Mechel Announces Financial Lease Contract for Mainline Diesel LocomotivesMoscow, Russia – August 5, 2011 – Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals companies, announces the signing of a three-party contract between Mecheltrans Vostok OOO, Sinara-Transport Machines OAO, and VTB Leasing OAO for development, production and delivery of TEM-8 type locomotives.
The contract stipulates that in 2012-2014 Lyudinovsky Diesel-Locomotive Building Works (part of Sinara-Transport Machines OAO) will deliver 18 single-sectional eight-axle TEM-8 locomotives to Mecheltrans Vostok OOO.
The new mainline single-sectional TEM-8 locomotive will be developed on the basis of the servicing of the TEM-7A electric-transmission switcher locomotive and equipped with the 2,206-KW power installation produced by GE Transportation Parts LLC (USA).
“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. Sinara-Transport Machines will develop locomotives specially suited for use in mountainous areas and intricate climatic conditions, which will not only enable us to use the Ulak-Elga railway with maximum efficiency, but also save on transport expenses. In accordance with production plans for Elga Coal Complex before 2014, these leased locomotives will allow us to ensure prompt and timely delivery of Elga coal. We are glad that our long-time partner VTB Leasing is part of this deal,” Mecheltrans Management OOO’s Chief Executive Officer Alexander Starodubov commented.
Mecheltrans OOO is Mechel Group’s transport operator, providing freight forwarding of no less than 50 million tonnes of cargo annually. The operator transports Mechel’s products to Russia and the CIS as well as further abroad. It arranges exports bound for Europe and Pacific Asia. A major part of the cargo goes through land border-crossings to China, Ukraine, Slovakia, Romania, Bosnia and Herzegovina.
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Mechel is one of the leading Russian companies. Its business includes four segments: mining, steel, ferroalloy and power. Mechel unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power. Mechel products are marketed domestically and internationally.
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.