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Mechel Reports 2022 Operational Results

Mechel PAO’s Chief Executive Officer Oleg Korzhov commented on the results:

“In 2022, our company had to operate under the conditions of a rapidly changing coal market and logistical difficulties caused by geopolitical factors and limited capacity of Russia’s Eastern railway infrastructure. We believe that the process of the so-called rebalancing of the commodity market will continue this year, forcing coal miners to adapt to new realities and seek new opportunities to market their products.

“The coal production figures recorded by Mechel's mining division last year remained mostly at the previous year’s level. As part of the technical re-equipment program, mining enterprises received more than 250 new machines and equipment units, including about 50 mine dump trucks, bulldozers, excavators and drilling rigs. In the short term, it will ensure incremental growth in output of the most valuable coal grades.

“The steel division finished the year 2022 with improved production of pig iron (+2%) and steel (+1%).

“Due to overfilled stockpiles due to restrictions imposed on Russian steel companies’ export sales, prices for construction products demonstrated a negative trend from the beginning of Q2 until the end of Q4 2022. The decrease in export sales was partially offset by an increase in sales of certain types of steel products on the domestic market.

“Coking coal concentrate sales year-on-year went down by 9% due to restrictions on rail transportation of products to Far Eastern ports in the second half of 2022.

“Restrictions on railway delivery of coal to the Far East affected the sales of PCI and anthracite, which went down 14% and 3%, respectively. At the same time, it should be noted that Southern Kuzbass Coal Company’s facilities boosted output of the abovementioned coal grades last year and built up stockpiles.

“Thermal coal sales went up by 7% year-on-year due to increased export shipments.

“Increased output of iron ore concentrate at the Korshunov Mining Plant contributed to increased sales of this product. This iron ore concentrate is mostly shipped to Mechel Group's Chelyabinsk Metallurgical Plant.

“The 22-percent decrease in coke sales was due to two factors — administrative and logistic barriers to shipments to Western European destinations and reduced demand from Russian customers.

“The restructuring of logistical supply chains, which led to longer delivery times, caused a 3% drop in ferrosilicon sales from Bratsk Ferroalloy Plant. The global ferroalloy market remains fairly favorable, as it has been over the last two years.

“Sales of rolled longs went up by 7% due to increased output and sales of Chelyabinsk Metallurgical Plant's universal rolling mill’s products on the domestic market.

“Sales of rolled flats went down by 9% year-on-year primarily due to an oversupply of these products on the domestic market starting from last year’s second quarter.

“A 7-percent decrease in overall hardware sales was due to weaker demand for wire products. At the same time, due to the expansion of our customer base, wire rope sales demonstrated positive dynamics in 2022 with a 12-percent increase.

“The 9-percent growth in sales of forgings was due to the effect of the low base of 2021. As for stampings, a 16-percent year-on-year slump in sales was due to decreased output by domestic railcar building companies, who are chief customers for these products. Demand for forgings began to show signs of recovery in Q4 2022.

“The power division produced 14% less electricity in 2022 due to major overhauls of the main generating facilities. A 2-percent decrease in heat output was due to higher average air temperatures during the winter season.”

Production (thousand tonnes): 

Sales (thousand tonnes): 

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Mechel is an international mining and steel company. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products.

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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.