Mechel announces commissioning of new berth at its Trade Port Posiet subsidiary

JSC Mechel (NYSE: MTL) announces the commissioning of a new berthing wall and warehouse area at its subsidiary, Trade Port Posiet OAO. The commissioning will enable the port to accept a new class of 40K tonne ships this year and will allow Mechel to broaden its capabilities of marketing coal to Asian Pacific countries.

The new berthing wall is 60 meters long and was developed by the Far East Marine Research Institute. Construction of the berthing wall and surrounding area was completed in 9 months, earlier than the 11 month period originally planned. The cost of constructing the facility was about RUR 63.0 million (about US$ 2.5 million). With the new wall commissioning the total berthing wall length becomes 510 meters.

Currently, the port is capable of accepting various types of ships with up to 25K-tonnes of carrying capacity. With commissioning of the new berth, the port will be capable of accepting and handling 40K-tonne Handymax class ships as early as this year. This will enhance Mechel’s capabilities in marketing coal to Asian Pacific countries.

The new berth has been constructed in line with the port’s development program. The program envisages achieving about 5 million tone freight turnover in 2010. The program also includes installation of specialized high-performance equipment for coal transshipping and construction of additional warehouse areas in an adjacent area which will enable total concurrent storing of about 300K tonnes of four different grades of coal.

Mechel specialists’ original solution regarding additional loading to high-capacity ships was implemented in this project. It enables loading to ships with up to 40K-tonne carrying capacity in the berths with the depth designed for loading to 25K-tonne ships. Additional loading is performed not on the road but directly at the port. Accepting the first 40K-tonne ship is scheduled for August 2007.

The capacity of Trade Port Posiet’s warehouses was about 90K tonnes in 2004, the year of its acquisition by Mechel. Today the port can concurrently store up to 160K tonnes of two different grades of coal in its existing warehouse areas. After the new berth commissioning, the newly formed area will allow for a cordon warehouse with about 200K tonne capacity. Storing another 100K tonnes is planned in the rear zone areas formed as the result of useful development of the adjacent hill.