Mechel uses its right of reply

Companies controlled by Mechel OAO make their decisions based on economic utility principles and have never been, nor will they be influenced by geopolitical situations.

We must stress that Mechel Târgovişte currently honors all the orders placed by Romanian entities operating in the defense industry and is open to doing so in the future, regardless of the country for which such products are intended.

The information that the Block and Bar Division (F.B.B.) has "suddenly cut its output" is not true to fact. The output of the division has not changed. The load of its capacity only depends on market factors, which currently reflect the shrinking demand in Eastern Europe in general, and in Romania in particular. However, in spite of all this, Mechel is currently working on a program for the rehabilitation of the FBB section, which provides the optimization of its technologies and the increase of its profitability.

Concerning the sale of two pieces of equipment SXP16 and SXP26 of the FBB section of Mechel Târgovişte, this requires the following clarifications:

The deal was made in full compliance with the legislation in force.

The deal was made taking into account the principle of the market price. The price that the Mechel Târgovişte plant has received in exchange for the piece of equipment was determined by an evaluator which was appointed following a call for tenders. The value of the equipment was determined by an independent evaluator, member of the National Association of Romanian Evaluators (ANEVAR), in compliance with the International Valuation Standards (IVS) and with the guidelines of ANEVAR, representing the market price, which is valid for the sale of this good on the open market.

The information concerning the sale of the two pieces of equipment was made public prior to the transaction. All the interested parties had the possibility of buying the tender book and to participate in the call for bids.

As to what concerns the relevance of the pieces of equipment in question for the military industry and for the output capacity for the defense industry it must be mentioned that those pieces of equipment haven"t been used for the production of products intended for military purposes, since the year 2000, and we have been notified through the address no. 230006/07.01.2003 of the Special Department of the Ministry of Resources and Industry, that the "objective called the Forge for special Blocks and Bars related to SC COST SA Târgovişte has no longer been maintained on the List of economic agents and of the production capacities operating for defense capacities". Along the same lines, we will also mention the authorization for the export of the aforementioned pieces of equipment, which proves that the customs authorities have verified and confirmed the legality of their exportation. The aforementioned authorities have confirmed, through the signing of the form no. 676/14.05.2010 and 782/31.05.2010 that the equipment in question are not included on the list of dual use products, which are subject to the exports verification regime according to EC regulation no. 428/2009.

Mechel did not have nor does it currently have the intention to sell the SXP55 piece of equipment.

The reasons for the sale of the aforementioned pieces of equipment have already been presented to the editorial office. Nevertheless, we want to specify once more that this transaction was only guided by financial reasons.

In order to adapt to the new realities caused by the economic crisis, which the Romanian economy as a whole is going through, as well as its players in the metallurgic industry, Mechel Târgovişte, being one of the companies in that sector, has decided to sell the unused pieces of equipment at an optimal price.

These decisions are exclusively guided by the need to increase competitiveness and to only keep those production capacities that are effectively used and profitable, including the sale of equipment owned by the company, which haven"t been used in a long time and have so far generated expenses with their maintenance and storage.

The information presented above and the reasons discussed were well known to union leader M. Toma, who is quoted in the article, who participates in all the operative meetings of the management of Mechel Târgovişte and who is made aware of the decisions of the decisions of the management, circumstances which unequivocally denote the tendentiousness of his statements.

Concerning the totally unfounded statements made about our majority shareholder, we want to inform you that Mechel OAO is a company listed on the New York Stock Exchange (NYSE), meaning that, in compliance with the regulations of the capital market, the shareholder information is public, and the mandatory reports of major shareholders ensure a maximum transparency on the shareholder structure, eliminating any opportunity for speculation similar to the one that appeared in the concerned, eliminating any speculation such as the ones that appeared in the mentioned article.