In March, Chelyabinsk Metallurgical Plant launched two key equipment units — blast furnace #4 and converter #1. Investment totaled 4.5 billion rubles. These two major projects were part of the ecological measures outlined by the federal Clean Air program.
In April, Bratsk Ferroalloy Plant launched its ore thermal furnace #3 after an upgrade. The furnace’s capacity went up from 25 MVA to 33 MVA. This enabled the plant to increase the facility’s output by 40%.
In May, Moscow Coke and Gas Plant (Moscoke) has sent a shipment to China for the first time in its history. The quality of the test batch proved satisfying to the plant’s clients, and by the year’s end the plant’s exports to China topped 120,000 tonnes.
In June, Izhstal launched production of large round bars in order to increase the share of high-margin products in the overall output. The plant upgraded its mill 450 and increased the diameter of its rolls from 120 to 200 mm to master production of new types of products with high surface quality.
In July, Mechel finished major repairs at its Neryungrinskaya Washing Plant, which cost a total of 1 billion rubles. This enabled the company to boost coal processing and output of high-quality coking coal concentrate to meet its contractual obligations.
In November, Beloretsk Metallurgical Plant began assembling four wire-drawing machines from Italy. They are due to be launched in 1Q2021. The plant acquired the new equipment as part of the upgrade project implemented with the support of Russia’s Industry Development Fund.
In December Mechel became laureate of the Regional Development — Russia’s Best 2020 award. For the award, the company presented it social and ecological initiatives for improving the environment in Chelyabinsk, and won the Social Projects and Stable Development nomination.
Trade Port Posiet fully implemented seven out of nine best available technologies for coal terminals. Those include dust suppression by using water mist, vacuum dust cleaning, dust aspiration in closed spaces and others.
Southern Kuzbass Coal Company consistently demonstrated positive production dynamics throughout the year. In 2020, the company mined 10.4 million tonnes of coal, which is 20% more than in 2019.
In 2020, the Group’s trading company Mechel Service supplied steel rolls for construction of hospitals for combatting coronavirus. A major batch was shipped for construction of a medical center in Kommunarka — Moscow’s chief coronavirus medical facility.
In January, Mechel Service launched its online store selling steel rolls.
Also in January, Trade Port Posiet launched the first stage of its specialized sprinkler system to suppress dust at its storage facilities.
In April, Russia’s Industry and Trade Ministry’s Industrial Development Fund approved a low-interest loan to Mechel Group’s Beloretsk Metallurgical Plant for upgrading its wire and rope production facilities.
In the first half of 2019, Elga Coal Complex launched a powerful electrical excavator EKG-18 with an 18-cubic-meter ladle, dragline ESh 20-90C, produced by special order by Uralmashzavod, as well as a ragging facility with a capacity of 2.4 million tonnes.
In September, Izshtal’s rolling mill 450 mastered production of 200-millimeter round rolls. This will boost the plant’s overall output.
Also in September, Beloretsk Metallurgical Plant began producing high-tensile zinc-coated wire for cable manufacturing. Before, Russian companies acquired this type of product abroad.
In September, Elga Coal Complex was linked to Russia’s united energy grid, which brought down the complex’s energy costs by five times.
In October, Mechel-Coke completed large-scale reconstruction of its by-product recovery plant #1’s benzene facility. The plant now uses the technology of closed cycle for coke gas cool-down without coke-oven effluent’s contact with air.
In November, Chelyabinsk Metallurgical Plant and Urals Stampings Plant won gold medals at the Metal-Expo’2019 exhibition for their joint project — production of rolls from bulk ingots.
In the second half of 2019, Southern Kuzbass Coal Company launched two new longwalls — at V.I. Lenina Underground and Sibirginskaya Underground mines. Industrial reserves at the two new facilities are estimated at over 4 million tonnes of coking coal.
In the second half of 2019, Mechel’s facilities in Kemerovo and Irkutsk Regions received 15 trucks supplied by BELAZ-24 as part of the technical upgrade program.
In 2019, Mechel Group’s Chelyabinsk Region facilities financed planting of over 112,000 tree seedlings. To do so, Mechel joined forces with Southern Urals ecologists to help restore forests depleted by fires.
In March, Izhstal launched a computerized processing line whose equipment ensures high geometric precision and surface quality. This line’s output is among the most high-margin types of long rolls.
In April, Chelyabinsk Metallurgical Plant marked the 75th anniversary of its first steel smelting.
In May, Korshunov Mining Plant produced its 240-millionth tonne of iron ore concentrate. The jubilee tonne was sent to the plant’s chief customer — Chelyabinsk Metallurgical Plant.
In August, Science Research Institute Atmosphere (St. Petersburg) launched an independent ecological audit of Mechel’s Chelyabinsk-based facilities. This voluntary research is part of the cooperation agreement signed by Chelyabinsk regional authorities, Federal Supervisory Natural Resources Management Service (Rosprirodnadzor) and Mechel PAO to ensure safe and socially responsible functioning of Mechel’s facilities.
In September, Mechel took part in a major international transport fair InnoTrans 2018 and showcased its rails and sought-after products for wagonbuilders.
In September, Chelyabinsk Metallurgical Plant became a certified producer of R65-type rails for railroads with traffic speed of up to 250 km/h.
In November, Izhstal mastered production of conductor rails used to feed electricity to underground metro cars. These rails have not been produced in Russia before. The project is essential as import substitution.
In November, Southern Kuzbass Coal Company’s New-Olzherassk Underground mine launched a new longwall with reserves estimated at 3.6 million tonnes.
In December, Urals Stampings Plant began marketing large-size forgings up to 1,000 mm in diameter, made from 50-tonne ingots. These forgings are much in demand by the engineering and machinebuilding industry. In order to produce large-size forgings, the plant upgraded its forge and press shop which enabled the facility to increase the forgings’ maximum weight and size.
In December, Trade Port Posiet completed construction of a covered conveyor gallery. This way, all technological operations involved in railcar unloading are conducted in covered areas.
In December, Beloretsk Metallurgical Plant launched a new facility producing multi-strand wire ropes, including polymer-coated ones. The polymer-coated ropes are due to replace imported counterparts in mining and oil industries, engineering, bridge and ship construction. For the project, the plant won support from Russia’s Industrial Development Fund and the Republic of Bashkortostan’s government.
Mechel prolonged several major coal export contracts — with Japan’s Itochu Corporation and JFE Steel, China’s Jidong Cement and Baosteel Resources.
In 2018, the group’s mining facilities received about 60 mining and transport machines as part of the company’s technical upgrade program.
Mechel successfully finished refinancing its 1-billion-dollar syndicated pre-export loan after nearly two years of talks with the pool of lenders.
In March, the Dzhebariki-Khaya deposit was shifted from underground to open pit mining. The open pit’s project capacity totals 320,000 tonnes, which will enable the company to fully meet the fuel needs of Yakutia’s northern and central regions.
In March, Chelyabinsk Metallurgical Plant’s universal rolling mill was acknowledged the best import substitution project by Russia’s Union of Industrialists and Enterpreneurs.
In April, the Expert Council of Russia’s Industry and Trade Ministry’s Industrial Development Fund approved a loan for Mechel’s Chelyabinsk Metallurgical Plant to implement a project for production of rails, beams and other structural rolls meant for export. The project’s cost totals 1.52 billion rubles, including 300 million rubles to be loaned by the Industrial Development Fund.
In April, Russia’s Federal Sea and River Transport Agency acknowledged Trade Port Posiet Russia’s best stevedore company based on 2016 results.
In June, Urals Stampings Plant mastered production of new types of products for the aviation industry — bars from specialty steels and heat-resistant alloys for aviation engine building.
In June, Mechel was awarded a diploma for its active participation in Russia’s Ecological Awareness Year and major contribution to environment protection. Since its founding, Mechel Group has invested some 16 billion rubles into environment protection measures.
In July, Chelyabinsk Metallurgical Plant has cast its first oversize 50-tonne ingot. The new technology for production of bulk ingots from specialty steels enabled Chelyabinsk Metallurgical Plant to enter the market for oversize products which only a few facilities in the world can produce.
In July, the group’s steel sales network Mechel Service launched its contact center which uses a toll-free federal number to take in client calls.
In August, Chelyabinsk Metallurgical Plant got two of its rail types certified as compliant with the European TSI standard. This certification is a requirement for supplying rails to the European Union.
In December, Mechel signed its biggest long-term contract for steam coal supply with China’s Jidong Cement, one of the world’s top cement producers. According to the memorandum, Mechel will supply its Chinese partners up to three million tonnes of steam coal mined at Southern Yakutia’s deposits.
In December, Izhstal signed a loan agreement with State Specialized Russian Export-Import Bank (Eximbank of Russia) for financing high-technology product manufacturing for export contracts. Eximbank of Russia AO opened a credit line totaling 3.35 billion rubles for 2.5 years.
In December, Mechel has successfully completed talks on restructuring its 1-billion-dollar syndicated pre-export facility in a bid to further improve the company’s financial state. Mechel has obtained the agreement of over 75% of the syndicate’s participants.
Port Mechel Temryuk reached a historically record cargo turnover of 1.5 million tonnes in 2017.
As part of the technical revamping program of Mechel’s mining division, by the end of 2017 the company’s Southern Yakutian facilities were supplied with over 30 mining machines, which will help boost coal mining volumes in 2018.
In January 2016, Urals Stampings Plant produced a batch of stainless steel forgings for the icebreaker flagship in the 22220 project. The Arctica will be the world’s largest and most powerful icebreaker.
In February 2016, Mechel started supplies of 100-meter R65 DT-350-type rails to Russian Railways.
In March 2016, Mechel prolonged the cooperation agreement with China’s major steel holding Baosteel Resources. Mechel will supply its Chinese partner with up to 1 million tonnes of premium-grade coking coal.
In April 2016, Elga Coal Complex’s washing plant produced its one-millionth tonne of coking coal concentrate since the plant’s launch.
In May 2016, the Industry Development Fund of Russia’s industry and trade ministry approved a loan for Beloretsk Metallurgical Plant to finance implementation of a project for producing multi-strand steel ropes to substitute imported ones.
In June 2016, Mechel closed the deal on selling to Gazprombank AO the 49% share in the Elga coking coal deposit development project. According to the agreement, Mechel sold to Gazprombank 49% of shares in Elgaugol OOO, the project operator company and owner of its subsoil license, 49% of shares in Elga-Doroga OOO which owns the Ulak-Elga railroad, and 49% of shares in Mecheltrans Vostok OOO which is the railroad’s transport operator.
By July 2016, 90 kilometers of rails produced by Chelyabinsk Metallurgical Plant were laid as part of Moscow’s central railroad ring (the second ring road of Moscow’s metro). Those 90 kilometers constitute half of the new transport railroad’s full length. The central ring is a major infrastructure project for the Russian capital.
In August 2016, Port Mechel Temryuk’s cargo turnover reached 195,000 tonnes. This is the best monthly result in the port’s history.
In September 2016, Chelyabinsk Metallurgical Plant’s beams were certified according to European standards. This enables the plant to mark its beams with the CE brand and sell it in Europe.
In September 2016, Southern Kuzbass Coal Company launched a new wall face at Sibirginskaya Mine. Investment into the launch totaled some 350 million rubles.
In December 2016, Mechel signed a memorandum for supply of the Elga deposit’s coal with China’s Jidong Cement, one of the world’s top five cement producers. According to the memorandum, Mechel will supply Jidong Cement from two to three million tonnes of steam coal.
In December 2016, Mechel signed agreements with VTB Bank for extending the maturity of the debt on its credit lines until 2022. ”Signing of the agreements with VTB Bank means that similar conditions on debt repayment that we made with Gazprombank and Sberbank will now come into force. So we can say that the extensive restructuring process with Russian state banks, which hold 67% of Mechel’s debt, is complete. This restructuring will enable the company to stabilize its financial position and focus on operational efficiency,” Mechel PAO’s Chief Executive Officer Oleg Korzhov noted.
In 2016, Beloretsk Metallurgical Plant mastered production of 12 new types of steel products, including wire, ropes and ribbons for various industries.
In 2016, Izhstal mastered production of over 20 new types of products and 22 type sizes of long rolls from new steel grades.
In January 2015, Mechel signed a memorandum of understanding with China’s steelmaking major Baosteel Resources corporation, which provides for an increase of coal supplies to 1.4 million tonnes of coking coal a year.
In February 2015, Mechel closed a deal on the disposal of Mechel Bluestone, Inc. (Delaware, USA), including its mining operations, to a company owned by the Justice family.
In February 2015, Urals Stampings Plant began designing engine parts for warships produced by NPO Saturn OAO. These new designs will be used in high-power gas turbine warship engines.
In February 2015, Chelyabinsk Metallurgical Plant won the status of a potential rail supplier to Germany’s railway operator Deutsche Bahn AG, following a production audit.
In February 2015, Chelyabinsk Metallurgical Plant mastered production of hot-rolled products from a heat-resistant alloy for the needs of defense industry, aerospace, mechanical engineering and chemical industries.
In March 2015, Mechel have received a nominee’s diploma for human resources development in the national “Russian Business Leaders: Dynamics and Responsibility 2014” contest.
In April 2015, Mecheltrans-East OOO and Sinara Transport Machines OAO (STM) signed a four-year contract on locomotive maintenance works.
In June 2015, Mechel signed a memorandum with China's Jidong Cement, one of the world's top ten cement producers. According to the memorandum, Mechel is due to supply 1 million tonnes of steam coal to Jidong Cement within the following year.
In June 2015, Mechel supplied rebar, structural shapes and hardware rolls for construction of Power of Siberia and Altai gas pipelines. Most of these products were manufactured at Chelyabinsk Metallurgical Plant.
In June 2015, Mechel obtained a certificate of compliance with the requirements of the Customs Union’s Technical Regulations for its rails of up to 100 meters in length. This certificate will enable the company to begin supplying Russian Railways OAO with Chelyabinsk Metallurgical Plant (CMP)’s products. “Obtaining the compliance certificate for our rails is an event of strategic importance for Mechel. Our success at these tests enables us to begin cooperation with Russian Railways and ensures a high load for CMP’s universal rolling mill,” Mechel’s Chief Executive Officer Oleg Korzhov noted.
In September 2015, Mechel signed a three-year agreement for coal supplies with Japan’s JFE Steel corporation, a major Asian steel mill. According to the agreement, Mechel will annually supply JFE Steel up to 1 million tonnes of metallurgical coals.
In December 2015, Trade Port Posiet began the transshipment of export coal products from third party companies. It will enable the port to additionally load the specialized transshipment coal complex which was launched into preliminary operation the year before.
In 2015, Beloretsk Metallurgical Plant has developed and mastered six new kinds of wire for various industries. By its technical characteristics, performance and surface quality Beloretsk wire is equal to foreign analogues.
In 2015, Beloretsk Metallurgical Plant has developed and mastered 16 new kinds of ropes for different industries. Developments are mainly aimed on import substitution and increasing production margins.
In February 2014, first tests of new coal export terminal at Primorye Region’s Trade Port Posiet were carried out. Modernization of the port’s facilities will enable the company to significantly increase export to the Asia-Pacific countries. The first stage of Port Posiet’s technical revamping provisions for a cargo turnover growth to up to 7 million tonnes a year.
In March 2014, project company Elgaugol OOO and State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” signed agreements for the second and third credit lines of project financing for developing Elga Coal Complex’s first phase, for 2.085 billion US dollars and 418.7 million US dollars.
In June 2014, shipments of the Group’s products were consolidated within its subsidiary Mecheltrans. Mecheltrans will oversee rail shipments of all of the Group’s products (including by open cars, covered wagons, containers, tank cars, flat wagons, hopper wagons, specialized vehicle stock) with further transshipment in ports and delivery to end customers by internal river routes in Russia and Europe, by sea and by truck.
In July 2014, due to several ferroalloy assets sales the Board of Directors decided to reorganize the Group’s administrative structure by eliminating the ferroalloy division. Mechel-Ferroalloys Management Company OOO, the division’s management company, was liquidated.
In July 2014, Mechel obtained SGS (the leading inspection, verification, testing and certification company) certificate for Elga Deposit’s coking coal. Independent lab testing showed that samples of coking coal from the Elga deposit are up to Russian and international standard.
In August 2014, a millionth tonne of coal was mined since operations began at the Elginsky open pit. ”Production of the millionth tonne is a milestone event for us, which proves that the Elga project has a real and tangible future. I congratulate Elga’s 1,500 employees and wish them more success,” Mechel OAO’s Chief Executive Officer Oleg Korzhov commented.
In August 2014, a batch of rails of type R65, produced at Chelyabinsk Metallurgical Plant for certification, successfully passed lab tests in Russian Railway Research Institute OAO. The rails passed lab tests on all counts and is fully compliant with Russian Railways OAO’s requirements. For the next stage of testing after lab tests, the rails were laid onto the experimental railroad ring that is used to test rails in real-life conditions over 6-7 months.
In November 2014, Elga Coal Complex’s seasonal washing plant was brought into an all-year mode. Starting in November 2014, the plant has reached an annual capacity of 2.7 million tonnes of run-of-mine coal (2.3 million tonnes of end product).
In December 2014, Trade Port Posiet’s annual cargo volume reached 5 million tonnes of coal products. This is the best result in the port’s history. The shipment including the 5-millionth tonne of coal was expedited to China.
In January 2013, Mechel acquired controlling stake in Vanino Sea Trade Port OAO. In line with the financial conditions for the deal, Mechel sold a part of the port’s common shares to Russian and foreign investors within the year, retaining a minor share package for itself. The consortium of investors is not interested in transhipping their products through Port Vanino, which will enable Mechel to use the port’s entire capacity in the company’s interests. Access to Port Vanino’s transhipment capacities significantly enhances Mechel’s export potential in the Asia-Pacific region.
In February 2013, Mechel signed a series of agreements for the disposal of its Romanian steel assets – Ductil Steel Mechel, Campia Turzii S.A., Mechel Targoviste S.A., Mechel East Europe Metallurgical Division SRL, Laminorul S.A – to a privately held Romanian group.
In April 2013, Mechel signed a memorandum of understanding with Baosteel Resources Int. Co. Ltd. The memorandum stipulates that Mechel OAO, through its subsidiary Mechel Carbon Singapore, will supply Baosteel Resources with up to 960,000 tonnes of coking coal annually.
In April 2013, Mechel launched constant operation at the Uvatsk quartzite deposit and delivery of the first batch of raw materials from the deposit to Bratsk Ferroalloy Plant.
In April 2013, Mechel signed an agreement with VTB Bank for a 40-billion-ruble (approximately 1.3-billion-dollar) loan.
In April 2013, Mechel signed several loan agreements with Gazprombank totaling 1 billion US dollars.
In April 2013, Mechel signed a three-year contract with South Korea's POSCO corporation for supply of coking coal. The agreement stipulates that Mechel Carbon (Singapore) will supply POSCO with 500,000 tonnes of coking coal per year.
In May 2013, successful hot testing was held at the complex of Chelyabinsk Metallurgical Plant’s universal rolling mill.
In June 2013, Mechel signed a coking coal supply agreement with China’s Shasteel Group. According to the agreement, Mechel Carbon (Singapore), trading subsidiary of Mechel OAO’s mining segment, will directly supply Shasteel Group with 40,000 to 80,000 tonnes of coking coal a month from Russian Far East ports.
In July 2013, Mechel fulfilled the order for a new class of steel for helicopter-making for the Russian Helicopters holding. The new class of steel is produced at Chelyabinsk Metallurgical Plant.
In July 2013, Mechel launched the universal rolling mill at Chelyabinsk Metallurgical Plant. The universal rolling mill is Russia’s first complex producer of high-quality structural shapes and rails 12.5 to 100 meters long. The mill’s complex includes all necessary technological equipment and uses state-of-the-art rolling, correction, processing and quality control technologies. The mill’s capacity is up to 1.1 million tonnes of finished product a year. Investment in the project totaled some 715 million US dollars.
In July 2013, within the strategy of divesting assets that are not part of the Group’s priority development areas, Mechel sold 100% of the shares of Toplofikatsia Rousse EAD (TPP Rousse, Bulgaria), 100% of shares of British-based steel plant Invicta Merchant Bar.
In August 2013, Mechel signed an agreement for disposal of several ferroalloys assets to Turkey’s Yildirim Groupan namely Voskhod Mining Plant (Khromtau, Kazakhstan) and Tikhvin Ferroalloy Plant (Tikhvin, Leningrad Region, Russia). The deal was closed in December 2013.
In September 2013, Vnesheconombank Supervisory Board approved financing the development of Elga Coal Complex for a total amount of 2,5 billion US dollars. The funds are to be used to complete the first phase of the Elga deposit’s development project, which includes construction of a railroad and a mining and washing complex with an annual capacity of 11.7 million tonnes of run-of-mine coal by 2017. The project’s implementation will create over 5,000 new jobs.
In September 2013, Mechel completed the construction project for a grinding-mixing complex to produce cement in Chelyabinsk Metallurgical Plant’s industrial zone. Its annual capacity is 1.6 million tonnes. Investment in the project totaled 174.4 million US dollars.
In December 2013, the Board of directors approved the appointment of Oleg Korzhov as Mechel OAO's Chief Executive Officer. Previously, Oleg Korzhov was Mechel OAO's Senior Vice President for Economics and Management.
Mechel consolidates more than 20 production enterprises.
In February 2012, Tikhvin Ferroalloy Plant launched a chrome briquette producing workshop. The launch of the workshop producing chrome briquettes out of concentrate of small-fraction chrome ore will increase the furnaces’ capacity from 12 to 14.4 MW, significantly broaden the plant’s ore base and fully use the dust formed during the gas purification process, helping ensure ecological safety.
In March 2012, Yakutugol Holding Company OAO received subsoil licenses for researching, investigating and extracting iron ore in the Sutamsky area and in the Sivaglinsky deposit, both located in the Republic of Sakha (Yakutia)’s Neryungri region. The Sutamsky iron ore area is about 3,300 square kilometers and consists of several promising iron ore deposits. The license area is over 740 square kilometers. Its estimated reserves under Russian standards are 1.35 billion tonnes. Sutamsky ores’ Fe content averages 32-40%. The Sutamsky area is located 210 kilometers south-east of Neryungri. The Sivaglinsky deposit is 90 kilometers north of Neryungri and is part of the Southern Aldan iron ore region. Its reserves under Russian standards are about 26.4 million tonnes. Its Fe content averages about 53%. The Sivaglinsky deposit’s ores also have a high yield, and most of them can be used in steelmaking without undergoing beneficiation, while the other can be processed using standard technology.
In March 2012, a ferroalloy electric furnace was installed and the first smelting of ferrosilicon conducted as part of modernization of Bratsk Ferroalloy Plant. This is the first of four ferroalloy electric furnaces with the capacity of 33 MVA each due to replace the existing furnaces with the capacity of 25 MVA, and to supervise installation and commissioning works. After the new furnaces are commissioned, Bratsk Ferroalloy Plant’s production capacity will increase by 30% and its power consumption will be reduced by 10-13%.
In May 2012, the Group’s management announced the company’s revised strategy focusing on development of its core businesses — consolidating its leading positions in production of metallurgical coals, consolidation of the company’s position on the construction steel product market and increasing Mechel’s share in the markets of high value-added products.
In September 2012, during the Business Summit of the Asia Pacific Economic Cooperation (APEC) Mechel signed a long-term partnership agreement with South Korea’s STX Group, to cooperate in the long term on promoting products manufactured by Mechel enterprises and STX Group, and implementing possible joint projects. Those include cooperation in coal shipments, joint participation in development of ports and port terminals in Russia’s Far East, as well as cooperation in sea transit issues.
At the same APEC Summit a cooperation agreement for supplying Elga Coal Complex’s coal was signed between Mechel Mining OAO and OJSC “RAO Energy Systems of East”. According the agreement, once probes of Elga’s coals are delivered to OJSC “RAO Energy Systems of East” subsidiary JSC “DTE” and in case test burning yields positive results, Mechel Mining may gradually increase supplies of the Elga deposit’s coals up to a total of 60 million tonnes over 15 years.
In October 2012, Mechel commissioned a seasonal washing plant at the Elga deposit, launched the full processing cycle and produced the first batch of coking coal concentrate. The newly built washing plant fully complies with best international standards. The plant’s annual processing capacity is up to 3 million tonnes.
In October 2012, Mechel’s subsidiary Mechel Mining OAO won the Minex-2012 Mining Excellence Award’s Investor of the Year nomination for implementing the project on development of the Elga coal deposit. The award committee’s independent experts evaluated the amount of work done over the past year and in an open poll and acknowledged Mechel’s contribution in developing Russia’s mining industry as the most significant.
In December 2012, Mechel reported signing an agreement for the disposal of 100% of Toplofikatsia Rousse EAD to Toplofikatsia Pleven, a privately-held Bulgarian power company. The disposal is valued at approximately 27.7 million euro based on the asset’s equity value. The disposal of TPP Rousse is fully aligned with Mechel OAO’s revised strategy. The transaction was made in accordance with the program for restructuring the Group’s assets as earlier approved by Mechel OAO’s Board of Directors.
In March 2011, Mechel finished reconstruction and successfully launched the coke battery #6 at Mechel-Coke OAO. This enabled the company to step up production of coke and chemical products and ensure production demands are met as well as provide an independent supply for Mechel’s Chelyabinsk Metallurgical Plant OAO and Southern Urals Nickel Plant OAO.
In order to cut costs, optimize financial expenditure and raise the efficiency of Mechel’s procurement processes, in May the company announced launching B2B-Mechel, an electronic trading system. Launching this system enabled the company to make efficient use of the potential of a well-developed Internet market with in unlimited range of products, works and services.
In June, Mechel launched a modernized steelmaking complex at its Romanian-based subsidiary Ductil Steel Otelu Rosu, including a new electric arc furnace with the COSS system, an upgraded continuous billets caster, and a modern scrap metal preparation section.
In June 2011, Mechel and South Korea’s POSCO signed two agreements – the Framework Project Agreement and the Agreement on Construction of a Permanent Worker Settlement for Elga Coal Complex. The settlement for shift personnel will provide space for 3,000 residents and include a public center and five residential areas. It is a key point for the large-scale development of the Elga deposit.
In June, Mechel won the auction for the subsoil license for Pionerskoye iron ore deposit, located in the Neryungri Region in the Republic of Sakha (Yakutia). Prospective additional reserves are estimated at 750 million tonnes of ore. The deposit also has dolomite reserves, which can be used to produce refractories.
As part of developing Elga Coal Complex, in summer 2011 a three-party contract was signed between Mecheltrans Vostok OOO, Sinara-Transport Machines OAO, and VTB Leasing OAO for development, production and delivery of TEM-8 type locomotives. The locomotives we are leasing will be used on the 315-kilometer Ulak-Elga rail branch, which links Mechel Group’s Elga Coal Complex with the Baikal-Amur Mainline.
A new converter # 2 in Chelyabinsk Metallurgical Plant’s oxygen-converter shop was launched, which was the first stage in the complex reconstruction program for Chelyabinsk Metallurgical Plant’s oxygen converter shop. Once the program is completed, the shop’s steel annual output will go up by 950,000 tonnes to a total of 4,550,000 tonnes.
In July, Yakutugol Holding Company OAO’s Nerungrinskaya washing plant processed 783,000 tonnes of coking coal and produced 536,000 tonnes of concentrate and 197,000 tonnes of middlings. This is the highest monthly result the plant achieved in its 26-year history.
In August, Trade Port Posiet reached record transshipment results in its history. The record was achieved due to improvements in the port’s technical support made within the framework of the large-scale modernization program which includes technical re-equipment and expansion of the port’s infrastructure, aimed at increasing the port’s annual coal transshipment capacity to 9 million tonnes.
In September, as part of implementing plans to expand into new markets, the company announced the creation of Mechel Somani Carbon Private Limited, India, set up jointly with India’s Somani Group. The joint venture will handle distribution of metallurgical coals on the Indian market. The project’s distribution area will be located on India’s east coast, 20 kilometers from India’s major port of Vizag, in an industrially developed region. Creation of this joint venture led to a significant increase in the number of metallurgical coal customers in India.
As part of reconstructing its smelting production, in October 2011 the company launched an experimental industrial complex to produce ferronickel including a 12 MW electric furnace at Southern Urals Nickel Plant. The program is aimed at increasing production efficiency, lowering production costs and dramatically reducing the volume of waste released into the atmosphere. Once the complex is launched, the plant will use a new technology for producing ferronickel by smelting in electric furnaces, which has no analogies in the world.
As part of the long-term environment protection program Mechel is implementing at Chelyabinsk Metallurgical Plant, a biochemical cleaning facility to treat phenolic waste water was launched at Mechel-Coke in October 2011. The new facility employs the method of neutralizing waste water by applying special complexes of phenol-destroying microorganisms, which break waste into water and carbon dioxide. This technology allows the company to thoroughly cleanse its emissions of phenols, thiocyanates and ammonium nitrogen and ensures higher neutralization efficiency.
On November 28, 2011 Mechel signed a long-term partnership agreement with BelAZ OAO during the session of the Supreme State Council of the Union State of Russia and Belarus held on the level of heads of state. The long-term partnership agreement provides for supplies of BelAZ-produced mining dump trucks to Mechel’s enterprises, supplies of spare parts for those trucks, setting up production of cargo platforms for BelAZ mining dump trucks at Mechel’s plants, and certification of a Mechel subsidiary as one of BelAZ’s service centers in the Russian Federation.
According to the results of a contest held by the information and publishing service Metallosnabzhenie I Sbyt supported by the Russian Union of Steel Product Suppliers and the International Industrial Exhibition Metal-Expo’2011, the Mechel Service service and sales network was acknowledged a winner in the nomination for the Best Federal Sales Network.
In December 2011, based upon the Cbonds news agency’s analysis, Mechel won the top place in the Best Primary Placement for Domestic Bonds nomination for the placement of the 17-19 series debentures with a maturity of 10 years and a put option in five years. This is proof of the high level of trust that investors have for the company’s financial policy.
In December, Mechel reported the launch of the blooming concaster #5 at Chelyabinsk Metallurgical Plant’s oxygen converter shop. The blooming concaster #5 with an annual capacity of one million tonnes is due to supply the universal rolling mill with top-quality continuously-cast billets. The estimated funding for the complex, including the blooming concaster #5, the ladle furnace # 4 and the vacuum degasser, totals some 189 million dollars.
In December, Mechel also announces the launch of the reconstructed coke-oven battery #5 at Mechel Mining OAO’s subsidiary Mechel-Coke OOO. The battery’s annual capacity is 470,000 tonnes of coke. Once the battery reaches full load, Mechel-Coke will produce over 3.1 million tonnes of coke a year, boosting production by 17%. Reconstruction of coke-oven battery #5’s facilities cost a total of 1.8 billion rubles (some 56.2 million US dollars).
In December, Mechel completed the transaction for the acquisition of 100% of the shares of Donetsk Electrometallurgical Plant (DEMZ AO, Ukraine) with annual capacity of 1 million tonnes of steel. The acquisition is valued at $537 million, with payment to be made in installments over 7 years. 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 segment 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.
In December, the company finished laying tracks along the entire route of the railway link from Ulak station to the Elga coal deposit. Construction involved laying 321 kilometers of tracks. The railway’s completion is one of the most complicated and important stages in implementing the unique project of developing the Elga coal deposit, which is one of the world’s largest coking coal fields.
In 2011, Mechel produced over 27.6 million tonnes of coal, over 6.1 million tonnes of steel and sold over 12.5 million tonnes of coking coal concentrate, over 4.3 million tonnes of PCI and anthracites, over 6.4 million tonnes of steam coal, over 4.4 million tonnes of iron ore concentrate, over 4.5 million tonnes of long and flat rolls, some 1 million tonnes of hardware and melded wire mesh, 16,300 tonnes of nickel, 84,000 tonnes of ferrosilicon, 58,000 tonnes of chrome, some 4 billion KW/h of electricity and over 7 billion Gcal of heat.
Mechel consolidates 30 production enterprises.
In April, Mechel acquired Laminorul Braila steel plant, located in south-eastern Romania. The plant manufactures structural shapes of different types: beams, channel bars, equal and unequal angles for industrial, civil and machinery construction. This is the only plant in Romania manufacturing special profile (bulb bar) which is used in shipbuilding.
In July, Mechel acquired Turkish steel trading group Ramateks. The main activity of Ramateks Group is distribution of construction and stainless steel long products as well as other types of steel products. Ramateks storage capacities are located in Istanbul and Konya. The company also has equipment for steel product cutting. The group joined Mechel’s international trade subsidiary Mechel Service Global B.V.
In July, Russian Prime Minister Vladimir Putin launched a fine and stainless steel production complex in the arc-furnace melting shop #6 of Chelyabinsk Metallurgical Plant. Commissioning of the new complex resulted in improvement of casted steel quality, boost in annual output of slabs from 600 thousand tonnes to 1.2 million tonnes, significant product range expansion and decrease in consumption of raw materials and power. The new equipment not only ensured better quality of products but also enabled the plant to increase output of plates and coils of corrosion-resistant steel grades, competing in quality with the products of the leading European producers, after reconstruction of the plant’s rolling facilities. Such products are not manufactured in Russia, so the complex’s launch allowed Russia to significantly cut down on imports and even exclude them in some cases.
In September, Russian Prime Minister Vladimir Putin commissioned a new electric steelmaking complex at Izhstal OAO. Commissioning of the new facility will mark complete transition of Izhstal OAO to electric furnace steelmaking. This is one of the key stages for the plant’s large-scale technical upgrade program, which provides for renovation of steelmaking complex and modernization of steel rolling facilities of Izhstal OAO. Technical modernization of the plant will result in more effective production, reduced costs, compliance with global quality standards and will allow us to satisfy the demand for specialty steel grades by the automobile, aircraft, aerospace and construction industries. It would also eventually mean more taxes paid to the budgets of all levels, new jobs creation, compliance with the latest safety requirements, and significant reduction of air emissions in the city of Izhevsk.
In September, Mechel OAO signed a loan agreement to finance the universal rolling mill installation project at its Chelyabinsk Metallurgical Plant.
In November, Mechel has increased its stake in the charter capital of the Toplofikatsia Rousse AD power station up to 100%, from the previously owned stake of 49%. Consolidation of 100% stake in Toplofikatsia Rousse AD was implemented in line with Mechel’s power segment development strategy. It provided new opportunities for realization of electric power in the promising European market and strengthened Mechel’s position in power industry.
In December, Yakutugol OAO passed the mining and transport part of the project documentation that is one of the key components of the construction project for the Elga Coal Complex’s first line.
In December, Mechel’s subsidiary, Mechel Materials OOO launched construction of a complex for Portland blast-furnace slag cement production with 1.6 million tonnes capacity on the premises of Chelyabinsk Metallurgical Plant. The commissioning of a grinding-mixing complex is planned for the 2nd quarter of 2012.
In December, the US-based Mechel-Bluestone launched its newest coal processing plant for washing coal mined at the Keystone Operations near Keystone, West Virginia. The K2 plant, worth 12 million dollars in investments, can process annually up to 3 million tonnes of run-of-mine coal. The launch will allow Mechel Bluestone to double its production of low-volatile coking coal.
In December, Mechel launched a new production line for steel electrode copper-coated wire on December 18 at its Beloretsk Metallurgical Plant subsidiary. The commissioning ceremony was attended by Plenipotentiary Presidential Representative in the Volga Federal District Grigory Rapota, President of the Republic of Bashkortostan Rustem Khamitov and Mechel OAO’s Chairman of the Board of Directors Igor Zyuzin.
According to 2010’s results as surveyed by the Prommetiz association, Mechel was acknowledged leader of Russian hardware market. In 2010, Mechel’s hardware enterprises jointly produced more hardware than any other Russian member companies of Prommetiz association.
Mechel comprised about 30 enterprises.
In 2010, Mechel produced 11.5 million tonnes of coking coal concentrate, some 2 million tonnes of other metallurgical coals (anthracites and PCI), over 8 million tonnes of steam coal, over 4.2 million tonnes of iron ore concentrate, over 3.8 million tonnes of coke, over 6 million tonnes of steel, 868,000 tonnes of hardware, 17,000 tonnes of nickel, 90,000 tonnes of ferrosilicon, 82,000 tonnes of ferrochrome, and over 4,019 billion kWh of electric power.
Production plummeted to its worst in the first quarter of 2009. Compared to the same period in 2008, production of coking coal went down by over 75% and of iron ore concentrate by 25%.
Throughout 2009, the situation was steadily improving. In 2009’s third quarter coking coal production more than doubled compared to the second quarter.
Despite hardships, all Mechel enterprises continued working. In February 2009, demand for some of the company’s products grew, which enabled Mechel to increase the plants’ load. For example, steel plants were loaded 70-80%. Despite the crisis, Mechel signed several long-term contracts, such as the five-year agreement to supply South Korea’s Hyundai Steel with coking coal, signed in March.
It is necessary to note that Mechel’s steel plants were in a markedly better position than their counterparts, due to a common well-balanced production chain from raw material production to high value-added products. The most significant issues were being resolved centrally through Mechel’s structure.
However, the company halted most of its investment programs due to the crisis. Those programs were resumed once the market stabilized and in the order of importance for the company’s business.
Despite the crisis, Mechel continued to implement its top priority projects. Chelyabinsk Metallurgical Plant was preparing for the construction of the universal rolling mill. Construction of the spur-track to the Elga deposit continued, as well as reconstruction of Izhstal’s steel-producing facilities which began a year earlier.
Mechel’s own service and sales network proved a major asset during the crisis. A diverse grid of big and small trade departments and subsidiaries, highly professional staff and an extensive client base enabled the company to sell its products even during crisis.
In February 2009, Mechel continued construction of the spur-track to the Elga coalfield. By then, 59 kilometers of the railroad had been repaired. Bridges were built and drainpipes laid along the railroad’s full length, with 24 bridges nearly complete and over 100 drainpipes laid down. A total of over 1,000 road constructors and other machines were involved in the process.
In April, despite the crisis, Chelyabinsk Metallurgical Plant launched the blast furnace #4. The furnace was halted in November 2008 due to revision of production plans and the plant’s production cuts. The furnace’s idling was used to undertake major repairs. The furnace’s reconstruction and other repairs enabled the plant to efficiently meet growing demand for steel and ensure future production volumes in accordance with market needs.
In April, Beloretsk Metallurgical Plant launched a new product – steel ropes manufactured from plastically drafted strands. The lifetime of steel ropes with plastically drafted strands is 1.5 times longer as compared to conventional ropes. Such ropes are used in open mine excavators, in mine hoists, tower and hoisting cranes, in oil production, etc.
Also in April, Mechel signed a definitive agreement to acquire 100% shares and interests of U.S. entities Bluestone Industries, Inc. With four mining complexes comprising eight active open pit and five underground mines Bluestone’s coking coal holdings in West Virginia include up to an estimated 725 million tonnes of reserves and resources. The vast majority is premium quality, low volatility hard coking coal suitable for sale to steel producers. With more than 30 customers, Bluestone’s customer base is well-diversified and includes the world’s top coke and steel producers. Bluestone’s assets enabled Mechel to diversify and strengthen its production capacities and expand its geography.
In May 2009, Mechel’s subsidiary Mechel Service OOO launched its own welded mesh production. VR-1 grade wire and cold deformed rebars of 2.8 mm -8.0 mm diameter produced at Mechel OAO’s subsidiaries would be used as feedstock. Construction companies of Moscow and Moscow Region would be the main off-takers of the welded meshes.
Mechel became Russia’s first steel company to resume coke production during the crisis. Periods of forced idling were used for major and routine repairs. In June, Chelyabinsk Metallurgical Plant’s subsidiary Mechel-Coke launched the coke-oven battery #4 which was halted in January 2008 for repairs and then was put on hot standby mode. Also in June, Moscow Coke and Gas Plant commissioned a block of coke-oven batteries..
In December, Prommetiz, a Russian association of hardware producers, released a survey on hardware market development in Russia revealing that in October and November 2009 the two plants of Mechel’s steel segment – Beloretsk Metallurgical Plant ОАО (BMK OAO) and Vyartsilya Metal Products Plant ZAO (VMZ ZAO) jointly produced more hardware than any other Russian member companies of Prommetiz association. Thus, in Q4 2009 Mechel gained the first position in Russia by hardware production volume. On the whole, 2009 became for Mechel the year to restore production to pre-crisis volumes.
Mechel comprised 24 enterprises and 3 trade ports.
In 2009, Mechel produced some 17.8 million tonnes of coal, over 4.2 million tonnes of iron ore concentrate, over 3.2 million tonnes of coke, some 5.5 million tonnes of steel, 627,000 tonnes of hardware, 16,000 tonnes of nickel, 86,000 tonnes of ferrosilicon, 83,000 tonnes of ferrochrome, some 3.5 billion kWh of electric power.
In February 2008, Mechel began constructing a spur-track linking the Baikal-Amur Mainline’s Ulak station with the Elga deposit. Construction is launched as part of developing the promising Elga coal field and implementing the mining segment’s development program. The group planned to launch development of the Elga deposit simultaneously with the rail-link’s construction.
Also in February, Mechel and RZhD OAO (Russia’s Railroad state agency) signed a contract on long-term partnership and supply of Russia’s railroads with rolled products manufactured by Mechel. To honor the agreement, Mechel launched construction of a state-of-the-art universal rolling mill on Chelyabinsk Metallurgical Plant, with the capacity of over 1 million tonnes a year. The new mill will produce high-quality railroad rails up to 100 meters in length and will make Russia one of the few countries that produce high-quality long rails for high-speed and high-loaded railroads.
In April, Mechel announced its acquisition of two Romanian steel plants, Ductil Steel Buzau and Otelu Rosu, the company’s third and fourth steel assets in Romania. Otelu Rosu produces steel and billets, while Ductil Steel Buzau manufactures rolled products and hardware from carbon and low-alloy steel. This acquisition enabled Mechel to continue development of its steel business in Eastern Europe.
In May, Oriel Resources Ltd. joined Mechel, along with its components — Tikhvin Ferroalloy Plant in the Leningrad Region, the Shevchenko nickel deposit and the Voskhod chrome ore deposit.
Mechel announced signing a contract for construction of a new melting complex at Southern Urals Nickel Plant. The contract, which is signed in accordance with the plant’s investment program, provides for a fundamental re-equipment of the plant and includes the design and supply of a 12 MW DC furnace. The 12 MW plant was designed to include the latest proven technology in the field of ferro-smelting and environmental protection. The technology has been designed by employing a holistic process approach to achieve low operating costs and high recoveries along with high levels of reliability.
Also in May, Mechel changed changed its American Depositary Receipts (ADRs) to its ordinary share ratio from 1:3 to 1:1. From the date Mechel’s ADRs were listed on the New York Stock Exchange, the price of each ADR increased from US$21 to a record high of US$171 in 2008. Following standard market practice, the company decided to increase liquidity of Mechel’s securities and give investors the opportunity to operate in a more customary price range while managing their investment strategies.
In May, Mechel commissioned a new modern ring rolling mill at Urals Stampings Plant. The new machine enabled Urals Stampings Plant to produce rings with an outer diameter of 400-4200 mm and a height of 60-1000 mm. There is high demand for these products from many promising industries, including oil and gas, aircraft, and mechanical engineering.
Also in May 2008, Mechel’s subsidiary Bratsk Ferroalloy Plant won the tender to acquire the rights to utilize the subsoil plot on the Uvatsk deposit of quartzite and quartz sandstones. The deposit is located in the Nizhneudinsk District of the Irkutsk Region, approximately 30 kilometers from the town of Nizhneudinsk, in the interfluvial area between the Kamenka and Uvat rivers. The explored reserves of quartzite in the Uvatsk deposit amount to about 7 million tonnes, with previous estimates indicating the potential for about 120 million tonnes. Quartzite ore is used to produce ferrosilicon, required in manufacturing metal products.
In June and July, two of Mechel’s Romanian assets — Mechel Targoviste and Mechel Campia Turzii — launched new construction reinforcement production lines. The project was consistent with the program of Mechel’s service and sales subsidiary, Mechel Service OOO, aimed at entering the market of custom-made construction reinforcement for Romanian customers.
In July 2008, Mechel’s Chelyabinsk Metallurgical Plant (CMP) subsidiary signed a contract with and Danieli, to supply technology and equipment to construct a rail and structural steel mill at CMP.
In August, Mechel announced the reconstruction of steel production lines and modernization of rolling mills at Izhstal OAO. The company’s chief goal was to maintain its leading position as producer of high-quality and grade steel. The reconstruction included closure of the outdated blast furnace production and the plant’s transfer to electric furnaces. Reconstruction was launched without halting production.
Also in August, Bratsk Ferroalloy Plant completed reconstruction of the last of four systems for gas cleaning. Upgrading from electrical filters to bag collectors was a significant step in the reconstruction and enabled the system to deplete impurities from outgoing furnace top gases by 99.6%.
One of Mechel’s top strategic priorities is to set up a stable resource base for its enterprises. Mechel’s steel production is sourced internally with its own coke made of coking coal mined at the company’s mines and open pits. In September, Chelyabinsk Metallurgical Plant completed major repairs of its coking battery #4. Repairs increased the battery’s capacity by 41 thousand tonnes per year, improved production quality and decreased the environmental impact. Due to this synergy, Mechel can cut production costs, increase its production’s financial and operational stability, and better control its products’ quality.
Also in September, Russia’s President Dmitry Medvedev and Kazakhstan’s President Nursultan Nazarbayev officially opened Mechel’s mining and processing plant at the Voskhod chore ore deposit in the Aktyubinsk Region, Kazakhstan. Part the chrome ore concentrate produced by the plant would be consumed by Mechel’s Tikhvin Ferroalloys Smelting Plant. The remaining volume would be marketed in Russia and internationally.
Also in September, Mechel’s service and trade subsidiary Mechel Service acquired a 100% stake in German-based HBL Holding GmbH which comprised 14 service and trading companies in Germany.
In October, Mechel announced signing a contract with Minmetals, one of China’s largest state-owned industrial corporations, to construct the rail and structural steel mill at its Chelyabinsk Metallurgical Plant OAO subsidiary on a turn-key basis with a tied loan being granted. Minmetals agreed to perform construction of the workshop, installation of the mill’s equipment and commissioning of technologies to be provided by Danieli.
In November, Chelyabinsk Metallurgical Plant and RZhD signed a contract to supply rail products to RZhD OAO from 2010 to 2030.
Despite the looming global economic crisis, Mechel’s enterprises showed stable production results over the first three quarters of 2008. However, with industries such as engineering, automobile and construction cutting down production due to financial crisis, paying demand fell, followed by steel industry’s production volumes. The fall of global steel production led to falling demand for coking coal and decreased ferroalloy production, which in turn created an acute lack of funds. Mechel mapped out anti-crisis measures, with serious saving, cutting down all possible costs and all non-vital expenses, boosting sales departments, refinancing loans. The company’s main goal was to minimize production costs and maintain what operations met existing demand.
Mechel owned 23 enterprises and 3 trade ports.
In 2008 Mechel produced some 26.4 million tonnes of coal, 4.7 million tonnes of iron ore concentrate, over 3.3 million tonnes of coke, some 6 million tonnes of steel, over 700,000 tonnes of hardware, 16,000 tonnes of nickel, 84,000 tonnes of ferrosilicon, 58,000 tonnes of ferrochrome, over 4 billion kWh of electric power.
In January 2007, Mechel Campia Turzii commissioned new ecological equipment — a press to process neutralized pickling solutions. This technology allowed the plant to give up use of the open slime storage and proved beneficial for the environment.
In March, Mechel Targoviste launched a new concasting machine. By March 2007, Mechel invested over 38 million dollars in Mechel Targoviste. Mechel’s management again proved its ability to transform an unprofitable enterprise and adapt it to survive in a competitive market.
In March 2007, Mechel bought its first major energy generating asset, confirming its intention to make power its separate business division. By winning the auction, Mechel acquired the controlling stake in Southern Kuzbass Power Plant OAO. Mechel bought the power station in a bid to raise the company’s efficiency by acquiring the ability to produce high value-added products, such as electricity, from its own steam coal, cut production costs due to generation of its own electric power, as well as get additional profit by marketing electricity and heat.
In May, Port Posiet commissioned a new 510-meter quay wall and warehouses. The quay wall was built as part of the port’s development program, which aimed at attaining a 9-million-tonne annual cargo turnover. It also included implementation of highly efficient coal reloading equipment and construction of warehouses.
In May Mechel bought, a controlling stake in Kuzbass Power Sales OAO as part of developing Mechel’s power segment. Kuzbass Power Sales is Siberia’s largest power seller. The acquisition allowed Mechel to create a vertically integrated power company which would have its own generators, raw materials and an expansive client base.
In the second half of 2007, Beloretsk Metallurgical Plant commissioned a series of new production equipment. The complex producing high-tensile stabilized reinforcing wire was launched in June, allowing the plant to manufacture a brand new product, low-relaxation stabilized reinforcing wire.
In July, the plant commissioned a new hardware-producing complex and laid the foundation for a new steel wire and cable making complex. These were major events timed to celebrate the plant’s 245th anniversary. The new lines allowed the plant to increase output of cable wire and thin cables, wire for making staples, as well as fibre wire.
In October Beloretsk Metallurgical Plant launched two new drawing machines for spring wire which was already being produced by the plant. The first spring wire production line was commissioned in 2005.
In December, the plant launched a modern equipment complex to produce high-tensile stabilized reinforcing wire strands used in construction. The new complex enabled BMP to manufacture 25,500 tonnes annually of a new type of product - stabilized reinforcing ropes.
In August 2007, Mechel acquired Bratsk Ferroalloy Plant, East Siberia’s largest high-quality ferrosilicon producer. It accounted for 16% of Russia’s internal ferrosilicon market in 2006 and 20% in the first three months of 2007, and 11% of exports in 2006.
Ferroalloys are used by steel producers, including Mechel’s own enterprises. The plant’s inclusion in Mechel Group enabled the company to significantly cut production costs and increase efficiency due to synergy between its raw materials, steel and power segments.
In September, Mechel acquired its third port — the Mechel Temryuk seaport, located on the Azov Sea’s Taman shore. The port would mostly reload coal. It can be used by river-sea type ships that can sail the Black and Mediterranean Seas as well as Eastern Europe’s internal waterways.
The port was acquired as part of constructing a global transport system and expanding the company’s logistics routes. This acquisition gave Mechel more options in regulating supply logistics, including export, minimizing dependence on transport market opportunities and shipping its products directly to its customers without involving third-party agents.
Transport system development is an important priority for Mechel. The company owns a railway operator — Mecheltrans OOO, which has its own gondola cars and a modern service center based in Chelyabinsk Metallurgical Plant.
In October, Mechel won the auction for Yakutugol’s controlling stake, increasing its share from 25% plus one to 100%, acquiring the Elga coalfield as well. The company paid a record sum of some 2.3 billion dollars for the two assets.
Yakutugol OAO mined a total of 10 million tonnes per annum, mainly coking coal as well as some steam coal. The company’s existing assets had estimated reserves of some 200 million tonnes. The Elga coal deposit’s reserves are set at 2.2 billion tonnes of coking coal. Experts estimated that coal reserves in that region can reach up to 30-40 billion tonnes. With this acquisition, Mechel became owner of Russia’s last coal asset left unprivatized and gained access to a major high-quality coking coal deposit, which created a firm basis for Mechel’s long-term mining development.
In December, Mechel acquired 49% of Toplofikatsia Rousse, a thermal power station based in Rousse, Bulgaria. The deal was part of Mechel’s bid to develop an independent power segment and find new markets for the company’s steam coal.
Mechel comprised 19 enterprises and 3 trade ports.
In March 2006, Mechel decided to optimize its capital investment program. The program set aside additional funds for further development and expansion of Mechel’s mining segment. It reflected Mechel’s overall strategy aimed at the segment’s growth, including new acquisitions in the mining sector.
In September, Southern Kuzbass Coal Company commissioned Olzherassk Underground Mine. The new enterprise is rigged with up-to-date mining equipment. The mine’s reserves are estimated at 160 million tonnes of coking coal.
In October 2006, Mechel acquired controlling stake in Moscow Coke and Gas Plant OAO. The deal corresponded with Mechel OAO’s strategy where the mining segment’s development, expansion of the company’s presence in coal and coke markets and increasing synergy were top priorities.
In November, Chelyabinsk Metallurgical Plant commissioned a new coke-oven battery. Once it reached full capacity, the annual coke production would increase by 500,000 tonnes. The battery’s produce is used to manufacture marketable coke, as well as supply Southern Urals Nickel Plant.
In December, Chelyabinsk Metallurgical Plant launched a concasting machine #4. The new aggregate allowed the company to dramatically cut production costs and step up quality of its long products. The machine was part of the plant’s technical re-equipment.
Once the machine reached its full capacity, the share of billets produced by constant casting in Mechel’s plants grew from 30% to 50%.
Mechel comprised 12 enterprises and 2 trade ports.
In 2006, Mechel produced over 17 million tonnes of coal, some 5 million tonnes of iron ore concentrate, some 2.6 million tonnes of coke, some 6 million tonnes of steel, 611,000 tonnes of hardware, and 14,400 tonnes of nickel.
In January 2005, Mechel wins the auction for shares of Yakutugol Holding Company OAO and becomes owner of the controlling stake (25% plus one share). The acquisition fitted well into the company’s overall strategy of reinforcing the mining division and increasing coking coal production. This victory paved the way for the company to expand its interests in the new region. Consolidation of Yakutian assets in late 2007 is a fine illustration to the consistency of Mechel’s strategy.
In April, Chelyabinsk Metallurgical Plant launched the first agglomachine for the new agglofactory. This increased Mechel’s capacity to meet its requirements in iron ore and allowed the company to boost shipments from Korshunov Mining Plant. The second agglomachine was launched in September.
Mechel wins the auction for the right to use subsoil plots for coking coal exploration and mining of two sites of the Erunakovsk deposit with estimated reserves of 264.6 million tonnes.
Mechel acquired controlling stake in Port Kambarka OAO for some 3.4 million dollars. Port Kambarka, located in Udmurt Republic’s village of Kama, is one of Russia’s deepest ports. The port can process river-sea cargo ships not only delivering within Russia, but also bound for Europe through the Baltic and Northern Seas.
In June, Mechel wins the auction for the right to use subsoil plots for coking coal exploration and mining at the Olzherassk, Sibirginsk and Raspadsk deposits. Combined with the plots the company acquired in 2004 and spring of 2005, Mechel increased its coal base by 1.15 billion tonnes.
Mechel comprised 11 enterprises and 2 trade ports.
In 2005, Mechel produced over 15.6 million tonnes of coal, over 4.5 million tonnes of iron ore concentrate, some 2.6 million tonnes of coke, some 5.9 million tonnes of steel, 557,000 tonnes of hardware and some 12,600 tonnes of nickel.
In March 2004, Mechel added a transport division to its business by acquiring a seaport. Port Posiet is located on the shores of the Japanese Sea south of Vladivostok on the border of Russia, China and North Korea. It allowed Mechel to optimize its shipments to Pacific Asia. Today the port is used mostly to reload coal concentrate.
In every one of its enterprises, Mechel implements a sweeping program aimed at increasing efficiency and quality, as well as cut production costs. Many enterprises, particularly steel plants, required major renovation of their production facilities. For instance, in March 2004 Chelyabinsk Metallurgical Plant launched a blast-furnace after reconstruction which increased its capacity by 50% to 1.5 million tonnes of pig iron per annum, which in turn significantly increased the plant’s production volumes. In May the plant launched a new constant casting machine producing 1 million tonnes of billets a year. The machine allowed the plant to boost production of billets by constant casting from 15% to 30%.
In May Mechel won the auction for 26.9% of Izhstal OAO’s stock. Izhstal is one of Russia’s major producers of rolled products and hardware from specialty steels and alloys. Acquiring Izhstal stock upheld Mechel’s position as Russia’s leading specialty steels and alloys producer. Mechel proceeded to buy up Izhstal’s stock to get a controlling stake, finally acquiring 87.35% of the stock in April 2005. By then, the company was already implementing production-and quality-boosting programs at the plant.
On October 29, 2004, Mechel made the initial public offering (IPO) of 10% of its shares, following a year and a half of intensive and large-scale preparation. The shares were listed on the New York Stock Exchange, which enjoys world-wide prestige and presents the toughest requirements to those who wish to be listed there. As a result of the listing, Mechel managed to attract some 300 million dollars for its stock, which were used for investment, acquisition of new assets and equipment to upgrade its enterprises.
Mechel thus became the first and so far the only coal and steel producer in Russia and Eastern Europe to make its IPO on the New York Stock Exchange. The IPO gave Mechel a new impetus. Today Mechel has some 30% of its common shares listed on the New York Stock Exchange as well as Russia’s RTS and MMVB. The company’s preferred shares are also circulated.
In November 2004, Mechel wins the auction for the right to use subsoil plots for coking coal exploration and mining at the Sibirginsk and Tomsk deposits. In December, Mechel got licenses for Raspadsk Open Pit and Berezovsk-2 areas, boosting its estimated reserves by 120.5 million tonnes total in the course of a month.
In December, Mechel sold its stock in Magnitogorsk Metallurgical Plant.
The company comprised 9 enterprises and 1 trade port.
In 2004, Mechel produced over 15.6 million tonnes of coal, some 3.9 million tonnes of iron ore concentrate, some 3 million tonnes of coke, 6.2 million tonnes of steel, some 600,000 tonnes of hardware and 12,700 tonnes of nickel.
The company makes new acquisitions in Russia and abroad.
In 2002, Beloretsk Metallurgical Plant, Vyartsilya Metal Products Plant and the plant in Romania’s city of Targoviste joined the Group.
At the same time, asset owners begin to prepare for the company’s IPO on the New York Stock Exchange.
As part of preparation work for the IPO, on March 19, 2003 the managing company of the newly created holding was registered and had all assets transferred to its balance. It was named Mechel OAO, and that date became Mechel’s official birthday. The company became one of Russia’s first holdings to unite steel and mining assets. Mechel’s creation was also a crowning moment for longstanding partnerships that linked its assets. Cooperation between coal, mining, hardware and steel producers allowed the company to consolidate resources and production sites, minimize dependence on external sources of raw materials and market stability. Those things proved Mechel’s recipe for success.
In April 2003 the company acquired Urals Stampings Plant in Chelyabinsk Region, Russia’s leading producer of stampings from quality steels, heat-resistant and titanium alloys. Cooperation between Urals Stampings Plant and Chelyabinsk Metallurgical Plant allowed Mechel to develop new promising markets for its products.
In June that same year, the company acquired its second steel plant in Romania, in the town of Campia Turzii. The plant produces a wide range of steel products. Later on, Mechel’s Romanian assets were named for their home towns — Mechel Targoviste and Mechel Campia Turzii respectively.
In September 2003, Korshunov Mining Plant joined Mechel. The plant was bankrupt since 1998, and had to halt production completely in April 2002 as its chief customer refused to pay. Both the enterprise and its staff were faced with lack of customers and so lack of means to survive. This had an immediate impact on the social situation in Irkutsk Region’s town of Zheleznogorsk-Iliymsky, as the city budget was directly dependent on the plant. Strategic partnership with Mechel helped dispel the crisis. Iron ore concentrate produced by Korshunov Mining Plant was since then shipped to the Urals, with Mechel investing in the plant and the town’s social policies. Finally the plant made a settlement with its creditors. The plant made a good addition to the Mechel family and could use the advantages of cooperation between mining and steel plants. Korshunov Mining Plant began increasing production levels and launched a large-scale technical revamping program.
In October, the Mechel team acquired a Lithuanian hardware plant, dubbed Mechel Nemunas. The plant produces hardware products — wire, mesh and nails — for domestic market.
By the end of 2003, Mechel owned 7 enterprises.
In 2003, Mechel produced over 14 million tonnes of coal, some 3.5 million tonnes of iron ore concentrate, over 2.7 million tonnes of coke, over 5 million tonnes of steel, some 430,000 tonnes of hardware and some 13,500 tonnes of nickel.