Kemerovo, Russia – April 7, 2005 – Southern Kuzbass Coal Company, a subsidiary of Mechel, has won two auctions for the right to explore and mine coking coal at two plots of the Erunakovskoye Coal Deposit, with total reserves of 264.6 million tons according to Russian reserve valuation standards.
According to the decisions of the auction committee, Mechel will receive 20-year licenses through its subsidiary, Southern Kuzbass OAO, for the Erunakovskaya-1 Mine and Erunakovskaya-3 Mine plots of the Erunakovskoye Coal Deposit. The acquisition of the new mining areas is in line with Mechel's strategy to further develop its coking coal mining operations.
Coal reserves are 58.0 million tons in the Erunakovskaya-1 Mine license area and 206.6 million tons in the Erunakovskaya-3 Mine license area, according to the Russian reserve valuation standards, and primarily consist of coking coal. The auction conditions require a minimum of 1 million tons of extraction annually during the first stage of development, and 2 million tons of extraction annually during the second stage of development for each of the two areas.
“Coking coal mining has always been a central part of Mechel’s operations, and it remains a strategic priority for us. In winning today’s auctions, we have taken another important step forward in the overall development of our company’s mining segment,” Mechel’s CEO, Vladimir Iorich, said on completion of the auction.
Russian reserve valuation standards differ from international standards. Mechel intends to finalize an independent reserve valuation of these license areas with U.S. experts during 2005.
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Mechel is one of the leading Russian metals and mining companies. The Company unites producers of steel, rolled products, hardware, coal, iron ore concentrate, and nickel. Mechel products are marketed domestically and internationally.