For 2008 Mechel produced 15.15 million tonnes of coking coal and 11.24Mt of thermal coal, an increase of 45% and 4% respectively from 2007.

However, the impact of the global downturn kicked in during the last three months of 2008 with the company clocking a 31% fall in coking coal output from the September quarter while thermal coal production lifted 9% to 2.95Mt.

Mechel senior vice president Vladimir Polin said the company was witnessing a stabilisation of prices for coal and iron ore.

“Under such conditions we directed our efforts at exploring new markets,” he said.

“Having increased sales of iron ore concentrate to China we started shipping our coal there as well.

“Very promising in this regard is our recent acquisition of Bluestone Coal, which opened up for us markets of the United States and Latin America.”

In May the company received a two-month extension to restructure $1 billion of a $1.5 billion bridge loan.

Mechel chief executive officer Igor Zyuzin said the company breached a number of covenants on debt obligations because of a significant and sharp decline in market conditions.

“That is why most of our long-term obligations were reclassified as short-term ones, which resulted in a significant increase of this position in our balance sheet,” he said.

“Most lending banks show understanding for this situation and take reasonable approach to it.

“We have already reached agreements on conditions for restructuring the main part of the debt and expect that the restructuring papers will be signed in July.”

Mechel had debt of $5.37 billion at the end of 2008 and a cash position of $254.84 million.