Mechel OAO’s Chief Executive Officer Yevgeny Mikhel commented on the company’s 2011 operational results:
“In the mining segment, despite a temporary halting of the Neryungrinskaya washing plant in early 2011 due to the collapse of three thickeners, we managed to increase sales of coking coal concentrate by 9% as compared to 2010. Steam coal sales went down as we implemented a strategy to increase production of PCI coals, with PCI sales going up by 332% to almost 2 million tonnes.
“The planned completion of the 321-kilometer railway to Elga Coal Complex in December 2011 will let us transport Elga coals and increase mining and sales to end customers. A total of some 200,000 tonnes of coal have been mined at the Elga deposit by the end of 2011.
“In the steel division, in 2011 we managed to increase sales of steel products due to our service and sales network Mechel Service Global’s expansion both in terms of quantity and quality. The launch of new branches and fruitful operations of the existing ones allowed us as a whole to increase sales of steel products manufactured by Mechel’s enterprises. Compared to the previous year’s figures, sales of steel flats went up by 44%, sales of steel longs by 12% and hardware — by 17%. The increase in sales was due not only to shipments to our regular partners, but also to the expansion of our client base and sales geography. Planned repairs of blast furnaces at Chelyabinsk Metallurgical Plant brought down our pig iron production somewhat. Steel production meanwhile increased by 1% as compared to the previous year’s figures.
“In the ferroalloys division, production and sales volumes remained stable. Chrome sales in 2011 went up by 8% as the structural content of the Voskhod deposit’s ore improved. An insignificant decrease in ferrosilicon production and sales was due to upgrading at Bratsk Ferroalloys Plant, where furnace # 4 is being replaced. Nickel production remained stable, with the small gap between nickel sales in 2011 and 2010 due to ownership transfer periods.
“As a whole, 2011 operating results can be considered as positive. Despite an unstable economic situation in the second half of last year, we managed to increase sales volumes in our key product lines. The decrease in some products’ sales was largely due to changes in our operational structure as well as the modernization program we are implementing, which will have a positive impact on our results in the future.”