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UBS Investment Research Mechel
2Q09 US GAAP slightly below expectations
Adjusted EBITDA loss reached US$19 mn in 2Q09 Mechel just released its 2Q09 US GAAP income statement Revenues reached $1.28 bn (UBSe $1.37 bn), with an adjusted EBITDA loss of -$19 mn (UBSe was at $52 mn) and net income of $219 mn (UBSe $126 mn). The weak performance seems to be driven by lower coal demand and an appreciation of the ruble, which outweighed some recovery in steel output. The results are generally weak, although the substantial % difference vs. forecasts is due to a low base. Performance was skewed by one-offs Mechel again revalued inventories upwards by $57 mn, vs. a similar gain of $61 mn in 1Q09, which artificially decreased the cost of sales. In addition to this, the company recorded a $304 mn forex gain on a 9% ruble appreciation during 2Q09, resulting in $219 mn in net income in 2Q09 vs. a loss of $691 mn in 1Q09. 3Q09 should be a much stronger quarter We believe that 3Q09 should demonstrate a strong improvement in profitability. In particular, Mechel’s output moderately rose virtually across-the-board, with the exception of сoking coal and ferrochrome production, which doubled q-o-q. Product prices also recovered in 3Q09. In addition to this, 3Q09 should be another quarter that has a forex gain, given the 4% ruble appreciation during the quarter. Valuation Mechel offers attractive exposure to coal, in our view, while a potential performance turnaround in 3Q09 may become a major trigger for the company. We value Mechel using a DCF approach and reiterate our bullish view on the company.

Global Equity Research
Russia Steel 12-month rating 12m price target Price

Buy *
Unchanged
US$25.00/US$25.00 Unchanged US$21.05/US$21.05 (ADR)

RIC: MTL.N BBG: MTL US

9 November 2009
Trading data (local/US$) 52-wk range Market cap. Shares o/s ADR ratio Free float Avg. daily volume ('000) Avg. daily value (US$m) Balance sheet data 12/09E Shareholders' equity P/BV (UBS) Net Cash (debt) Forecast returns Forecast price appreciation Forecast dividend yield Forecast stock return Market return assumption Forecast excess return EPS (UBS, US$) 12/09E 12/09E 12/10E UBS 0.07 1.28 Cons. (0.99) 1.30 12/08 Actual +18.8% 0.0% +18.8% 10.6% +8.2% US$3.86bn 2.3x (US$5.29bn) US$21.70-2.57/US$21.92-2.61 US$8.76bn/US$8.76bn 416m (ORD)/416m (ADR) 1 ADR:1 ORD 23% 1,169/18.7/-

Highlights (US$m) Revenues EBIT (UBS) Net Income (UBS) EPS (UBS, US$) Net DPS (UBS, US$) Profitability & Valuation EBIT margin % ROIC (EBIT) % EV/EBITDA (core) x PE (UBS) x Net dividend yield %

12/07 6,684 1,398 913 2.19 0.76 5-yr hist av. 15.7 28.7 -

12/08 9,951 2,556 2,908 6.99 1.12 12/08 25.7 30.2 6.5 4.3 3.7

12/09E 5,527 571 31 0.07 0.50 12/09E 10.3 5.9 13.4 >100 2.4

12/10E 7,424 1,455 534 1.28 0.01 12/10E 19.6 14.6 7.2 16.4 0.0

12/11E 8,298 2,084 882 2.12 0.17 12/11E 25.1 20.0 5.3 9.9 0.8

Performance (US$)
70.0 60.0 50.0 40.0 30.0 20.0 10.0 10/06 01/07 04/07 07/07 10/07 01/08 04/08 07/08 10/08 01/09 04/09 07/09 10/09 0.0 Stock Price (US$) Rel. Russian RTS1-Interfax 600 500 400 300 200 100 0

Price Target (US$) (LHS) Rel. Russian RTS1-Interfax (RHS)

Stock Price (US$) (LHS)

Source: UBS

www.ubs.com/investmentresearch

Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Valuations: based on an average share price that year, (E): based on a share price of US$21.05 on 09 Nov 2009 15:06 EST

Alexei Morozov
Analyst alexei.morozov@ubs.com +7-495-648 2369

Kirill Chuyko
Analyst kirill.chuyko@ubs.com +7 495 648 2365

Anastasia Gracheva
Analyst anastasia.gracheva@ubs.com +7 495648 2363

This report has been prepared by UBS Limited ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 5. * Exception to core rating bands; See page7 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

Mechel 9 November 2009

Table 1: Mechel’s 2Q09 US GAAP income statement, US$ mn
2Q08 Revenues COGS Gross profit SG&A Adjusted EBITDA * Operating profit Interest expense Other income and expense Share of net income from associates Pretax profit Income tax current Minority interest Net profit 3 021 1 474 1 547 583 1 083 964 61 5 7 891 243 46 602 1Q09 1 179 804 375 361 28 14 118 595 (3) (696) 22 (27) (691) 2Q09 1 281 970 311 369 (19) (58) 107 (336) 2 168 58 (7) 219 q-o-q, % 9% 21% -17% 2% -9% y-o-y, % -58% -34% -80% -37% 76% -81% -76% -64% 2Q09E UBSe 1 374 1 028 346 380 52 (34) 130 (320) 156 30 126 8% 95% 74% 30 638% Diff, % -7% -6% -10% -3% 70% -18% 5% 126 2Q09E Consensus 1 254 Diff, % 2%

Key profitability ratios, % Gross margin Adjusted EBITDA margin * Operating margin Net margin * Adjusted for inventory revaluation Source: Company data, UBS estimates 51% 36% 32% 20% 32% 2% 1% -59% 24% -1% -5% 17% -8% -4% -6% 76% -27% -37% -36% -3% 25% 4% -2% 9% -1% -5% -2% 8% 2% 15% 10% -12%

UBS 2

Mechel
Income statement (US$m)
Revenues Operating expenses (ex depn) EBITDA (UBS) Depreciation Operating income (EBIT, UBS) Other income & associates Net interest Abnormal items (pre-tax) Profit before tax Tax Profit after tax Abnormal items (post-tax) Minorities / pref dividends Net income (local GAAP) Net Income (UBS) Tax rate (%) Pre-abnormal tax rate (%)

12/04
3,636 (2,747) 889 (138) 751 846 (51) 0 1,545 (176) 1,369 (15) (12) 1,343 1,358 11 11

12/05
3,805 (3,122) 683 (168) 516 41 (31) 0 526 (137) 389 (1) (7) 381 382 26 27

12/06
4,398 (3,586) 812 (196) 616 169 (30) 0 755 (231) 524 1 (32) 493 493 31 30

12/07
6,684 (4,996) 1,688 (290) 1,398 75 (87) 0 1,385 (356) 1,029 0 (116) 913 913 26 26

12/08
9,951 (6,931) 3,020 (463) 2,556 884 (324) 0 3,116 (119) 2,997 0 (89) 2,908 2,908 4 4

12/09E
5,527 (4,470) 1,057 (485) 571 0 (518) 0 53 (14) 39 0 (8) 31 31 27 27

% ch
-44.5 -35.5 -65.0 4.8 -77.6 60.0 -98.3 -87.9 -98.7 -91.3 -98.9 -98.9 608.8 608.8

12/10E
7,424 (5,442) 1,982 (527) 1,455 0 (541) 0 914 (247) 667 0 (133) 534 534 27 27

% ch
34.3 21.7 87.5 8.7 154.5 4.3 1624.3 1624.3 1624.3 1624.3 1624.3 1624.3 0.0 0.0

12/11E
8,298 (5,665) 2,633 (549) 2,084 0 (575) 0 1,510 (408) 1,101 0 (220) 882 882 27 27

% ch
11.8 4.1 32.8 4.0 43.3 6.2 65.2 65.2 65.2 65.2 65.2 65.2 0.0 0.0

Per share (US$)
EPS (local GAAP) EPS (UBS) Net DPS Cash EPS BVPS

12/04
3.36 3.40 0.01 3.74 4.94

12/05
0.92 0.92 0.49 1.32 5.31

12/06
1.18 1.18 0.47 1.65 6.88

12/07
2.19 2.19 0.76 2.89 8.42

12/08
6.99 6.99 1.12 8.10 9.68

12/09E
0.07 0.07 0.50 1.24 9.27

% ch
-98.9 -98.9 -55.5 -84.7 -4.3

12/10E
1.28 1.28 0.01 2.55 10.71

% ch
1624.3 1624.3 -98.0 105.5 15.6

12/11E
2.12 2.12 0.17 3.44 12.95

% ch
65.2 65.2 1624.3 34.8 20.8

Balance sheet (US$m)
Net tangible fixed assets Net intangible fixed assets Net working capital (incl. other assets) Other liabilities Operating invested capital Investments Total capital employed Shareholders' equity Minority interests Total equity Net debt / (cash) Debt deemed provisions Total capital employed

12/04
1,275 173 590 (193) 1,844 76 1,920 2,058 215 2,272 (460) 108 1,920

12/05
1,509 250 525 (139) 2,144 425 2,569 2,210 128 2,338 132 98 2,569

12/06
2,013 275 977 (144) 3,121 429 3,550 2,865 163 3,028 374 148 3,550

12/07
3,702 2,139 2,143 (701) 7,282 151 7,434 3,505 301 3,805 3,294 335 7,434

12/08
4,278 3,438 2,767 (841) 9,641 80 9,722 4,031 291 4,322 5,114 285 9,722

12/09E
4,710 3,438 2,336 (841) 9,643 80 9,723 3,858 294 4,152 5,285 285 9,723

% ch
10.1 0.0 -15.6 0.0 0.0 0.0 0.0 -4.3 1.2 -3.9 3.3 0.0 0.0

12/10E
5,091 3,438 2,593 (841) 10,280 80 10,360 4,460 355 4,815 5,260 285 10,360

% ch
8.1 0.0 11.0 0.0 6.6 0.0 6.6 15.6 20.5 16.0 -0.5 0.0 6.6

12/11E
5,251 3,438 2,716 (841) 10,564 80 10,644 5,389 454 5,843 4,516 285 10,644

% ch
3.1 0.0 4.8 0.0 2.8 0.0 2.7 20.8 28.1 21.4 -14.2 0.0 2.7

Cash flow (US$m)
Operating income (EBIT, UBS) Depreciation Net change in working capital Other (operating) Operating cash flow Net interest received / (paid) Dividends paid Tax paid Capital expenditure Net (acquisitions) / disposals Other Share issues Cash flow (inc)/dec in net debt FX / non cash items Balance sheet (inc)/dec in net debt Core EBITDA Maintenance capital expenditure Maintenance net working capital Operating free cash flow, pre-tax

12/04
751 138 (249) (944) (304) (51) (5) (176) (303) 759 755 221 895 10 905 884 (138) (40) 706

12/05
516 168 101 (96) 688 (31) (194) (137) (428) (567) 40 1 (627) 35 (592) 640 (150) (35) 455

12/06
616 196 (163) 29 677 (30) (191) (231) (398) (155) 64 0 (262) 21 (241) 799 (155) (67) 577

12/07
1,398 290 (374) 52 1,366 (87) (315) (356) (830) (2,557) (161) 0 (2,940) 20 (2,920) 1,686 (160) (86) 1,441

12/08
2,556 463 (369) 995 3,646 (324) (468) (119) (1,200) (2,101) 723 0 157 (1,978) (1,821) 2,633 (160) (97) 2,376

12/09E
571 485 431 3 1,491 (518) (208) (14) (912) 0 (3) 0 (169) (2) (171) 1,057 (160) (65) 832

% ch
-77.6 4.8 -99.6 -59.1 60.0 -55.5 -87.9 -24.0 -99.9 -90.6 -59.9 0.0 -33.2 -65.0

12/10E
1,455 527 (257) 60 1,785 (541) (4) (247) (900) 0 (60) 0 (40) 65 25 1,982 (160) (84) 1,738

% ch
154.5 8.7 1624.3 19.7 4.3 -98.0 1624.3 -1.3 1624.3 -76.5 87.5 0.0 29.6 108.9

12/11E
2,084 549 (124) 99 2,609 (575) (73) (408) (700) 0 (99) 0 633 111 745 2,633 (160) (94) 2,379

% ch
43.3 4.0 -51.9 65.2 46.1 6.2 1624.3 65.2 -22.2 65.2 71.7 2867.2 32.8 0.0 11.0 36.9

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Note: For some companies, the data represents an extract of the full company accounts.

UBS 3

Global Equity Research
Russia Steel 12-month rating 12m price target

Mechel
Buy *
US$25.00
Valuation (x)
P/E (local GAAP) P/E (UBS) P/CEPS Net dividend yield (%) P/BV EV/revenue (core) EV/EBITDA (core) EV/EBIT (core) EV/OpFCF (core) EV/op. invested capital

5Yr Avg
-

12/07
7.2 7.2 5.5 4.8 1.9 1.3 5.1 6.2 6.0 1.7

12/08
4.3 4.3 3.7 3.7 3.1 1.7 6.5 6.7 7.2 2.0

12/09E
NM >100 17.0 2.4 2.3 2.6 13.4 24.8 17.0 1.5

12/10E
16.4 16.4 8.3 0.0 2.0 1.9 7.2 9.8 8.2 1.4

12/11E
9.9 9.9 6.1 0.8 1.6 1.7 5.3 6.7 5.9 1.3

Company profile
Mechel is a diversified mining and steel company. It is Russia's largest coking coal producer (15.2m tons 2008), the second-largest producer of long products, the third largest nickel producer (16k tons), and a sizeable producer of steaming coal (11.2m tons 2008) and iron ore (4.7m tons 2008); consolidated steel capacity is 7m tons. It exports significant quantities of coal to Europe and Asia. Mechel's steel business is 100% self-sufficient in coking coal, more than 80% in iron ore and 50% in electricity. The company is controlled by one individual shareholder, and listed on the NYSE, with a free float of 30%.

Enterprise value (US$m)
Average market cap + minority interests + average net debt (cash) + pension obligations and other - non-core asset value Core enterprise value

12/07
6,564 300 1,834 1 (99) 8,599

12/08
12,635 290 4,204 1 (99) 17,031

12/09E
8,762 294 5,200 1 (99) 14,158

12/10E
8,762 354 5,273 1 (99) 14,291

12/11E
8,762 454 4,888 1 (99) 14,005

Value (EV/OpFCF & P/E)
20.0x 15.0x 10.0x 5.0x 0.0x 12/07 12/08 12/09E EV/OpFCF (LHS) P/E (RHS) 12/10E 20.0x 15.0x 10.0x 5.0x 0.0x 12/11E

Growth (%)
Revenue EBITDA (UBS) EBIT (UBS) EPS (UBS) Cash EPS Net DPS BVPS

5Yr Avg
34.4 54.7 64.1 55.4 45.7 86.1 63.7

12/07
52.0 107.9 127.0 85.3 74.7 61.0 22.3

12/08
48.9 78.9 82.9 NM 180.2 48.5 15.0

12/09E
-44.5 -65.0 -77.6 -98.9 -84.7 -55.5 -4.3

12/10E
34.3 87.5 154.5 NM 105.5 -98.0 15.6

12/11E
11.8 32.8 43.3 65.2 34.8 NM 20.8

Margins (%)
EBITDA / revenue EBIT / revenue Net profit (UBS) / revenue

5Yr Avg
20.1 15.7 15.9 5Yr Avg 28.7 42.8 5Yr Avg 14.4 NM 28.9 0.9 5Yr Avg 1.7 2.1 7.6 5Yr Avg 1.0 10.1 2.3 5Yr Avg 34.1 25.5 -

12/07
25.3 20.9 13.7 12/07 26.9 20.0 28.7 12/07 16.1 2.9 34.5 2.0 12/07 1.3 1.6 6.5 12/07 1.0 12.4 2.9 12/07 94.0 48.4 21.3

12/08
30.3 25.7 29.2 12/08 30.2 29.1 77.2 12/08 7.9 6.2 16.1 1.7 12/08 1.2 1.5 8.1 12/08 0.9 12.1 2.6 12/08 NM 55.9 24.7

12/09E
19.1 10.3 0.6 12/09E 5.9 4.3 0.8 12/09E 1.1 0.1 NM 5.0 12/09E 0.6 0.7 5.1 12/09E 1.5 16.5 1.9 12/09E NM 57.8 36.7

12/10E
26.7 19.6 7.2 12/10E 14.6 10.7 12.8 12/10E 2.7 NM 0.8 2.7 12/10E 0.7 0.9 7.5 12/10E 1.2 12.1 1.7 12/10E NM 54.1 36.9

12/11E
31.7 25.1 10.6 12/11E 20.0 14.6 17.9 12/11E 3.6 12.1 8.3 1.7 12/11E 0.8 1.0 7.0 12/11E 1.1 8.4 1.3 12/11E 83.8 45.6 34.9

Profitability
30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 12/07 12/08 12/09(E) 12/10(E) ROIC (RHS) 12/11(E) 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

Return on capital (%) EBIT ROIC (UBS) ROIC post tax Net ROE Coverage ratios (x) EBIT / net interest Dividend cover (UBS EPS) Div. payout ratio (%, UBS EPS) Net debt / EBITDA Efficiency ratios (x) Revenue / op. invested capital Revenue / fixed assets Revenue / net working capital Investment ratios (x) OpFCF / EBIT Capex / revenue (%) Capex / depreciation Capital structure (%) Net debt / total equity Net debt / (net debt + equity) Net debt (core) / EV

EBIT margin (LHS)

ROE v Price to book value
80.0% 60.0% 40.0% 20.0% 0.0% 3.5x 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 12/07 12/08 ROE (LHS) 12/09(E) 12/10(E) Price to book value (RHS) 12/11(E) 0.0x

Growth (UBS EPS)
10000 9000 8000 7000 6000 5000 4000 12/07 12/08 Revenue (LHS) 12/09(E) 12/10(E) UBS EPS Growth (RHS) 12/11(E) 100% 50% 0% -50% -100%

Source: Company accounts, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. Valuations: based on an average share price that year, (E): based on a share price of US$21.05 on 09 Nov 2009 15:06 EST Market cap(E) may include forecast share issues/buybacks.

Alexei Morozov
Analyst alexei.morozov@ubs.com +7-495-648 2369

Kirill Chuyko
Analyst kirill.chuyko@ubs.com +7 495 648 2365

Anastasia Gracheva
Analyst anastasia.gracheva@ubs.com +7 495648 2363

* Exception to core rating bands; See page7

UBS 4

Mechel 9 November 2009

Mechel Mechel is a diversified mining and steel company. It is Russia's largest coking coal producer (15.2m tons 2008), the second-largest producer of long products, the third largest nickel producer (16k tons), and a sizeable producer of steaming coal (11.2m tons 2008) and iron ore (4.7m tons 2008); consolidated steel capacity is 7m tons. It exports significant quantities of coal to Europe and Asia. Mechel's steel business is 100% self-sufficient in coking coal, more than 80% in iron ore and 50% in electricity. The company is controlled by one individual shareholder, and listed on the NYSE, with a free float of 30%.

Statement of Risk We see the following risks associated with investing in Mechel: lower steel margins compared to emerging market peers, steel and raw materials prices coming down and Russia’s political and tax risks.

Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

UBS 5

Mechel 9 November 2009

Required Disclosures
This report has been prepared by UBS Limited, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request.
UBS Investment Research: Global Equity Rating Allocations
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Rating Category Buy Hold/Neutral Sell Rating Category Buy Sell Coverage 44% 40% 15% 3 Coverage less than 1% less than 1%
1

IB Services 39% 35% 27% 4 IB Services 33% 0%

2

1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. Source: UBS. Rating allocations are as of 30 September 2009.

UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Buy Neutral Sell UBS Short-Term Rating Buy Sell Definition FSR is > 6% above the MRA. FSR is between -6% and 6% of the MRA. FSR is > 6% below the MRA. Definition Buy: Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event. Sell: Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.

UBS 6

Mechel 9 November 2009

KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.

Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities CJSC: Alexei Morozov; Kirill Chuyko; Anastasia Gracheva.

Company Disclosures
Company Name 4, 16, 20 Mechel Reuters MTL.N 12-mo rating Short-term rating Buy (CBE) N/A Price US$20.01 Price date 06 Nov 2009

Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 4. 16. 20. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity. UBS Securities LLC makes a market in the securities and/or ADRs of this company. Because UBS believes this security presents significantly higher-than-normal risk, its rating is deemed Buy if the FSR exceeds the MRA by 10% (compared with 6% under the normal rating system).

Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.

UBS 7

Mechel 9 November 2009

Mechel (US$)
Price Target (US$) 80.0 60.0 40.0 20.0 0.0 01-Apr-05 01-Apr-06 01-Apr-07 01-Apr-08 01-Apr-09 01-Jul-05 01-Jul-06 01-Jul-07 01-Jul-08 01-Oct-04 01-Oct-05 01-Oct-06 01-Oct-07 01-Oct-08 01-Jul-09 01-Oct-09 01-Jan-05 01-Jan-06 01-Jan-07 01-Jan-08 01-Jan-09 Stock Price (US$)

Buy 2 Buy Neutral No Rating

Source: UBS; as of 06 Nov 2009 Note: On August 4, 2007 UBS revised its rating system. (See 'UBS Investment Research: Global Equity Rating Definitions' table for details). From September 9, 2006 through August 3, 2007 the UBS ratings and their definitions were: Buy 1 = FSR is > 6% above the MRA, higher degree of predictability; Buy 2 = FSR is > 6% above the MRA, lower degree of predictability; Neutral 1 = FSR is between -6% and 6% of the MRA, higher degree of predictability; Neutral 2 = FSR is between -6% and 6% of the MRA, lower degree of predictability; Reduce 1 = FSR is > 6% below the MRA, higher degree of predictability; Reduce 2 = FSR is > 6% below the MRA, lower degree of predictability. The predictability level indicates an analyst's conviction in the FSR. A predictability level of '1' means that the analyst's estimate of FSR is in the middle of a narrower, or smaller, range of possibilities. A predictability level of '2' means that the analyst's estimate of FSR is in the middle of a broader, or larger, range of possibilities. From October 13, 2003 through September 8, 2006 the percentage band criteria used in the rating system was 10%.

UBS 8

Mechel 9 November 2009

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