MOSCOW, July 6 /PRNewswire/ --

Mechel OAO (NYSE: MTL), one of the leading Russian mining and metals
companies, today provided additional detail regarding its previously
announced capital expenditure program for 2007-2011.

As the result of a thorough analysis of Mechel's investment capabilities,
which are based on its solid, consistent operational cash flow, the Company
has decided to expand its capital expenditure program to US$2.7 billion for
2007-2011 in both the mining and steel segments, as previously announced.

Mechel plans to invest about US$1.5 billion in its steel subsidiaries
from 2007-2011.

Relative to 2006 levels, the planned program will increase the segment's
total steel output by 12%, and will also lead to a 26% increase in the
Company's output of rolled steel, by 2011.

The planned program will also result in a shift in overall steel product
mix to include a greater proportion of higher value-added products. The most
significant changes in the product mix will occur at Chelyabinsk
Metallurgical Plant (CMP), Mechel's main steel asset - about US$1.3 billion
will be invested in the modernization of CMP. These investments will allow
the plant to double its output of continuously cast steel billets while also
extending its mix of construction and engineering rolled products. Mechel
plans to strengthen its position as one of Russia's leading producers of long
products. To fulfill this task, about US$650.0 million will be invested by
2011.

To achieve this objective, Coil Mill 250-2 will be modernized and a new
mill will be installed to manufacture structural shapes, for which there is a
strong market in Russia. This project will result in a noticeable
optimization of CMP's product portfolio: instead of producing billets for
export, the plant will begin manufacturing about 1 million tonnes of high
margin products for Russian market. In addition, construction of a bloom
machine with a complex of steel processing outside stove in the
oxygen-converter shop and new rolled facilities in the blooming shop are
planned.

The investment plan also provides for the reconstruction of CMP's
existing hot and cold rolling facilities, with a concurrent increase in
stainless steel flat rolled products output. To fulfill this task, US$250.0
million will be invested. The operations to realize this plan include: 1)
modernization of the continuous casting slab machine and construction of the
complex of steel processing outside stove to increase the annual slab output
to 1.2 million tonnes; 2) reconstruction of hot rolling mill 2300/1700 to
increase its annual capacity to 1.1 million tonnes, including 400,000 tonnes
of thick plates; and 3) reconstruction of the cold rolling shop to increase
the output of the high quality stainless steel flat products. These
investments will allow the plant to expand its product mix in terms of
stainless flat products' sizes and grades while also improving product
quality.

Mechel plans to supplement its investments in CMP made during the last
2-3 years to further reduce costs. Investments allocated for this will total
about US$400.0 million. The Company will continue developing sinter plant No.
2. The construction of the sinter plant is in line with Mechel's strategic
objective to increase its self-sufficiency in raw materials and reduce steel
production costs. Implementation of this project will allow Mechel to
increase its self-sufficiency in iron ore concentrate to 70% of its total
consumption. The present planned production capacity of the commissioned
sinter plant amounts to about 4.5 million tonnes of sinter annually. Mechel
plans to increase sinter production at CMP to 6.5 million tonnes annually by
2012. In addition, the Company is planning construction of a new blast
furnace with an annual capacity of 1.7 million tonnes, while decommissioning
obsolete facilities. The oxygen-converter shop will also be reconstructed.

Investments in the modernization of Izhstal will total about US$140.0
million. The plant's technical re-equipment program provides for fundamental
modernization of its steel melting operations and a reconstruction of its
long product rolling facilities, which will result in an increase in its
output. The Company also plans to decommission the mill's open hearth
facilities, and also increase the EAF output to about 500,000 tonnes and
reconstruct Mill 250.

In line with Mechel Targoviste's investment plan, the plant's
medium-grade and small-grade rolling mill complex will be modernized, which
will result in increasing its rolled section output to 500,000 tonnes
annually. Also, a vacuum machine will be reconstructed in order to reduce
production costs and increase its annual capacity to 200,000 tonnes. The
investments in the both projects will total about US$25.0 million.

About US$105.0 million will be invested in modernization of the hardware
product facilities at Mechel's subsidiaries to enable producing new types of
products.

In the mining segment, Mechel has set an objective to increase its coal
output to 25 million tonnes by 2010 from 17 million tonnes in 2006. The
Company plans to invest about US$1.2 billion in its coal sector during

2007-2011. About US$700.0 million of that amount will be invested in
Southern Kuzbass: in constructing new mines Erunakovskaya-1, Sibirginskaya
(Extension 2), and Olzherasskaya-Glubokaya; in constructing the Sibirginsk
Washing Plant; and implementing a cost reduction program in coal mining and
transportation.

In order to expand its coal exports to the Asia-Pacific Region, Mechel
will reconstruct Port Posiet. The investment will total about US$70.0
million. As the result, the port will become a modern sea terminal. This will
allow Mechel to expand its sales market and reduce costs.

The Company also plans to invest about US$90.0 million in the
modernization of mining and transportation equipment at Korshunov Mining
Plant to maintain its output at 5 million tonnes.

Regarding high nickel prices in the long term and the permanent shortage
of the metal, Mechel will invest about US$300.0 million in the technical
re-equipment of Southern Urals Nickel Plant. This will allow the Company to
increase its nickel output to 24,000 tonnes, while reducing its production
costs.

"Mechel intends to continue to grow and take advantage of the
opportunities ahead of it. Our annual investments in production over the next
five years amount to about US$400.0 million - US$500.0 million, and we expect
to fund them out of our strong operational cash flow. Our previous capital
expenditures have been key to the generation of our strong operational and
financial results. The new well balanced capital expenditure program reflects
Mechel's overall strategy aimed at further expanding its mining segment and
increasing effectiveness and profitability of its steel segment. In both
segments we are going to focus on the projects that will allow Mechel to
achieve good operational results, increase value-added products output and
productive efficiency," Mechel Management Company's Chief Executive Officer,
Vladimir Polin, commented.

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Mechel is one of the leading Russian mining and metals companies. Mechel
unites producers of coal, iron ore, nickel, steel, rolled products, and
hardware. Mechel products are marketed domestically and internationally.

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Some of the information in this press release may contain projections or
other forward-looking statements regarding future events or the future
financial performance of Mechel, as defined in the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution
you that these statements are only predictions and that actual events or
results may differ materially. We do not intend to update these statements.
We refer you to the documents Mechel files from time to time with the U.S.
Securities and Exchange Commission, including our Form 20-F. These documents
contain and identify important factors, including those contained in the
section captioned "Risk Factors" and "Cautionary Note Regarding
Forward-Looking Statements" in our Form 20-F, that could cause the actual
results to differ materially from those contained in our projections or
forward-looking statements, including, among others, the achievement of
anticipated levels of profitability, growth, cost and synergy of our recent
acquisitions, the impact of competitive pricing, the ability to obtain
necessary regulatory approvals and licenses, the impact of developments in
the Russian economic, political and legal environment, volatility in stock
markets or in the price of our shares or ADRs, financial risk management and
the impact of general business and global economic conditions.