MMK Presentation: Organic Growth Strategy - Magnitogorsk Iron ...

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Target investments to boost profitability MMK focuses its activity on steel making, investing in quality and technology The implementation of the investment programme will enhance MMK’s competitive ability in the long term The investment programme is perfectly balanced to reduce costs, maintain the existing capacity and diversify into new unique products The entire gain in production from MMK’s investment program (abt. 3 m tons) will consist of downstream high value added products for the growing Russian market “MMK shares offer a good combination of improving medium term returns, relative valuation upside and leading market position in the attractive segments of downstream domestic market” Analyst of Goldman Sachs 21
Creating the most efficient steel production in Russia Crude steel Production Commercial Products Production 13.3 Mtpy 12.2 Mtpy Work under earlier contracts Plate Mill 5,000 HDGL # 2 14.1 Mtpy 13.0 Mtpy •Start-up of HDGL 2 with a capacity of 450 ktpy •Increase of the 2,000 HSM productivity by 500 ktpy 14.2 Mtpy 13.2 Mtpy •5,000 Plate Mill to roll first plate •Galvanized steel production level raised to 850 ktpy •Start-up of CCL # 2 2007 2008 2009 2010 2011 2012 2013 Note: 1. Expected capacity expansion based on management assessments according to MMK’s current Capex budget 14.2 Mtpy 13.2 Mtpy •Plate Mill 5,000 to reach design cap. of 1.5 Mtpy •Colour coated products’ level to rise to 400 ktpy •Start-up of the new cold rolling shop (CRM) 14.2 Mtpy 13.2 Mtpy •Production at the new 2000CRM to reach 2 Mtpy • Production of cold rolled and galvanized steel for auto sector to reach 1.1 Mtpy •450 ktpy HDGL (#3) to go on stream •Commercial galvanized steel production to reach 1.35 Mtpy Increased Efficiency + Increased Capacity 15.1 Mtpy 14.0 Mtpy •Start-up of BOF converter # 4, with BOF production level to increase by 1 Mtpy •Production level at 2,500 HRM to go up to 5 Mtpy 16.1 Mtpy 15.0 Mtpy •Production in the BOF Shop to reach 12 Mtpy •Production level at 2,500 HRM to go up to 5.5 Mtpy US$816 m Planned Investments US$1 609 m US$1 871 m US$1 476 m US$493 m US$294 m US$186 m 22
Page 1 and 2: Organic Growth Strategy June 2008
Page 3 and 4: Key Investment Factors Target inves
Page 5 and 6: Broad Product Mix Picture Picture P
Page 7 and 8: Automotive 10,11% Food 2,60% Metalw
Page 9 and 10: Footprint on Promising Export Marke
Page 11 and 12: Access to the Fast Growing Turkish
Page 13 and 14: Establishing long-term relations wi
Page 15 and 16: Development of Prioskol Iron Ore De
Page 17 and 18: Strategic Alliance of MMK and Belon
Page 19 and 20: 6000 4000 2000 0 Guarantied Suffici
Page 21: 100% 80% 60% 40% 20% 0% MW 800 600
Page 25 and 26: th. t 14 000 12 000 10 000 * - in 2
Page 27 and 28: Disclaimer THIS PRESENTATION IS FOR

MMK Presentation: Organic Growth Strategy - Magnitogorsk Iron ...

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