to the adjusted EBITDA of $91.3 million in 2Q 2012. The adjusted EBITDA margin
of the steel segment was 4.27% in 3Q 2012, versus an adjusted EBITDA margin of
4.65% in 2Q 2012. Depreciation and amortization in the steel segment decreased
by 3.4% from $41.2 million in 2Q 2012 to $39.8 million in 3Q 2012.

Commenting on the steel segment's results, Mechel-Steel Management OOO's Chief
Executive Officer Vladimir Tytsky noted:

"In the third quarter, we continued to implement our equipment modernization
program at our enterprises. Construction of the universal rolling mill at
Chelyabinsk Metallurgical Plant has reached its final stage. We also continued
to optimize stockpiles of steel products in our sales network's warehouses.
Despite a certain decrease of overall sales volumes of our finished products,
we managed to increase sales of high value-added products, such as hardware
and forgings. Lower iron ore and coke prices enabled us to reduce production
costs at the division's key Russian enterprises. The Russian market's stable
demand for long products also proved helpful. At the same time, persistent
weakness in the European steel market and high scrap prices put great pressure
on the results of the division's enterprises located in Eastern Europe.
Ultimately we decided first to cut production at electric smelting plants and
then to temporarily halt production there. Many other companies faced the same
problems, including those whose products we are selling through our sales
network. Cutting production at such plants led to reduced sales volumes and
therefore the division's revenues. Due to our focus on the Russian market for
long products, which fared much better than its European counterpart, in the
third quarter we managed to maintain EBITDA at a fairly high level as compared
to previous financial periods."

Ferroalloys Segment Results For The 9M 2012

US$ thousand                  9M 2012 ^(1)     9M 2011 ^(1)     Change
                                                                   Y-on-Y
Revenue from external         348,114           359,366            -3.1%
customers
Intersegment sales            72,980            183,194            -60.2%
Operating loss                (193,592)         (8,983)            2,055.1%
Net loss attributable to      (204,782)         (32,437)           531.3%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)    (121,784)         (32,437)           275.4%
Adjusted EBITDA ^(1) (3)      (18,022)          57,102             --
Adjusted EBITDA, margin       -4.28%            10.52%             --
^(4)^
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

US$ thousand                   3Q 2012 ^(1)      2Q 2012 ^(1)     Change
                                                                    Q-on-Q
Revenue from external          91,007             132,376           -31.3%
customers
Intersegment sales             23,025             22,141            4.0%
Operating loss                 (24,525)           (135,297)         -81.9%
Net loss attributable to       (41,688)           (107,055)         -61.1%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)     (41,688)           (24,057)          73.3%
Adjusted EBITDA ^(1) (2)       (3,144)            (7,381)           -57.4%
Adjusted EBITDA, margin ^(3)^ -2.76%             -4.78%            --
^(1)^ See Attachment A.
^(2)^ Adjusted net loss is net loss adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

Product Sales:

Product name                       9M 2012,        9M 2011,        9M 2012 vs.
                                   thousand tonnes thousand tonnes 9M 2011, %
Nickel                             11              12.5            -12%
Including nickel supplied to       2               4.6             -56%
Mechel enterprises
Ferrosilicon                       57              65.8            -13%
Including ferrosilicon supplied to 22              22.2            -1%
Mechel enterprises
Chrome                             53              43.3            22%
Including chrome supplied to       6               12.9            -53%
Mechel enterprises

The ferroalloy segment's revenue from external customers in 3Q2012 amounted to
$91.0 million, or 3% of consolidated net revenue, a decrease of 31.3% compared
with the segment's revenue from external customers of $132.4 million or 4% of
consolidated net revenue, in 2Q2012.

In 3Q2012, the operating loss in the ferroalloys segment decreased by 81.9%
and totaled $24.5 million, or -21.5% of total segment revenue, as compared to
an operating loss of $135.3 million, or -87.6% of total segment revenue, in
2Q2012. The adjusted EBITDA in the ferroalloys segment in 3Q2012 increased by
57.4% and amounted to negative $3.1 million, compared to segment's adjusted
negative EBITDA of $7.4 million in 2Q2012. The adjusted EBITDA margin of the
ferroalloys segment was -2.8% in 3Q2012 compared to the adjusted EBITDA margin
of -4.8% in 2Q2012. The ferroalloys segment's depreciation, depletion and
amortization in 3Q2012 was $20.9 million, a decrease of 23.7% over $27.4
million in 2Q2012.

Mechel-Ferroalloys Management OOO's Chief Executive Officer Sergey Zhilyakov
noted:

"As the situation on the ferroalloy product markets continues to worsen, we
had to resort to drastic measures in a bid to reduce the negative economic
effect. In the third quarter, production at Southern Urals Nickel Plant was
dramatically reduced. In late September, nickel production at the plant was
halted completely. Tikhvin Ferroalloy Plant's production program was also
revised. At the same time, Bratsk Ferroalloy Plant, using its modernized
furnace's full capacity, increased manufacturing products whose sales bring
the company profit even despite the markets' high volatility. As a result,
operational loss and negative EBITDA were markedly reduced. The division will
continue to optimize its operations in a bid to achieve positive results."

Power Segment Results for The 9M 2012

US$ thousand                   9M 2012 ^(1)     9M 2011 ^(1)     Change
                                                                   Y-on-Y
Revenue from external          565,192           566,087           -0.2%
customers
Intersegment sales             358,362           380,502           -5.8%
Operating (loss) / income      (42,208)          23,071            --
Net (loss) / income
attributable to shareholders   (62,496)          99                --
of Mechel OAO
Adjusted net (loss) / income   (8,603)           99                --
^(1) (2)
Adjusted EBITDA ^(1) (3)       21,184            33,520            -36.8%
Adjusted EBITDA, margin^(4)    2.29%             3.54%             --
^(1)^ See Attachment A.
^(2)^ Adjusted net (loss) income is net (loss) income adjusted for effects of
impairment of long-lived assets and goodwill and provision for amounts due
from related parties (including income tax and amounts attributable to
noncontrolling interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

US$ thousand                   3Q 2012 ^(1)     2Q 2012 ^(1)     Change
                                                                   Q-on-Q
Revenue from external          147,059           174,691           -15.8%
customers
Intersegment sales             109,101           113,099           -3.5%
Operating loss                 (10,850)          (56,237)          -80.7%
Net loss attributable to       (13,877)          (60,053)          -76.9%
shareholders of Mechel OAO
Adjusted net loss ^(1) (2)     (13,877)          (6,160)           125.3%
Adjusted EBITDA ^(1) (3)       (6,610)           287               --
Adjusted EBITDA, margin^(4)    -2.58%            0.10%             --
^(1)^ See Attachment A.
^(2)^ Adjusted net income is net income adjusted for effects of impairment of
long-lived assets and goodwill and provision for amounts due from related
parties (including income tax and amounts attributable to noncontrolling
interests effects)
^(3)^ Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of
contingent liabilities at fair value, forex gain/(loss), net result on the
disposal of non-current assets, impairment of long-lived assets and goodwill,
provision for the loan given to related parties, amounts attributable to
noncontrolling interests and interest income.
^(4)^ Adjusted EBITDA margin is calculated as a percentage of consolidated
revenues of the segment, including intersegment sales.

Power Segment Output and Sales For The 9M 2012

Product name                         9M 2012   9M 2011   9M 2012 vs. 9M
                                                         2011, %
Electric power generation (ths. kWh) 3,097,211 2,830,884 9%
Heat power generation (Gcal)         5,409,167 4,804,525 13%

Mechel's power segment revenue from external customers in 3Q 2012 was $147.0
million, or 5% of consolidated net revenue, a decrease of 15.8% compared with
the segment's revenue from external customers of $174.7 million or 6% of
consolidated net revenue in 2Q2012.

The operating loss in the power segment in 3Q2012 amounted to $10.9 million,
or -4.2% of thesegment's revenue in the same period compared to an operating
loss of $56.2 million, or -19.5% of the total segment revenue, in 2Q2012. The
adjusted EBITDA in the power segment in 3Q2012 amounted to negative $6.6
million, compared to the adjusted positive EBITDA of $0.3 million in 2Q2012.
The adjusted EBITDA margin for the power segment in 3Q2012 amounted to -2.6%
compared to 0.1% in 2Q2012. Depreciation and amortization in power segment in
3Q2012 decreased by 0.8% comparing with the 2Q2012 from $3.65 million to $3.62
million.

Mechel-Energo OOO's Chief Executive Officer Yuri Yampolsky noted:

"In the third quarter the power division worked with a low-season load and was
preparing for the forthcoming winter period as planned. At the same time,
production results are as planned and even exceed plans at some enterprises.
Repairs and preparation for the winter are also complete. Financial results
were typical for low-seasonelectricity and heat consumption, and are
generally on the level of the previous period."

Recent Highlights

  *In October 2012, Mechel reported signing long-term agreements with
    Sberbank of Russia OAO pursuant to which Sberbank opened four credit lines
    to Southern Kuzbass Coal Company OAO for a total of 24 billion rubles for
    a period of five years with a three-year grace period. Yakutugol Holding
    Company OAO, Mechel Mining OAO and Mechel OAO act as guarantors of the
    facility.
  *In October 2012, due to accumulated coal inventories, Mechel reported the
    temporary halting of mining facilities at Mechel Bluestone.
  *In November 2012,Mechel reported the temporary halting of production
    facilities at Donetsk Electrometallurgical Plant (DEMZ), and the schedule
    for temporary suspension of production at the group's Romanian steelmaking
    facilities, in both cases due to unfavorable conditions on markets of raw
    materials and finished steel products.
  *In December 2012, Mechel announced signing an amendment and restatement
    agreement in relation to a syndicated pre-export loan totalling 1 billion
    US dollars in order to further improve the liquidity of the company.

Financial Position

Capital expenditure on property, plant and equipment and acquisition of
mineral licenses for the 9M 2012 amounted to $847.3 million, of which $509.8
million was invested in the mining segment, $296.2 million was invested in the
steel segment, $32.0 million was invested in the ferroalloy segment and $9.3
million was invested in the power segment.

As of September 30, 2012, total debt was $9.7 billion. Cash and cash
equivalents amounted to $582 million and net debt amounted to $9.1 billion
(net debt is defined as total debt outstanding less cash and cash equivalents)
at end of 3Q 2012.

The management of Mechel will host a conference call today at 9:00 a.m. New
York time (2:00 p.m. London time, 6:00 p.m. Moscow time) to review Mechel's
financial results and comment on current operations. The call may be accessed
via the Internet at http://www.mechel.com, under the Investor Relations
section.

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, steel, rolled products, ferroalloys, hardware,
heat and electric power. Mechel products are marketed domestically and
internationally.

The Mechel OAO logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8181

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.

              Attachments to the 9M 2012 Earnings Press Release

                                 Attachment A

Non-GAAP financial measures. This press release includes financial information
prepared in accordance with accounting principles generally accepted in the
United States of America, or US GAAP, as well as other financial measures
referred to as non-GAAP. The non-GAAP financial measures should be considered
in addition to, but not as a substitute for, the information prepared in
accordance with US GAAP.

Adjusted EBITDA represents earnings before Depreciation, depletion and
amortization, Foreign exchange gain/(loss), Gain/(loss) from remeasurement of
contingent liabilities at fair value, Interest expense, Interest income, Net
result on the disposal of non-current assets, Impairment of long-lived assets
and goodwill, Provision for loan given to related parties, Amount attributable
to noncontrolling interests and Income taxes. Adjusted EBITDA margin is
defined as adjusted EBITDA as a percentage of our net revenues. Our adjusted
EBITDA may not be similar to EBITDA measures of other companies. Adjusted
EBITDA is not a measurement under accounting principles generally accepted in
the United States and should be considered in addition to, but not as a
substitute for, the information contained in our consolidated statement of
operations. We believe that our adjusted EBITDA provides useful information to
investors because it is an indicator of the strength and performance of our
ongoing business operations, including our ability to fund discretionary
spending such as capital expenditures, acquisitions and other investments and
our ability to incur and service debt. While interest, depreciation and
amortization are considered operating costs under generally accepted
accounting principles, these expenses primarily represent the non-cash current
period allocation of costs associated with long-lived assets acquired or
constructed in prior periods. Our adjusted EBITDA calculation is commonly used
as one of the bases for investors, analysts and credit rating agencies to
evaluate and compare the periodic and future operating performance and value
of companies within the metals and mining industry.

Adjusted net income / (loss) represents net income / (loss) before Impairment
of long-lived assets and goodwill and Provision for the amounts due from
related parties, including the effect on income tax and amounts attributable
to noncontrolling interests. Our adjusted net income / (loss) may not be
similar to adjusted net income / (loss) measures of other companies. Adjusted
net income / (loss) is not a measurement under accounting principles generally
accepted in the United States and should be considered in addition to, but not
as a substitute for, the information contained in our consolidated statement
of operations. We believe that our adjusted net income / (loss) provides
useful information to investors because it is an indicator of the strength and
performance of our ongoing business operations. While impairment of long-lived
assets and goodwill and provision for the amounts due from related parties are
considered operating costs under generally accepted accounting principles,
these expenses represent the non-cash current period allocation of costs
associated with assets acquired or constructed in prior periods. Our adjusted
net income / (loss) calculation is used as one of the bases for investors,
analysts and credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the metals and
mining industry.

Adjusted EBITDA can be reconciled to our consolidated statements of operations
as follows:

Consolidated results

US$ thousand                                               9M 2012   9M 2011
Net (loss) / income                                        (550,094) 526,730
Add:                                                               
Depreciation, depletion and amortization                   453,819   421,578
Forex loss / (gain)                                        (5,828)   131,518
Loss from remeasurement of contingent liabilities at fair  1,413     1,303
value
Interest expense                                           484,717   448,127
Interest income                                            (52,453)  (10,097)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and provision 748,568   (6,175)
for the loan given to related parties
Amount attributable to noncontrolling interests            7,059     53,046
Income taxes                                               136,496   290,733
Adjusted EBITDA                                            1,223,696 1,856,763

                                                                   
US$ thousand                                               3Q 2012   2Q 2012
Net (loss) / income                                        54,910    (823,023)
Add:                                                               
Depreciation, depletion and amortization                   140,756   157,205
Forex loss / (gain)                                        (126,629) 291,716
Loss from remeasurement of contingent liabilities at fair  484       469
value
Interest expense                                           159,595   164,060
Interest income                                            (15,883)  (17,798)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and provision 74,520    674,567
for the loan given to related parties
Amount attributable to noncontrolling interests            17,730    (25,688)
Income taxes                                               69,363    (36,059)
Adjusted EBITDA                                            374,848   385,446

Adjusted Net income / (loss) can be reconciled as follows:

US$ thousand                                                 9M 2012   9M 2011
Net (loss) / income                                          (550,094) 526,730
Net result on the disposal of non-current assets, impairment
of long-lived assets and goodwill and provision for amounts  771,028   --
due from related parties
Amount attributable to noncontrolling interests              (27,778)  --
Income taxes                                                 (20,043)  --
Adjusted net income                                         173,113   526,730

                                                                   
US$ thousand                                                 3Q 2012 2Q 2012
Netincome / (loss)                                          54,908  (823,023)
Net result on the disposal of non-current assets, impairment
of long-lived assets and goodwill and provision for amounts  77,222  693,806
due from related parties
Amount attributable to noncontrolling interests              --      (27,778)
Income taxes                                                 --      (20,042)
Adjusted net (loss) / income                                 132,130 (177,037)

Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as
follows:

US$ thousand            9M 2012   9M 2011
Revenue, net            8,750,831 9,617,126
Adjusted EBITDA         1,223,696 1,856,763
Adjusted EBITDA, margin 13.98%    19.31%

                                
US$ thousand            3Q 2012   2Q 2012
Revenue, net            2,714,876 3,085,908
Adjusted EBITDA         374,848   385,446
Adjusted EBITDA, margin 13.81%    12.49%

Mining Segment

US$ thousand                                                9M 2012  9M 2011
Net income                                                  428,245  630,826
Add:                                                               
Depreciation, depletion and amortization                    243,010  244,444
Forex loss / (gain)                                         1,840    99,315
Loss from remeasurement of contingent liabilities at fair   1,413    1,303
value
Interest expense                                            205,429  259,151
Interest income                                             (84,016) (117,972)
Net result on the disposal of non-current assets            (805)    (282)
Amount attributable to noncontrolling interests             38,574   57,067
Income taxes                                                131,488  257,151
Adjusted EBITDA                                             965,178  1,431,003

                                                                    
US$ thousand                                                 3Q 2012  2Q 2012
Net income                                                   216,765  (30,024)
Add:                                                                
Depreciation, depletion and amortization                     76,515   84,875
Forex loss / (gain)                                          (93,695) 197,945
Loss from remeasurement of contingent liabilities at fair    484      469
value
Interest expense                                             64,605   72,291
Interest income                                              (29,389) (31,053)
Net result on the disposal of non-current assets             (2,388)  1,166
Amount attributable to noncontrolling interests              10,394   10,264
Income taxes                                                 61,866   (4,026)
Adjusted EBITDA                                              305,157  301,906

Adjusted Net income/loss can be reconciled as follows:

US$ thousand                                   9M 2012 9M 2011
Net income                                     428,245 630,826
Provision for amounts due from related parties 22,680  --
Adjusted net income                            450,925 630,826

                                                     
US$ thousand                                   3Q 2012 2Q 2012
Net (loss) / income                            216,765 (30,024)
Provision for amounts due from related parties 1,974   20,706
Adjusted net (loss) / income                   218,739 (9,318)

Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as
follows:

US$ thousand                           9M 2012   9M 2011
Revenue (including intersegment sales) 3,195,773 3,866,849
Adjusted EBITDA                        965,178   1,431,003
Adjusted EBITDA, margin                30.20%    37.01%

                                             
US$ thousand                           3Q 2012 2Q 2012
Revenue (including intersegment sales) 949,168 1,088,265
Adjusted EBITDA                        305,157 301,906
Adjusted EBITDA, margin                32.15%  27.74%

Steel Segment

US$ thousand                                                9M 2012   9M 2011
Net loss                                                    (751,830) (38,217)
Add:                                                                
Depreciation, depletion and amortization                    124,657   94,839
Forex loss                                                  (23,098)  59,148
Interest expense                                            278,155   245,545
Interest income                                             (5,730)   (10,808)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and provision  595,705   (1,192)
for the loan given to related parties
Amount attributable to noncontrolling interests             (14,222)  (9,148)
Income taxes                                                10,950    28,514
Adjusted EBITDA                                             214,587   368,681

                                                                   
US$ thousand                                               3Q 2012   2Q 2012
Net loss                                                   (110,989) (625,277)
Add:                                                               
Depreciation, depletion and amortization                   39,762    41,244
Forex loss / (gain)                                        (48,171)  116,228
Interest expense                                           96,128    95,163
Interest income                                            155       (2,861)
Net result on the disposal of non-current assets,
impairment of long-lived assets and goodwill and provision 76,725    518,523
for the loan given to related parties
Amount attributable to noncontrolling interests            8,470     (19,295)
Income taxes                                               12,666    (32,474)
Adjusted EBITDA                                            74,746    91,251

Adjusted Net income / (loss) can be reconciled as follows:

US$ thousand                                                9M 2012   9M 2011
Net loss                                                    (751,830) (38,217)
Impairment of long-lived assets and goodwill and provision  593,755   --
for amounts due from related parties
Amount attributable to noncontrolling interests             (15,320)  --
Income taxes                                                (14,797)  --
Adjusted net loss                                           (188,192) (38,217)

                                                                   
US$ thousand                                               3Q 2012   2Q 2012
Net loss                                                  (110,989) (625,277)
Impairment of long-lived assets and goodwill and provision 75,249    518,506
for amounts due from related parties
Amount attributable to noncontrolling interests            --        (15,320)
Income taxes                                               --        (14,797)
Adjusted net loss                                          (35,740)  (136,888)

Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as
follows:

US$ thousand                           9M 2012   9M 2011
Revenue (including intersegment sales) 5,441,514 5,847,457
Adjusted EBITDA                        214,587   368,681
Adjusted EBITDA, margin                3.94%     6.30%

                                               
US$ thousand                           3Q 2012   2Q 2012
Revenue (including intersegment sales) 1,749,193 1,964,199
Adjusted EBITDA                        74,746    91,251
Adjusted EBITDA, margin                4.27%     4.65%

Ferroalloys Segment

US$ thousand                                                9M 2012   9M 2011
Net loss                                                    (204,782) (32,437)
Add:                                                                
Depreciation, depletion and amortization                    74,775    66,489
Forex loss / (gain)                                         15,442    (26,796)
Interest expense                                            22,182    49,700
Interest income                                             (56)      (1,742)
Net result on the disposal of non-current assets,           101,192   210
impairment of long-lived assets and goodwill
Amount attributable to noncontrolling interests             (19,159)  1,294
Income taxes                                                (7,614)   384
Adjusted EBITDA                                             (18,022)  57,102

                                                                   
US$ thousand                                                3Q 2012  2Q 2012
Net loss                                                    (41,688) (107,055)
Add:                                                               
Depreciation, depletion and amortization                    20,856   27,439
Forex (gain) / loss                                         15,236   (22,457)
Interest expense                                            6,729    7,360
Interest income                                             253      (97)
Net result on the disposal of non-current assets,           142      100,947
impairment of long-lived assets and goodwill
Amount attributable to noncontrolling interests             (1,032)  (16,698)
Income taxes                                                (3,640)  3,180
Adjusted EBITDA                                             (3,144)  (7,381)

Adjusted Net income / (loss) can be reconciled as follows:

US$ thousand                                    9M 2012   9M 2011
Net loss                                        (204,782) (32,437)
Impairment of long-lived assets and goodwill    100,702   --
Amount attributable to noncontrolling interests (12,458)  --
Income taxes                                    (5,246)   --
Adjusted net loss                               (121,784) (32,437)

                                                       
US$ thousand                                    3Q 2012  2Q 2012
Net loss                                        (41,688) (107,055)
Impairment of long-lived assets and goodwill   --       100,702
Amount attributable to noncontrolling interests --       (12,458)
Income taxes                                    --       (5,246)
Adjusted net loss                               (41,688) (24,057)

Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as
follows:

US$ thousand                           9M 2012  9M 2011
Revenue (including intersegment sales) 421,094  542,560
Adjusted EBITDA                        (18,022) 57,102
Adjusted EBITDA, margin                -4.28%   10.52%

                                             
US$ thousand                           3Q 2012 2Q 2012
Revenue (including intersegment sales) 114,032 154,517
Adjusted EBITDA                        (3,144) (7,381)
Adjusted EBITDA, margin                -2.76%  -4.78%

Power Segment

US$ thousand                                                  9M 2012  9M 2011
Net (loss) / income                                           (62,496) 99
Add:                                                                 
Depreciation, depletion and amortization                      11,377   15,805
Forex (gain) / loss                                           (12)     (149)
Interest expense                                              16,316   14,365
Interest income                                               (15)     (209)
Net result on the disposal of non-current assets, impairment  52,476   (4,910)
of goodwill
Amount attributable to noncontrolling interests               1,866    3,834
Income taxes                                                  1,672    4,685
Adjusted EBITDA                                               21,184   33,520

                                                                    
US$ thousand                                                 3Q 2012  2Q 2012
Net (loss) / income                                          (13,877) (60,053)
Add:                                                                
Depreciation, depletion and amortization                     3,623    3,646
Forex loss / (gain)                                          1        1
Interest expense                                             5,232    5,460
Interest income                                              --       --
Net result on the disposal of non-current assets, impairment 39       53,932
of goodwill
Amount attributable to noncontrolling interests              (102)    40
Income taxes                                                 (1,528)  (2,739)
Adjusted EBITDA                                              (6,610)  287

Adjusted Net income/loss can be reconciled as follows:

US$ thousand           9M 2012  9M 2011
Net (loss) / income    (62,496) 99
Impairment of goodwill 53,893   --
Income taxes           --       --
Adjusted net income   (8,603)  99

                                    
US$ thousand                 3Q 2012  2Q 2012
Net (loss) / income          (13,877) (60,054)
Impairment of goodwill       --       53,893
Income taxes                 --       --
Adjusted net (loss) / income (13,877) (6,160)

Adjusted EBITDA margin can be reconciled as a percentage to our Revenues as
follows:

US$ thousand                           9M 2012 9M 2011
Revenue (including intersegment sales) 923,554 946,589
Adjusted EBITDA                        21,184  33,520
Adjusted EBITDA, margin                2.29%   3.54%

                                             
US$ thousand                           3Q 2012 2Q 2012
Revenue (including intersegment sales) 256,160 287,790
Adjusted EBITDA                        (6,610) 287
Adjusted EBITDA, margin                -2.58%  0.10%

                                                           
Consolidated Balance Sheets                                 
(in thousands of U.S. dollars)                              
                                         September 30, 2012 December 31, 2011
                                         (unaudited)        
ASSETS                                                      
Cash and cash equivalents                $582,198         643,379
Accounts receivable, net of allowance for
doubtful accounts of $66,254 as of        758,831            824,560
September 30, 2012 and $50,966 as of
December 31, 2011
Due from related parties                  1,160,409          1,315,288
Inventories                               2,214,113          2,599,097
Deferred income taxes                     48,164             36,056
Prepayments and other current assets      537,933            654,285
Total current assets                      5,301,648          6,072,665
                                                           
Long-term investments in related parties  8,693              8,150
Other long-term investments               15,036             13,997
Property, plant and equipment, net        7,551,030          7,076,303
Mineral licenses, net                     4,663,565          4,733,676
Other non-current assets                  190,841            222,442
Deferred income taxes                     50,702             27,817
Goodwill                                  1,094,252          1,151,187
Total assets                              $18,875,768      $19,306,237
                                                           
LIABILITIES AND EQUITY                                      
Short-term borrowings and current portion $2,404,279       2,651,357
of long-term debt
Accounts payable and accrued expenses:                      
Trade payable to vendors of goods and     945,600            976,187
services
Advances received                         180,106            206,156
Accrued expenses and other current        316,487            281,762
liabilities
Taxes and social charges payable          274,377            277,284
Unrecognized income tax benefits          2,305              2,190
Due to related parties                    159,105            179,672
Asset retirement obligation, current      6,160              3,703
portion
Deferred income taxes                     41,517             41,822
Pension obligations, current portion      23,140             22,172
Dividends payable                         112                4
Finance lease liabilities, current        118,424            96,907
portion
Total current liabilities                 4,471,612          $4,739,216
                                                           
Long-term debt, net of current portion    7,283,159          6,745,524
Asset retirement obligations, net of      40,098             40,214
current portion
Pension obligations, net of current       159,323            144,182
portion
Deferred income taxes                     1,483,886          1,514,014
Finance lease liabilities, net of current 349,713            375,249
portion
Other long-term liabilities              370,945            382,512
                                                           
EQUITY                                                      
Common shares (10 Russian rubles par
value; 497,969,086 shares authorized,
416,270,745 shares issued and outstanding 133,507            133,507
as of September 30, 2012 and December 31,
2011)
Preferred shares (10 Russian rubles par
value; 138,756,915 shares authorized,
83,254,149 shares issued and outstanding  25,314             25,314
as of September 30, 2012 and December 31,
2011)
Additional paid-in capital                846,191            845,994
Accumulated other comprehensive loss      (283,098)          (356,580)
Retained earnings                         3,614,751          4,345,754
Equity attributable to shareholders of    4,336,665          4,993,989
Mechel OAO
Noncontrolling interests                  380,368            371,337
Total equity                              4,717,033          5,365,326
Total liabilities and equity             $18,875,768      $19,306,237

                                                             
Consolidated Statements of Operations and                     
Comprehensive Income (Loss)
(in thousands of U.S. dollars)                 Nine months ended September 30,
                                              2012            2011
                                              (unaudited)     (unaudited)
Revenue, net (including related party amounts
of $558,812 and$789,199 during nine months    $8,750,831    $9,617,126
2012 and 2011, respectively)
Cost of goods sold (including related party
amounts of $696,781 and $1,422,929 during nine (6,156,816)     (6,255,629)
months 2012 and 2011, respectively)
Gross profit                                   2,594,015       3,361,497
                                                             
Selling, distribution and operating expenses:                 
Selling and distribution expenses             (1,320,845)     (1,339,263)
Taxes other than income tax                   (78,062)        (94,687)
Accretion expense                              (3,816)         (5,054)
Loss on write-off of property, plant and       (3,846)         (2,425)
equipment
Impairment of goodwill and long-lived assets   (470,967)       --
Provision for amounts due from related parties (300,062)       --
Provision for doubtful accounts               (10,876)        (8,367)
General, administrative and other operating    (435,409)       (457,532)
expenses, net
Total selling, distribution and operating      (2,623,883)     (1,907,328)
expenses
Operating (loss) income                       (29,868)        1,454,169
                                                             
Other income and (expense):                                   
Incomefrom equity investments                405             351
Interest income                               52,453          10,097
Interest expense                              (484,717)       (448,127)
Other income (expenses), net                   49,359          (14,463)
Foreign exchange gain (loss)                   5,828           (131,518)
Total other income and (expense), net         (376,672)       (583,660)
(Loss) income before income tax               (406,540)       870,509
                                                             
Income tax expense                            (136,496)       (290,733)
Net (loss) income                             (543,036)       579,776
Less: Net income attributable to               (7,059)         (53,046)
noncontrolling interests
Net (loss) income attributable to shareholders $(550,095)    $526,730
of MechelOAO
Less: Dividends on preferred shares           (79,056)        (78,281)
Net (loss) income attributable to common       (629,151)       448,449
shareholders of MechelOAO
                                                             
Net (loss) income                             (543,036)       579,776
Currency translation adjustment               84,565          (182,982)
Change in pension benefit obligation          (776)           (1,199)
Adjustment of available-for-sale securities   (75)            (1,327)
Comprehensive (loss) income                    $(459,322)    $394,268
Comprehensive income attributable to           (17,291)        (33,029)
noncontrolling interests
Comprehensive (loss) income attributable to    (476,613)       361,239
shareholders of MechelOAO

                                                             
Consolidated Statements of Cash Flows                         
(in thousands of U.S. dollars)                 Nine months ended September 30,
                                              2012            2011
                                              (unaudited)   (unaudited)
Cash Flows from Operating Activities                          
Net (loss) income attributable to shareholders (550,094)       526,730
ofMechelOAO
Net income attributable to noncontrolling      7,059           53,046
interests
Net (loss) income                              $(543,035)    $579,776
Adjustments to reconcile net (loss) income to                 
net cash provided by operating activities:
Depreciation                                  333,023         285,714
Depletion and amortization                    120,795         135,864
Foreign exchange (gain) loss                   (5,828)         131,518
Deferred income taxes                         (77,336)        23,147
Provision for doubtful accounts                10,876          8,367
Change in inventory reserves                   23,937          504
Accretion expense                              3,816           5,054
Revision in asset retirement obligations       (2,867)         (5,076)
Loss on write-off of property, plant and       3,846           2,425
equipment
Impairment of goodwill and long-lived assets   470,967         --
Provision for amounts due from related parties 300,062         --
Income from equity investments                (405)           (351)
Non-cash interest on pension liabilities      9,002           10,264
Loss (gain) on sale of property, plant and     4,091           (2,439)
equipment
Gain on accounts payable with expired legal    (2,445)         (3,665)
term
Gain on forgiveness of accounts payable        (17,401)        --
Amortization of loan origination fee           36,002          45,330
Loss resulting from accretion and              1,413           1,303
remeasurement of contingent liability
Pension service cost, amortisation of prior
service cost and actuarial (gain) loss, other  3,010           6,033
expenses
Changes in working capital items, net of                      
effects from acquisition of new subsidiaries:
Accounts receivable                           30,941          (206,152)
Inventories                                   485,060         (608,748)
Trade payable to vendors of goods and          (18,331)        43,592
services
Advances received                             (29,543)        (74,255)
Accrued taxes and other liabilities           61,793          (290)
Settlements with related parties              (230,267)       (288,552)
Other current assets                          135,732         (135,410)
Unrecognized income tax loss (benefits)        115             (2,378)
Net cash provided by (used in) operating       1,107,023       (48,425)
activities
                                                             
Cash Flows from Investing Activities                          
Acquisition of DEMP, less cash acquired        (24,652)        --
Acquisition of Cognor, less cash acquired      (24,172)        --
Short-term loans issued and other investments  (1,485)         (386,328)
Proceeds from short-term loans issued          71,766          345,979
Proceeds from disposals of property, plant and 23,461          13,364
equipment
Purchases of mineral licenses                 (1,320)         (23,266)
Purchases of property, plant and equipment    (846,018)       (1,370,073)
Net cash used in investing activities         (802,420)       (1,420,324)
                                                             
Cash Flows from Financing Activities                          
Proceeds from borrowings                      3,482,050       4,711,690
Repayment of borrowings                       (3,296,138)     (2,735,546)
Dividends paid                                (186,443)       (209,696)
Dividends paid to noncontrolling interest      (8,475)         --
Acquisition of noncontrolling interest in      (32)            (188)
subsidiaries
Repayment of obligations under finance lease  (92,937)        (76,066)
Sale leaseback proceeds                        --            25,473
Net cash (used in) provided by financing       (101,975)       1,715,667
activities
                                                             
Effect of exchange rate changes on cash and    (263,809)       (69,596)
cash equivalents
                                                             
Net (decrease) increase in cash and cash       (61,181)        177,322
equivalents
                                                             
Cash and cash equivalents at beginning of      643,379         340,800
period
Cash and cash equivalents at end of period    $ 582,198       $ 518,122

CONTACT: Mechel OAO
         Vladislav Zlenko
         Director of Investor Relations
         Mechel OAO
         Phone: 7-495-221-88-88
         Fax: 7-495-221-88-00
         vladislav.zlenko@mechel.com

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