Moscow, Russia — March 2, 2006 — Mechel OAO (NYSE: MTL) announces that, in response to a request for proposals from Russian Railways OAO, it has submitted a non-binding proposal regarding Yakutugol and the development of the Elga coal deposit in Yakutia.

The non-binding proposal contemplates the formation of a new company, to be named Sakhaugol OAO. Sakhaugol would be formed through the contribution by Mechel of its 25%+1 share in Yakutugol OAO and up to $300 million, in return for which Mechel would obtain 51% of Sakhaugol.

Other participants in the newly-formed company would include Russian Railways OAO, which would contribute 29.5% of Elgaugol OAO (a company that has the license to develop the Elga deposit); and the Government of the Republic of Sakha, which would contribute 39.4% of Elgaugol OAO and 45%-1 share in Yakutugol OAO.

As a result, Sakhaugol would own about 70% of Yakutugol and 68.9% of Elgaugol. Yakutugol OAO is a coal producer that produced 9.9 million tonnes of coal in 2005, most all of which is exported to Asian markets. The Elga coal deposit has proven reserves, according to Russian reserve standards, of 2.2 billion tonnes of coal, potentially making it the largest coal deposit in Russia.

“The proposal we submitted is in furtherance to our goal to gain control over Yakutugol OAO, and could also serve to launch Mechel into a strategically very interesting region, one remarkably rich in mineral resources. All of this, of course, is fully on line with our strategy to further strengthen the mining segment,” Mechel’s COO, Alexei Ivanushkin, said.