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Mechel’s growth strategy consists of expanding our mining business, both through organic growth and acquisitions; to improve profitability in our steel segment through plant modernization, cost cutting and product portfolio optimization; to maintain our leading position as a producer of carbon and specialty steel long products in Russia; and to continue to capitalize on the synergies deriving from our status as an integrated group. We also develop our promising ferroalloys division, improve performance of our power segment and expand our international sales structure. STRATEGIC CAPITAL EXPENDITURE PROGRAM Mechel's strategic capital expenditure program is aimed at increase in production efficiency, further development of all business segments and product portfolio expansion. Our four-year investment program is developed on the bases of tight analyses of current trends in economy and the company’s ability to generate cash flows, get profit and arrange financing. In the period of 2009-2012 we plan to invest about US$2.9 billion to our priority capital projects. Out of this amount we intend to direct about US$1.4 billion to development of our mining segment. We plan to spend about US$1.2 billion on the projects devoted to increase in the efficiency of our metallurgical plants’ operations. Investments to development of our ferroalloys and power segments will amount US$110 million and US$36 million respectively. Our priority project in the mining segment is development of Elga coking coal deposit. The project includes construction of the railroad which would connect Elga deposit with the Baikal-Amur mainline. Investments to the project that started in 2008 are estimated at the level of US$1.6 billion. Additionally we suppose to invest about US$188 million to development of our Southern Kuzbass Coal Company subsidiary. Our priority project in metallurgical segment is construction of the universal rail and structural shapes steel mill at Chelyabinsk metallurgical plant subsidiary which started in 2008. Commissioning of the universal mill would enable us to increase the output of high value-added products (high quality rolled products and rails). We also proceed with working on our Izhstal plant reequipment program aimed at its production efficiency increase. | |||