Mechel : Management presentation. December 2020

MANAGEMENT PRESENTATION

DECEMBER, 2020

Disclaimer

This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Mechel PAO (Mechel) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Any purchase of securities should be made solely on the basis of information Mechel files from time to time with the U.S. Securities and Exchange Commission. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Mechel or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.

This presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of Mechel, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements. We refer you to the documents Mechel files from time to time with the U.S. Securities and Exchange Commission, including our Form 20-F. These documents contain and identify important factors, including those contained in the section captioned "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in our Form 20-F, that could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or ADRs, financial risk management and the impact of general business and global economic conditions.

The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.

Overview

• • Leading vertically integrated Mining & Metals company

• • Comprises two major divisions - Mining and Steel

• • Main divisions are supported by Power division, Sales & Marketing units and Logistics facilities

• • As of December 31, 2019 Company emloyed about 56.2 thousand people

Financial Highlights

Operating Highlights, Sales

9M2020 Revenue

Breakdown (196.2 bln rubles)

9M2020 EBITDA*

Breakdown (31.4 bln rubles)Mining Segment

6.8

9M19

Source: Company data

Steel

Mining

Met CoalSteam CoalIron ore concentratePow er

* Here and further EBITDA is calculated as Adjusted EBITDA in accordance with definition in our earnings Press release Appendix A

9M20

Source: Company data

Steel Segment

2.75

2.65

9М19

9М20

Steel (production)Long ProductsHardware

Capital Structure

Ordinary Shares 416,270,745 - 75%Preferred Shares 138,756,915 - 25%

Corporate Governance

The company adheres to the most rigorous standards of corporate governance. Apart from complying with shareholder law norms, Mechel assumes a series of additional obligations, holding to the highest international requirements, including NYSE corporate governance rules that apply to US-based companies within the NYSE 303A listing standard.

In accordance with the Company's charter members of the Board of Directors are elected by Shareholders' General Meeting, to a total of 9 persons, the majority of whom are independent (independent directors).

In order to execute its functions, the Board of Directors created the following permanent committees:

• • Audit Committee

• • Committee on Investments and Strategic Planning

• • Committee on Appointment and Remuneration

Growth Points

Our major growth and development points are:

•  Debt restructuring

  Successful restructuring will decrease financial expenses and arrange financing to develop our major projects

•  Growing share of Universal rolling mill and stainless long and flat steel products

  Increases steel segment profitability by moving products range towards the higher value added positions

•  Port Posiet

  Gates to our Asian coal offtakers through increase of capacities to 9 mln tonnes

Supported by …

Superior mining assets quality

•  One of the leading metallurgical coal producers and exporters on the seaborne market

•  Ability to supply steel producers with a wide range of metallurgical coal

•  Core assets positioned at the lower bound of the global cost curve

Strong local steel producer position

•  Most diversified specialty steel producer in Russia

•  One of the largest long steel producer in Russia

•  Largest distribution platform in Russia

•  First newly built rolling mill for beams and high-speed long rails in Russia

Strategic position to supply Asia-Pacific seaborne market

•  Coal assets uniquely positioned to supply metallurgical coal to attractive Asia-Pacific markets

•  Access to key Far Eastern ports with low transportation cost

•  Own infrastructure including ports and rolling stock, secures access to end customers and export markets

Vertically integrated steel business model

Assets Structure

Power Segment

Own Ports

Kuzbass Power Sales Company

Distribution

Mechel Service (Russia)Mechel Service Global (excl. Russia)

Mechel Carbon AG (Swiss)

Vertically Integrated Mining & Steel Business Model

Coking Coal Concentrate, 12m 2019

One of the leading metallurgical coal producer globally with ability to supply steel producers with a wide range of metallurgical coal types, coke and iron ore concentrate.

Own infrastructure helps to establish access to end customers.

Production

Consumption

Sea Port capacity, 12m 2019

Iron Ore Feed, 12m 2019

ProductionConsumption

Cargo turnover, 12m 2019

Coke, 12m 2019

MMt

2,6

1,7

ProductionConsumption

Power, 12m 2019

MMt

14.5

* -Source: Company data

- Volumes shipped through Vanino port

Shipped through own portsShipped overall

MMt

29,6

14,0

Own rolling stock

blnKWh

Overall

Production

Consumption

Market Position

Broad Geographic Footprint

Ability to Supply All Metcoal Markets

Diversification / enhancement of sales channels to the fast- growing Asian and European markets

3.1mlnt(1)

Europe

Major coking coal exporting regions

Major coking coal importing regions

Size of respective seaborne coking coal markets

Mechel's routes

3rd parties routes

Target markets for Mechel's coking coal supplies

Target markets for Mechel's steam coal supplies

Notes: (1) FY2019 metallurgical coal production

Russian Federation

(2) Total seaborne met coal trade (2018), CRU

Extensive range of metcoal grades allows for diversified product portfolio to serve a variety of customer needs

2.7 m ln t (1) Yak utugol

Mechel's own ports on the Sea of Japan and Azov Sea serve as the stable gateways to export markets

CanadaUSAAustralia

Freight rates from port Posiet (Handysize 22 000 t)

• to Northern China

• to Yangtze River

• to Southern China

• to Thailand

• to Philippines

• to Indonesia

India

(West Coast / East Coast)

Freight rates from port Vanino (45 000 t)

$9.25 pmt

• to Northern China

  $9.75 pmt

• to Yangtze River

  $12.00 pmt

• to Southern China

  $14.00 pmt

  $10.00 pmt

  $10.50 pmt

  $11.50 pmt

• to Thailand

  $14.00 pmt

  $12.50 pmt

• to Philippines

  $15.25 pmt

  $12.50 pmt

• to Indonesia

$19 / $17 pmt

India

(West Coast / East Coast)

$13.90 pmt

$16.75 pmt /

$15 pmt

to Japan

$7.00 pmt

to Japan

$6.00 pmt

Steel Segment

Mechel Service Global - Map of distribution hubs

Russian Federation

Europe

Kazakhstan

Mechel Serv ice f acilities

Source: Company data

Advantages

	84 storage sites and service centers throughout Russia, CIS & Europe
	Real time market intelligence and pricing feedback
	Opportunity to address specific customer needs and sell more high margin and value added products

Product	Production Volum e, 12m 2019 '000 tonnes	Ru s s ian production s har e	Rank
Rebar	1,223	16.2%	4
Wire rod	835	26.7%	1
Wire products	379	27.5%	1
Rails	274	21.8%	2
Beams	271	27.0%	2
High-tensile wire	28	28.5%	2

Source: Company Filings

Universal Rolling Mill

Key project results

•  From January 2016 Mechel supplies rails to the Russian Railways.

•  New types of rails production (for use at European railways) have already been adopted at the plant and passed certification for conformity with European railroad standards.

•  In 9M2020 Rails sales increased by 37% compared to 9M2019.

•  Structural shapes sales increased by 28% Q-o-Q.

•  We continue developing and producing new types of rails and shapes at Universal rolling mill. In the near term we plan to start mastering new rail types for railroads with speed up to 400 km/h.

•  In July 2020 Chelyabinsk Metallurgical Plant has shipped to the customers the 3rd-million tonne of products from the Universal Rolling Mill since the beginning of production. 40% оf the production volumes were rails.

Key project metrics:

•  Capacity - up to 1.1 mln tonnes

  Universal rolling mill sales (th tonnes)

  ProductRailway railsStructural shapes

•  CAPEX - US$ 900 mln including steel-making facility (Continuous casting machine #5)

•  Products - High-speed and low-temperature rails of up to 100 meter long

  - H-beams, channel bars, angles and grooves

•  Target consumers - Russian Railways and Construction industry

9M' 20

9M' 19

%

3Q' 20

2Q' 20

%

264

193

+37

50

• 99 -50

  228

  213

  +7

  86

• 67 +28

Universal Rolling Mill

Source: Company data

Logistics Facilities

Mechel Trans -

Access to Seaborne Market

• Access to main customers in Asia-Pacific and Europe is secured through own ports facilities

•  Port capacity alignes with expected growth in export volumes

Own and Partner Seaport Facilities

Ports Key Characteristics

Own and Partner Seaport Annual Turnover Capacities, MMt

21.0

10.0

2012Posiet

Source: Company data

Temryuk

Notes: * Volumes secured by contractual agreements

2020Vanino

Mechel Infrastructure Allows Secured Access to Final Customers

Posiet Port

• • Increase access to Asian coal customers via seaborne m arket

• • Existing port capacity - 9 mln tonnes per year

• • Target capacity - 15 mln tonnes (Panamaxvessels) after 2nd stage of m odernization

Vanino Port*

* Access to port secured by contractual agreements

• • Increases logistics flexibilityto Asian coal customers

• • Total turnover up to 10 mln tonnes of cargo per year

• • Shorter transportation dis tances - lower rail and vessel freights costs

Temryuk Port

• • Logistics flexibilityon the Sea of Azov and Black Sea

• • Potential to increase export of coking coal, PCI and anthracite to Europe

• • Existing port capacity - 2 mln tonnes

• • Target capacity - 4 mln tonnes

Mechel Trans Transportation Company

• • Rolling stock of about 11,500 railcars

• • Ensures uninterrupted trans portation

• • Reduces dependencyon Russian Railways, state- owned and independent freighters

Port Posiet

Debt Restructuring

Debt structure & net debt / EBITDA ratiodynamics

•  As of November 2020 portion of restructured debt is at a level of 90%; ruble portion of debt amounts to 54%; and Russian state-controlled banks hold 86,7% of our debt portfolio.

•  Net leverage increased to 8.2 on LTM EBITDA decrease and USD- and euro-denominated debt growth as a result of ruble depreciation.

•  Average interest rate through the debt portfolio as of November 2020 is 5.5% per annum; average paid interest rate amounts to 5.4% per annum.

•  In 3Q2020 Group repaid RUB 4.9 bln and received RUB 6.2 bln of debt.

60 00

50 00

40 00

30 00

20 00

10 00

0

FY'15 FY'16 FY'17 FY'18 1Q'19 1H'19 9M'19 FY'19 1Q'20 1H'20 9M'20

Lease and other financial liabilities

Long-term borrowings

Interest payable

Short-term borrowings and current portion of long-term borrowings

Net Debt*/EBITDA

* excluding GPB option on Elga, fines and penalties

Including Elga coal complex.

BondsOther

1.0%0.6%

3 0,0

2 5,0

2 0,0

1 5,0

1 0,0

5,0

0,0

21

MANAGEMENT PRESENTATION / DECEMBER 2020 / DEBT STRUCTURE

KEY FINANCIAL AND OPERATIONAL RESULTS

3Q 2020 Financial results summary

•  Consolidated Revenue in 3Q2020 amounted to 64.4 bln RUB, a slight decline compared to 2Q2020. Steel segment Revenue growth on stronger pricing and sales volumes for construction steel products was offset by weaker Revenues in Mining and Power segments on lower coal prices and seasonal decline in power and heat consumption.

RUB mlnRevenueOperating profit / (loss)

•  3Q2020 EBITDA* went up by 6% compared to 2Q2020 and amounted to 9.3 bln RUB with EBITDA margin increase to 15%. It happened mainly due to Steel segment EBITDA growth with stable EBITDA of Mining segment.

•  Loss attributable to equity shareholders of Mechel PAO in 3Q2020 amounted to 26.0 bln RUB, compared to profit amounted to 47.1 bln RUB in 2Q2020. Growth of exchange rate losses on ruble weakening was the major factor of negative dynamics.

EBITDA*EBITDA margin, %

(Loss) / profit attributable to equity shareholders of Mechel PAO

*Here and further EBITDA is calculated as Adjusted EBITDA in accordance with definition in Press release Attachment A

3Q' 20

2Q' 20

• 64,424 64,536

6,353

%

9M' 20

9M' 19

%

-0.2% 196,197 220,113 -11%

(2,260)

- 12,023 30,787 -61%

9,349

8,852 6% 31,362 44,333 -29%

15%

14%

16% 20%

(25,959)

47,074 -155% (15,763)

12,174 -229%

3Q 2020 Production and sales summary

•  In 3Q2020 coal mining volumes decreased by 7% compared to 2Q2020 on lower production at Yakutugol and almost stable results of Southern Kuzbass Q-on-Q. In 9M2020 coal mining volumes increased by 29% compared to 9M2019.

•  Pig iron and steel production declined by 5% and 8% respectively Q- on-Q as a result of ongoing repairing works at Chelyabinsk Metallurgical Plant.

•  Coking coal sales to third parties in 3Q2020 decreased by 12% compared to 2Q2020.

•  Other met coal (PCI and anthracites) sales were higher by 6% Q-on- Q. Steam coal sales (including middlings) grew in 3Q2020 by 2% Q-on-Q.

•  Flat and Long products sales were flat Q-on-Q.

Production (th tonnes)

Product

3Q' 20

2Q' 20

%

9M 20

9M 19

%Run-of-mine Coal*

4,274

4,578

-7

13,131

• 10,195 +29

  Pig Iron

  862

  912

  -5

  2,646

• 2,530 +5

  Steel

  852

  926

  -8

  2,654

• 2,750 -3

 Excluding the volume of the Elga coal complex.

Sales (th tonnes)

Product

3Q' 20

2Q' 20

%

9M 20

9M 19

%Coking Coal*

Steam Coal*

Flat Products

Long Products

1,435 1,000

1,628 975

-12 +2

4,487 2,857

• 4,277 +5

• 2,457 +16

  109 645

  109 647

  0 0

  342 1,940

• 337 +1

• 1,891 +3

 Excluding the volume of the Elga coal complex.

Mining segment

•  Share of domestic sales continued to decline and shrank from 20% to 17% Q-on-Q. Share of Europe increased from 9% to 10%, sales to China comprised 22% after 20% in 2Q2020. Share of sales to Middle East, CIS and Asia (without China) remained unchanged.

•  Weaker coal prices resulted in 6% Mining segment revenue decline Q-on-Q.

•  Negative revenue dynamics was compensated by cost of sales decrease that allowed EBITDA to stay unchanged Q-on-Q. EBITDA margin increased from 24% to 25% compared to 2Q2020.

Revenue, EBITDA margin, RUB Bln

Inter-segment revenue

30,0

RevenueEBITDA margin

20,0

10,0

0,0

3Q 19

100%

80%

60%

40%

20%

0%

4Q 19

1Q 20

2Q 20

3Q 20

EBITDA, RUB Bln

7,0 6,0 5,0 4,0

3,0 2,0 1,0 0,0

6.4

6.4

EBITDA 2Q2020

Revenue breakdown by regions (3Q 2020)

Middle East 5%

PricesExternal sales volumesInter-segment salesCost of salesEBITDA 3Q2020

Steel segment

•  Steel segment Revenue to 3rd parties in 3Q2020 increased by 3% compared to 2Q2020 due to higher construction steel products prices Q- on-Q, as well as increased sale volumes of structural shapes of Universal Rolling Mill, which allowed to offset the decrease of rails sales. Rising prices for structural shapes also had a positive impact.

•  EBITDA in 3Q2020 went up by 18% compared to 2Q2020 on higher prices for construction steel products and decrease in selling and distribution expenses.

•  Segment`s EBITDA margin increased Q-on-Q from 6% to 7%.

EBITDA, RUB Bln

4,0

Revenue, EBITDA margin, RUB Bln

Inter-segment revenueRevenueEBITDA margin

3Q 19

4Q 19

1Q 20

2Q 20

3Q 20

Revenue breakdown by regions (3Q 2020)

3,5

1,5

1,0

0,5

3,0

2,5

2,0

0,0

Prices

EBITDA 2Q2020

- 0.1

- 0.2

External sales Inter-segment Cost of sales volumes sales

OtherEBITDA 3Q2020

Cash costs & Average sales prices dynamics

Mining Segment

3Q19

2,381

4Q19

1Q20

Coal SKCC

Steel Segment

Cash costs, RUB/tonne

2Q20

3Q20

3,031

3,390

2,782

2,156

Coal YU

Iron ore

CokeCoking coal Anthracite and Steam coal

PCI

Average sales prices FCA, RUB/tonne

Iron ore

3Q19

4Q19

1Q20

2Q20

3Q20

3Q19

4Q19

1Q20

2Q20

3Q20

Ferrosilicon

BilletsWire rodRebarCarbon flat Railway rails Ferrosilicon

RebarHardwareCarbon flatRailway railsStructural shapes

Consolidated revenue and segment EBITDA dynamics

•  Mining segment Revenue to 3rd parties in 3Q2020 decreased by 6% compared to 2Q2020. This was a result of lower prices for almost all coal products in the reporting period, compared to 2Q2020.

•  Steel segment Revenue to 3rd parties in 3Q2020 increased by 3% compared to 2Q2020 due to higher construction steel products prices Q-on-Q, as well as increased sale volumes of structural shapes of Universal Rolling Mill, which allowed to offset the decrease of rails sales. Rising prices for structural shapes also had a positive impact.

•  Power segment Revenue to 3rd parties declined by 2% in 3Q2020 compared to 2Q2020 due to seasonal factors.

•  Mining segment EBITDA remained stable in 3Q2020 compared to 2Q2020 and amounted to 6.4 bln RUB as lower Revenue was compensated by cost of sales decrease.

•  Steel segment EBITDA went up by 18% and amounted to 3.0 bln RUB compared to 2Q2020 on higher prices for construction steel products and decrease in selling and distribution expenses.

•  Power segment EBITDA declined by 34% in 3Q2020 and amounted to 254 mln RUB on selling and distribution expenses growth.

Revenue, RUB Bln

Power

Steel

-1.1

1.1

6.0 5.9

Revenue 2Q2020

Mining SegmentSteel Segment

Segment EBITDA, RUB Bln

Mining

-0.1

Power SegmentRevenue 3Q2020

Power

Steel

Mining

0.4

9,4

9,4

9,7

6.4

6.4

EBIT DA 2Q2020

Mining SegmentSteel SegmentPower SegmentEBIT DA 3Q2020

Cash flow & trade working capital

•  Cash flow from operations covers Group's current expenses, including debt service and lease payments.

•  As of September 30, 2020, trade working capital was negative at -12.3 bln RUB.

•  Group's capital expenditures in 9M2020 amounted to 6.0 bln RUB, including 1.8 bln RUB of lease payment.

Cash net of overdrafts as of 31.12.2019

Net Operating Net Investing Net Financingactivitiesactivities activitiesEffect ofCash net ofexchange rate overdrafts aschangesof 30.09.2020

Trade working capital management, RUB Bln

FREE CASH FLOW for 9M 2020, RUB Bln

30.09.2019

31.12.2019

Trade current assets

31.03.2020

30.06.2020

Trade current liabilities

30.09.2020

Trade working capital

Cash flow from

OperationsNet interest Capital expenses, incl expenditures overdue interest (excluding lease) and capitalized

Net investing activity

Free Cash Flow Net Settelment of Free Cash Flow loan,lease and to Firm other obligations

Operational Results

Mining Segment

Production:

Steel Segment

Production:

Product

Pig Iron

9M'2020, thousand tonnes

Sale s:

Steel

MANAGEMENT PRESENTATION / DECEMBER 2020 / KEY OPERATIONAL RESULTS

Product

Flat rolls

Long rolls

Hardw are

Forgings

Stam pings

Ferrosilicon

9M'2020, thousand tonnes

2,646 2,654

1,940

342

415

31

30

47

2Q2020, thousand tonnes

912 926

2Q2020, thousand tonnes

%

-5 -8

%

109

0

9

+2

4

-17

18

-13

Mechel is a global mining and metals company