Development strategy

In May 2012, the company’s Board of Directors approved Mechel’s strategic program.

Mechel’s strategy is aimed at improving the company’s financial results, increasing its shareholder value and decreasing its debt portfolio.

Our strategy’s first element is aimed at consolidating the company’s leading positions in production of metallurgical coals.

Mechel is one of Russia’s largest coking coal producers. In August 2011 we began industrial mining at the Elga deposit with reserves of 2.2 billion tonnes of coking coal. Mechel’s competitive advantages lie in the unique combination of our rich resource base, geographical and product diversification, proximity to key markets, low production costs, our own logistics and immense experience in developing mining projects.

We consider control over business’s transport component, including port capacities, a key factor of our success. As such, Mechel constantly works at expanding its logistics. Today we are reconstructing Port Posiet in Primorye Region to boost its capacity.

The second element of Mechel’s strategy is further consolidation of the company’s position on the steel product market.

Mechel is a segment leader in Russia and the CIS and a major supplier of construction steel products. Once the universal rolling mill at Chelyabinsk Metallurgical Plant reaches its designed output capacity, the company plans to expand its presence in the segment of sections and shapes as well as rails.

Our leadership on the steel markets is supported by our own service and sales network Mechel Service. It ensures the company a direct link with the end customer, which guarantees stable marketing regardless of market volatility and seasonal demand swings.

Increasing Mechel’s share in the markets of high value-added products is the third element of our strategy.

Mechel is the leader of Russia’s hardware market and the market of stainless and specialty steels rolls. The company produces the widest range of this type of products and is the leading producer in several market segments. This advantage is further strengthened by unique technologies which can be further developed to significantly expand the range of our profitable products, improve their quality and expand into new markets.