Q3 profits reached $US55 million compared to last quarter’s $823 million tumble but total net income for the first nine months of 2012 was down dramatically compared to the same period in 2011.

Mechel notched a $550 million loss at the nine-month mark this year, compared to a $527 million gain at the corresponding period in 2011.

One of Russia’s most indebted miners noted a massive cost control effort in its most recent financial report, but nevertheless posted an increase in borrowing for 2012.

Mechel’s net long-term debt, which was $6.8 million at the end of last year, rose 8% to $7.3 million after nine months this year.

“Work on optimizing the company’s debt structure never stops,” Mechel chief executive Evgeny Mikhel said, referring to last week’s restructuring of a $1 billion loan.

“Investment expenses are subject to ever more rigorous control,” Mikhel said.

“Despite the fact that programs of production cost cuts have always been in place at our enterprises, now we pay extra attention to the issue.”

At the nine-month mark this year, the coal and steel company’s mining arm recorded a 32% year-over year decline in profits at $428 million.

However, run-of-mine coal production during the same period rose 5% year-over-year to some 21 million tonnes.

“As the market situation has worsened for more than a year, our chief tasks became maintaining the mining division’s operational efficiency and ensuring further development of Elga, the company’s key strategic project,” Mechel Mining chief operating officer Boris Nikishichev said.

“This year the group’s production and sales enterprises have made maximum effort to increase production and shipment volumes as Southern Kuzbass’s production capacities were restored, which enabled us to partly smooth over the negative impact of lower prices.”

Mechel Mining responded to 2012 market conditions with limitations on expenses, acquisition of third-party supplies for lower prices, planned production cutbacks, temporary suspension of some US operations and the selling of inventories.

The Elga coal complex in remote Siberia completed construction of its washing plant in Q3 2012 and is tipped to have a coal capacity of 3Mt now that it is able to work year round.

A long-term off-take for up to 60Mt of Elga’s steam coal over 15 years was signed in September with Moscow-based utility RAO Energy Systems.