Our business consists of two segments: mining and steel, comprising facilities in Russia, Romania and Lithuania. In addition, Mechel owns two trade ports, a railway and an energy company.

In 2006, Mechel had revenues about $4.4 billion (U.S. GAAP), net income about $603 million and EBITDA ⁽¹⁾ more than $1 billion.

MINING BUSINESS

Our mining segment comprises production and sale of coal (coking and steam), iron ore and nickel, which supplies raw materials to our steel business and also sells substantial amounts of raw materials to third parties. We are capable of internally sourcing 100% of the coking coal, 92% of the iron ore and 55% of the nickel requirements of our steel segment, assuming in the case of iron ore that third parties process certain quantities of our iron ore into concentrate and then into pellets and sinter, which comprise the ultimate form of iron ore feed into the steel making process. In addition, we are the only specialty steel manufacturer in the world capable of internally sourcing all three of these raw materials. We are the second largest producer of coking coal in Russia, with a 12% market share in 2004, and Russia’s largest exporter of coking coal concentrate. We also control 23% of the coking coal washing capacity in Russia.

In 2006, Mechel produced approximately:

• 17,013 thousand tonnes of coal, including:
  - 9,697 thousand tonnes of coking coal,
  - 7,316 thousand tonnes of steam coal

• 4,976 thousand tonnes of iron ore concentrate
• 14.4 thousand tonnes of nickel

STEEL BUSINESS

Our steel business comprises production and sale of semi-finished steel products, carbon and specialty long products, carbon and stainless flat products, and value-added downstream metal products including hardware, stampings and forgings.  Within these product groups, we are further able to tailor steel grades to meet specific end-user requirements.

Mechel is the second largest producer of long products in Russia, and the largest and most comprehensive producer of specialty steels and alloys in Russia, producing 39% of total Russian specialty steel output. We also produce significant amounts of coke, both for internal use and for sales to third parties.

Our steel business is supported by our mining business, which includes coal (coking and steam), iron ore, nickel and limestone.

In 2006, Mechel produced approximately:

• 5,950 thousand tonnes of steel
• 4,714 thousand tonnes of rolled products
• 3,631 thousand tonnes of pig iron
• 2,570 thousand tonnes of coke
• 611 thousand tonnes of hardware