Mechel announces the results of implementing its plan to develop the branch network of its Mechel Service service and sales subsidiary

In 2008, as part of Mechel Service’s regional sales network expansion, offices were opened in Belgorod, Ulyanovsk, Astrakhan, Irkutsk, Kaliningrad, Stavropol, Mineralnye Vody, Anapa, Naberezhnye Chelny, and Vidnoye (Moscow Region). In connection with the expansion of Mechel Service OOO’s production facilities, it has transformed its units in Tyumen, Omsk, Krasnodar, Sochi, and Nizhny Novgorod into its branches. Mechel Service has also opened additional warehouses in Rostov-on-Don, Samara, and Krasnoyarsk.

Mechel Service’s sales network currently includes over 50 offices in 40 major Russian cities.

Mechel Service’s subsidiaries also currently operate in Romania and Kazakhstan. In September 2008, in line with the implementation of expanding its sales network, enhancing and extending range of its services, and enlarging its client base, Mechel Service acquired HBL Holding, a German group of steel trading and distribution companies. The acquisition has strengthened Mechel Service’s position in the European Union and allowed it to increase its number of sales units to 65.

Along with expanding its sales geographically, Mechel Service, as part of its development program, implemented numerous projects in organizing its production and service sites in 2008. Equipment for straightening and cutting-off reinforcing bars according to custom tailored sizes was launched in Yekaterinburg, Krasnodar, St. Petersburg, Rostov-on-Don, Sochi, Chelyabinsk, and Tyumen. Installation of a new automatic line for welded mesh production, in the Moscow Region, with 1,200-1,500 tn monthly capacity was initiated. This new service started their operations at Samara and Novosibirsk. These innovations allowed Mechel Service OOO to substantially expand the range of its marketable products and services provided to end customers.

In 2009, Mechel Service plans to continue its sales expansion program, development of its branch network and new production and service facilities. Furthermore, the company is currently considering expansion of its sales network in Kazakhstan and developing a program to expand its operations to the Russian Far East, CIS, and far-abroad countries. In addition, as part of establishing its own production and warehouse base, Mechel Service expects to complete the upgrades of its warehouse complexes in the Moscow Region, Yekaterinburg, Ufa, and Anapa.

“The development of Mechel Service’s branch network in 2008 enabled Mechel to substantially enlarge its client base and ensure steady sales of our finished metal products even while the industry experienced a strong decline of demand in Russia and abroad,” Mechel Senior Vice President Vladimir Polin commented.