Mechel Reports The 9M 2012 Financial Results

"The third quarter was also marked by another event in the development of Elga Coal Complex — we completed construction of a washing plant and made the technological launch of a full production cycle. Currently finishing and insulating works are being conducted at the site, and when completed, the plant will be able to work all year round reaching 3 million tonnes capacity. Washing facilities next year will enable us to increase coal production at Elga and increase Mechel Mining's supplies of coking coal concentrate. In order to ensure a long-term off-take for Elga's steam coal, in September we signed a long-term cooperation agreement with RAO Energy Systems of East OAO, which provides for a gradual increase in coal supplies up to a total of 60 million tonnes over 15 years."

Steel Segment Results For The 9M 2012

US$ thousand	9M 2012 (1)	9M 2011 (1)	Change Y-on-Y
Revenue from external customers	5,246,358	5,613,161	-6.5%
Intersegment sales	195,156	234,296	-16.7%
Operating (loss) / income	(503,231)	277,921	--
Net loss attributable to shareholders of Mechel OAO	(751,830)	(38,217)	1867.3%
Adjusted net loss (1) (2)	(188,192)	(38,217)	392.4%
Adjusted EBITDA (1) (3)	214,587	368,681	-41.8%
Adjusted EBITDA, margin (4)	3.94%	6.30%	--
(1)   See Attachment A.
(2)   Adjusted net loss is net loss adjusted for effects of impairment of long-lived assets and goodwill and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects)
(3)   Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for the loan given to related parties, amounts attributable to noncontrolling interests and interest income
(4)   Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

US$ thousand	3Q 2012 (1)	2Q 2012 (1)	Change Q-on-Q
Revenue from external customers	1,699,564	1,897,661	-10.4%
Intersegment sales	49,629	66,538	-25.4%
Operating loss	(42,868)	(471,029)	-90.9%
Net loss attributable to shareholders of Mechel OAO	(110,989)	(625,277)	-82.2%
Adjusted net loss (1) (2)	(35,740)	(136,888)	-73.9%
Adjusted EBITDA (1) (3)	74,746	91,251	-18.1%
Adjusted EBITDA, margin (4)	4.27%	4.65%	--
(1)   See Attachment A.
(2)   Adjusted net loss is net loss adjusted for effects of impairment of long-lived assets and goodwill and provision for amounts due from related parties (including income tax and amounts attributable to noncontrolling interests effects)
(3)   Adjusted EBITDA is EBITDA adjusted for effects of remeasurement of contingent liabilities at fair value, forex gain/(loss), net result on the disposal of non-current assets, impairment of long-lived assets and goodwill, provision for the loan given to related parties, amounts attributable to noncontrolling interests and interest income
(4)   Adjusted EBITDA margin is calculated as a percentage of consolidated revenues of the segment, including intersegment sales.

Steel Segment Output and Sales For The 9M 2012

Production :

	9M 2012,	9M 2011,	9M 2012 vs.
Product name	thousand tonnes	thousand tonnes	9M 2011, %
Pig iron	3,107	2,672	16%
Steel	5,101	4,501	13%

Product Sales:

	9M 2012,	9M 2011,	9M 2012 vs.
Product name	thousand tonnes	thousand tonnes	9M 2011, %
Flat products	534	512	4%
Including those produced by third parties	303	308	-2%
Long products	3,107	2,925	6%
Including those produced by third parties	666	614	9%
Billets	1,950	1,723	13%
Including those produced by third parties	751	1,208	-38%
Hardware and welded mesh	737	722	2%
Including those produced by third parties	39	39	0%
Forgings	39	45	-13%
Stampings	83	88	-6%

Mechel's steel segment's revenue from external customers in 3Q 2012 amounted to $1.7 billion, or 63% of the consolidated net revenue, a decrease of 10.4% over the segment's revenue from external customers of $1.9 billion, or 61% of consolidated revenue, in 2Q 2012.

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