Mechel Announces Commissioning of New Mining Machinery at Krasnogorsk Open Pit Mine of Southern Kuzbass

Mechel announces that the Company has commissioned a unique backhoe hydraulic excavator with an 11 cubic meter bucket, Liebherr R-994, at Krasnogorsk open pit mine of its coal mining subsidiary, Southern Kuzbass.

This is the second excavator of that type put into operation at Krasnogorsk open pit mine in 2007 in line with the technical re-equipment program being implemented at Southern Kuzbass OAO. The cost of the newly commissioned equipment is more than RUR 80.0 million (over $3.0 million). A similar machine was also put into operation and successfully operates at Sibirginsk open pit mine.

The new machine is designed for complete coal seam extraction with an open cast method of coal mining, especially at lower levels where space is confined. This will enable operational losses of coal to be reduced by 2% to 4%. Operation of the excavator’s backhoe (Liebherr R-994) requires half the number of workers as compared with electric drive excavators, which enables increased labor productivity and reduced coal production costs. In addition, the back hoe technology enables operations in complicated mining and geological conditions eight meters below the excavator’s standing level.

The new excavator’s cab provides conditions suitable for highly productive work and conforms to the sanitary standards and requirements. The excavator team was formed of the best employees of the open pit mine and received additional two month training with the involvement of the manufacturer representatives, which allowed workers to learn the construction of the excavator and the specificity of its operation.

The renewal of equipment at Southern Kuzbass is a part of Mechel’s long-term capital expenditure program, which is aimed at increasing coal output to 25 million tn in 2010. In line with Mechel’s plans, investments in developing Southern Kuzbass will amount to approximately $700.0 million in the period from 2007 to 2011. The next significant equipment purchase, a similar model of an excavator, is being prepared for commissioning at Olzherassk open pit mine of Southern Kuzbass.