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Mechel is one of the leading Russian mining and metals companies. Its business includes four segments: mining, steel, ferroalloys and power. The Group’s subsidiaries are located in 12 regions of Russia, Kazakhstan, USA, Romania, Bulgaria and Lithuania. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, steel downstream products and electric and heat power. Mechel owns three trade ports and a transport operator. Mechel’s products are sold in Russia as well as on international markets. Mechel employs more than 80 thousand people. Mechel is the first and still the only coal mining and metals company in the region of Eastern and Central Europe and Russia having its shares placed on the New York Stock Exchange. In 2008 Mechel had above $US9.5 bln of revenue, about $US1.15 bln of net income and more than $US2 billion of EBITDA (according to US GAAP). The company’s capitalization reached the level of $US 24 billion in May 30, 2008. Since 2003 to 2008 production of Mechel’s main products increased: coal – to 86%, iron ore concentrate – to 331%, nickel – to 19%, coke – to 27%, pig iron – to 11%, rolled products – to 32%, hardware – to 54%. MINING SEGMENTOur mining segment comprises production and sale of coal (coking and steam) concentrates and iron ore concentrate. It supplies raw materials to our steel business and also sells substantial amounts of raw materials to third parties. Mechel is the largest Russian producer of hard coking coal. Our share on the market of coking coal concentrate in Russia makes 60%. Mechel also is the third largest Russian coal producer out of the total Russian coal output. 26% of the coking coal washing facilities in Russia belong to Mechel. We are capable to internally sourcing 100% of the coking coal and 92% of the iron ore to our steel segment, assuming that in the case of iron ore third parties process certain quantities of our iron ore concentrate into pellets and sinter. Mechel’s mining segment includes:
In 2008 Mechel’s plants produced 26.5 tonnes of coal including 15 million tonnes of coking coal and 11 million tonnes of steam coal as well as 4.7 tonnes of iron ore concentrate. Mechel’s plants has very advantageous geographical position providing the company conditions for supplying raw materials to Russian steel producers as well as to the largest international markets. STEEL SEGMENTOur steel business comprises production and sale of semi-finished steel products, carbon and specialty long products, stainless flat products, and value-added downstream metal products including hardware and stampings. Our steel business is supported by our mining business, which includes coal (coking and steam), iron ore and limestone. In 2008, Mechel produced about 6 million tonnes of steel, 5.4 million tonnes of rolled products, 3.5 million tonnes of pig iron, 3.3 million tonnes of coke, 719 thousand tonnes of hardware. Mechel’s steel segment includes:
FERROALLOYS SEGMENTAs a leader in special steel production in Russia, Mechel requires a steady supply of ferroalloys of various types. In this regard we actively develop our ferroalloys business. Our ferroalloys segment comprises:
Nickel production at Southern Urals Nickel Plant is sourced with ore from two own nickel open-pit mines, Sakharinsky and Buruktalsky. In 2008 the plant produced 16 thousand tonnes of nickel in ferronickel. The whole amount of the output not consumed by Mechel’s plants is exported. Bratsk Ferroalloy Plant is a modern high-performance facility producing ferrosilicon with high (65% and 75%) silicon content. In 2008 the plant’s output exceeded 91 thousand tonnes which makes 15% of total ferrosilicon production in Russia. To ensure own source of raw materials for the plant, a license for Uvatskoe quartzite deposit development was acquired on May 2008. Proven reserves of the deposit amount to about 7 million tonnes; however, available estimates indicate that total probable reserves of the deposit may reach almost 120 million tonnes. Mechel plans to build a mining plant there with annual capacity of 400 thousand tonnes of ore. After Oriel Resources’ acquisition in April 2008 Tikhvin Smelting Plant (Leningradskaya Region), Shevchenko Nickel Deposit (Kazakhstan) and Voskhod Chrome Deposit entered Mechel Group’s structure. Tikhvin Smelting Plant’s production capacity is 140 thousand tonnes of high-carbon ferrochrome per annum. On September 2008 Mechel commissioned its new chrome-mining Voskhod Mining Plant subsidiary in Kazakhstan. The plant’s production capacity is above 900 thousand tonnes of chromite concentrate. The plants of Mechel’s ferroalloys segment are subsidiaries of Oriel Resources Ltd., Mechel OAO being its sole shareholder. In 2008 Mechel’s ferroalloys plants produced 16 thousand tonnes of nickel, 91 thousand tonnes of ferrosilicon, and 58 thousand tonnes of ferrochrome (ferrochrome data presented for Q2-Q4 2008). POWER SEGMENTOur power segment includes two generating assets and a power sales company. Heat and power generating activities are intended both to meet Mechel Group’s internal demand and to contribute to free market sales. Mechel power segment comprises:
In 2008 Mechel power segment’s subsidiaries produced more then 4 billion MW of electric power and 6 billion Gcal of heat power. Our ferroalloy, mining, energy and steel facilities are composed in a unified vertical integrated production complex. Production structures involving well-balanced production chain and own raw material base are more economically effective and less depend on market fluctuations. |
