The Interview Steel Works

MMK’s Mill 5000 is one of the most advanced production facilities for heavy-gauge plate steel, and we intend to continuously grow our presence across the shipbuilding market. This possibility is closer to becoming a reality today, and we are happy with the agreements we have reached with USC. MMK has the capacity to fully meet the requirements of Russia’s shipbuilding sector, which will soon become a major driver of domestic economic growth.

Contributing to infrastructure In November 2006, MMK contracted SMS-DEMAG to ship equipment and parts for the Mill 5000 designed to roll highly profitable plates with the high strength of up to X120 reaching 4,850 millimeters by width. These MMK products are primarily used in oil-and-gas sector as well as in shipbuilding, bridge engineering and machine building industries. MMK’s major customers in the Russian pipe-making sector are ChelPipe, Seversky and Volzhsky pipe plants (both affiliated to TMK), Vyksa Steel Works and Almetyevsk Pipe Plant (affiliates of OMK).

In 2010, mill 5000 has reached its projected capacity of 1.5 mln tons per year. The mill has strengthened MMK foothold on the Russian market of rolled metal for pipemakers and secured MMK’s partaking in major oil-and-gas projects including Sakhalin- Khabarovsk-Vladivostok and Bovanenkovo- Ukhta gas mains and BTS-2 and VSTO oil pipelines

Crossing the borders To strengthen its footprint internationally, especially in the Middle East and Mediterranean markets, MMK has completed construction of MMK-Metalurji, a steelmaking complex in Turkey with a

capacity of 2.3 million tons per year. The complex produces hot and cold rolled flat products and galvanized and color-coated coils.

Construction of the Turkish plant included several stages. In November 2008, a service center was commissioned in the town of Iskenderun designed to cut hot-rolled coils, slit and cut cold-rolled coils and coated steel and to package the products. In October 2010 the site in Iskenderun witnessed the launch of the cold-rolling shop complete with a continuous pickling line, a two-stand reversing mill, a hot-dip galvanizing unit and a color coating line. In March 2011, a ribbon was cut at the electric arc furnace facility linked to a cast-and-roll unit. In May 2011, a color coating line was put into operation at the production site in Istanbul and the first coil of cold-rolled galvanized sheet was painted. In July 2011, a continuous hot pickling line was launched at the company’s site in Istanbul to draw the line under the construction of the entire metal processing compound.

The plant in Iskenderun has its own sea port built by the company as a green field project to supply the Iskenderun site with raw- and input materials and ship commercial products to customers. The port is capable of catering ships of up to 100,000 tons of deadweight and is located within the plant's territory. This sea hub is equipped to unload metal scrap, metal products including heavy-weight items, and various bulk cargoes. It can also offer its marine shipping services to third party companies located in the region.

The geographic position of the facilities and availability of a private sea port ensure favorable export opportunities for the

company. It can ship its products by sea to customers in Europe, Asia and the Middle East, helping customers optimize their expenses thanks to low transportation costs. MMK sees that as an additional competitive strength.

The MMK strategy in the region is based on the company’s competitive know how. Developed by the professional marketing team, it is built on a number of factors. Firstly, the annual demand for metal in Turkey is increasing by 7-10%, according to analysts. Secondly, there are good prospects for growth in the Middle East and Mediterranean countries. Another advantage is that the MMK Metalurji complex is capable of directly producing hot thick plate (avoiding the slab phase) that is further rolled into the cold one. This technology is implemented for the first time and it is much faster, cheaper and requires less energy consumption.

Looking forward It is expected that steel consumption in Russia will grow in 2012 faster than in the world on average. Steel consumption growth along with the investments made by MMK in equipment modernisation and mastering new products will help the company increase production of finished products in 2012 at its Russian facilities. Overall growth of the MMK Group’s finished products output in 2012 may reach15%, owing (among other factors) to ramp-up of the company's facilities in Turkey to full production capacity.

Contact: Kirill Golubkov

Magnitogorsk Iron & Steel Works Email: kgolubkov@mmk.ru