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Mechel's Management Discusses Q2 2011 (1H 2011) Results - Earnings Call Transcript

So this way, we launched an important strategic project and it is almost impossible to overestimate the importance of this project for the company. When Elga reaches full capacity, Mechel will substantially improve its position among the largest global producers of coking coal.

During the first half of the year, all the efforts of the company in its mining division was aimed at accelerating the achievement of 100% capacity utilization at Neryungrinskaya washing plant at Yakutugol. We wish this objective by the end of June and from implementation of certain technical solutions the plant set a production record in July.

On the whole, since the start of the year, against the favorable background of prices in the markets of metallurgic coal from quarter-to-quarter we have been growing the production of this type of product. Although there were certain challenges due to spontaneous heating of coal, of the mine Olzherasskaya-Novaya in August last year and also the Sibirginskaya mine in June this year, because of this the production of coal mining of Novaya coal mines was suspended.

Currently, some new work has been done there to construct a new long wall features and although already in this quarter we plan to start new long wall face and to resume production of coal at Olzherasskaya-Novaya mine and in the next quarter at the Sibirginskaya mine. At the same time, we are constructing the second vertical shaft at the Sibirginskaya mine which will enable us to bring production there to 2.4 million tonnes of high quality coking coal already in 2014.

We continue acquiring mining complexes for other another production facility at the Southern Kuzbass in order to improve capacity for metallurgical coal, mining already in the beginning of next year. At our American enterprise, Bluestone, in the last several months, we put into operation new and also formerly idle mines, Spider Ridge and (inaudible). This is done to raise production of very valuable grade of coking coal that are in high shortage; I am talking about the low volatility and high volatility grades of coking coal.

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