Mechel announces commissioning of new mining machines at Southern Kuzbass

JSC Mechel announces the commissioning of new mining machines at the open pit mines of its coal mining subsidiary, Southern Kuzbass OAO. The commissioning of the new machines will allow Mechel to increase efficiency of coal mining and reduce production costs.

The new machines were put into operation in line with the technical re-equipment program of Southern Kuzbass OAO. Two new hydraulic backhoe type excavators with 11 cubic meter
bucket capacity were put into operation at Krasnogorsk and Sibirginsk open pit mines. The total cost of the machines was approximately RUR178.0 million (about US$7.0 million).

The newly commissioned Liebherr R-994 excavators are designed for more complete and selective coal seam extraction with an open cast method of coal mining at lower levels, for water drainage and road construction. The excavators require only half the number of workers to operate as compared with other models of backhoe type excavators, which is expected to result in increased labor productivity. In addition, the commissioning of the new machines will enable reduced operational losses of coal by 2% to 4%, increased coal output, and reduced risk of environment pollution.

Similar model excavators are successfully used at Mechel’s Korshunov Mining Plant subsidiary.

Mechel plans to commission similar machines at other open pit mines at Southern Kuzbass OAO, Olzherassk and Krasnogorsk in September of this year.

The renewal of equipment at Southern Kuzbass OAO is part of Mechel’s long-term capital expenditure program, which is aimed at increasing coal output to 25 million tonnes by 2010. In
line with Mechel’s plans, investments in developing Southern Kuzbass will amount to approximately US$700.0 million in the period from 2007 to 2011.