Yakutsk, Russia – January 24, 2005 – Mechel has won an auction for the sale of ordinary shares in Open Joint Stock Holding Company Yakutugol that constitute 25 % + 1 share of the company's Charter capital.

At the auction Mechel, through its wholly-owned subsidiary, Littel Echo Invest. Corp., acquired 1,010,498 ordinary shares, or 25 % + 1 share of the company's charter capital, in OJSC Holding Company Yakutugol for approximately US$411 million (RUR11,577.6 billion) from the Ministry of Property of the Republic of Sakha (Yakutia).

Yakutugol extracts predominantly coking coal, as well as steam coal in open and underground mines. The Company's annual output is approximately 9 million tons of coal, sales for 9 months of 2004 were about US$262.3 million (RUR7,282.5 billion). Coal reserves are approximately 300 million tons based on Russian reserve valuation standards. The company has sold most of the output to the Asian Pacific region, primarily Japan, South Korea, and Taiwan, mostly under long-term contracts.

“Acquisition of the blocking stake in Yakutugol is in line with our overall strategy to strengthen our mining sector and increase production of coking coal. We are very pleased that winning the auction opened a way for Mechel to expand its interests in a new region,” Mechel’s CEO, Vladimir Iorich, said after the auction.

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Mechel Steel Group OAO
Irina Ostryakova
Director of Communications
Phone: 7-095-258-18-28
Fax: 7-095-258-18-38
irina.ostryakova@mechel.com

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Mechel Steel Group is a Russian metals and mining company, uniting producers of steel, rolled products, hardware, coal, iron ore concentrate, and nickel. Mechel Steel Group 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 Steel Group, 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 Steel Group files from time to time with the U.S. Securities and Exchange Commission, including our Form F-1. 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 F-1, 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.