Organic Growth Strategy March April 2008 MMK at a Glance - - PowerPoint PPT Presentation

Organic Growth Strategy

March – April 2008

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CAGR 6.9%

559 722 425 332 976 1043 1174 1098 1707 1788 2521 5262 5438 6095 6391 897 1331 1698 1634 1563 843 1647 1542 1579 1483 3 000 6 000 9 000 12 000 1996 2004 2005 2006 2007

Slabs and billets Long products HRC CRC Downstream

MMK at a Glance

Geographic Location Financial & Operational Indicators - MMK Group

Source: US GAAP accounting statements 1.Only MMK’s steel production and the steel products output

Share Equity Structure (1) Growth of the Steel Products Output

10 137 10 201

‘000 tons

5 863

Source: ММК

11 346 12 203

1. Data upon register closing as of 07.03.2008 2. Mr.V.F.Rashnikov, Chairman of the Board of Directors, MMK, is the beneficiary owner of MMK’s

• rdinary shares, which belongs to Mintha Holding Limited and Fulnek Enterprises Limited.

Mintha Holding Limited (2) Fulnek Enterprises Limited (2) Free-float

46.26% 41.01% 12.73%

Moscow Kazakhstan

MMK

SSGPO Suppliers from Kuznetsk Coal Basin Moscow Kazakhstan

MMK

SSGPO Suppliers from Kuznetsk Coal Basin

64,0 2 368 1 444 947 1 232 Comprehensive income, US$ mln 21,6 22,2 17,6 25,5 Net income margin,% 0,164 1 772 28,6 2 342 8 197 12,2 13,3 2007 2004 2005 2006

%, 06/07

Steel produced, mt (1) 11,3 11,4 12,5 6,4 Steel products output, mt (1) 10,1 10,2 11,3 8,0 Revenue, US$ mln 4 829 5 380 6 424 27,6 EBITDA, US$ mln 1 735 1 511 2 005 16,8 EBITDA margin, % 35,9 28,1 31,2 Net income, US$ mln. 1 232 947 1 426 24,3 Earnings per share, US$ 0,125 0,095 0,140 17,1

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Declared strategy of MMK: performance in 2007

Expansion of downstream production

– Sellable products output keeps on growing according to our estimates – Crude steel and slabs output growth to meet the demand from plate mill coming on stream – Significant product changes are bound in 2008 – Preparation for new plate mill commissioning moves on according to schedule Start-up – July 2009 – Realization of the high quality CR rolled steel goes according to schedule Start-up - 2010

Expansion on fast growing markets

– Entry to the strong Turkish market to organically grow in flat rolled steel – This expansion is in line with MMK growth strategy in the fast-growing markets

Target investments to boost profitability

– Heavy plate and CR automotive rolled steel – Acquisition of Intercos-4 to start a project for downstream processing in order to meet the demand from the booming automotive industry and home appliances production

Secured raw material supplies

– Long-term contracts with key raw material suppliers are in place and prove effective – The decision has been made to develop Prioskol iron ore deposit. This will allow to be 100% self-sufficient in iron ore in the long term. – Strategic alliance with Belon company. Supplies of high quality coal to MMK triple. Up to 80% requirement coverage by 2012.

DECLARED STRATEGY OF MMK: PERFORMANCE IN 2007

3

Competitive Edge in Costs Broad Product Mix Strong Positions on the Fast Growing Russian Market Footprint on Promising Export Markets Target investments to boost profitability Experienced Management

Key Investment Factors

2007 financial results Annexes

4

Broad Product Mix

MMK is the largest producer of steel and rolled products in Russia MMK produces the broadest range of products in Russia, from slabs to downstream, high added value products Diversified product mix allows flexibility to respond to demand changes With main focus flat products, MMK commissioned in 2006 state-of-the-art facilities to produce of 2 mtpy of long products Product mix is evolving with focus on downstream high value added products

“We view MMK’s competitive advantages as production excellence, supported by world-class facilities and a unique product mix with a high degree of high value-added products” Analyst of Credit Suisse

BROAD PRODUCT MIX

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ММК 20% Severstal 18% NLMK 14% NKMK 3% Uralskaya Stal 5% NTMK 9% Chelyabinsk Iron and Steel Works 6% ZMSK 9% Other 16%

Leader of Rolled Steel Output in Russia, 2007

Source: Metal Expert

ММК 37% Severstal 32% NLMK 18% Uralskaya Stal 4% Other 9%

Leader of Flat Steel Output in Russia, 2007

Arcelor Mittal

Nippon Steel JFE

Baosteel U.S. Steel Nucor Tangshan Corus Group Riva Group Severstal ThyssenKrupp Evraz Group Gerdau Anshan Jiangsu Shagang Group W uhan Sumitomo SAIL Techint ММК POSCO

20 40 60 80 100 120

One of the Largest Steel Producers in the World, mt

Market Position

BROAD PRODUCT MIX

Source: IISI

6

Output of Main Products in 2007

Hot rolled sheet 6.39 m tons (52.4%) Cold rolled sheet 1.56 m tons (12.8%) Long products 1.79 m tons (14.7%) Downstream products 1.49 m tons (12.2%) Billets and slabs 0.98 m tons (8.0%)

Picture Picture Picture Picture

Broad Product Mix

Leading Position in High Added Value Production

MMK’s share in Russia’s total

1

% of MMK’s production Products

52% 42% HR flat products 23% Polymer (colour) coated rolled products 1% 24% Galvanized flat products 35% CR flat products 53% CR narrow strip 3% 100% Tinplate 2% 13% 3% 54% Special sections 2%

Source: MMK, Chermet

1 1 1 2 3 2

Market position

BROAD PRODUCT MIX

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Strong Positions on the Russian Market

MMK’s geographic position is the key factor to determine its orientation towards satisfying the demand of the fast growing Russian market MMK is strategically placed in the highest steel consumption region of Russia The share of domestic sales is constantly growing and will reach at least 65% The product mix will allow MMK to meet the demand of Russia’s various industrial sectors The Russian market absorbs all of MMK’s long products and downstream products The entire gain in production level due to modernization (apprx.3 m tons) will be shipped to the domestic market

“Thanks to its diversified product mix, MMK is exposed to all of the

domestic market’s major segments.. MMK also enjoys strong links to the construction market, which accounts for over 20% of its domestic sales, as well as the mechanical engineering and automotive industries, which we think could come alive in the future” Analyst of Troika Dialog

STRONG POSITIONS ON THE RUSSIAN MARKET

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49% 50% 54% 60% 51% 50% 46% 40% 0% 50% 100% 2004 2005 2006 2007

Domestic Market Export

Sales Structure

Growth of Downstream Products Sales in Russia and CIS, 2002-2007 Domestic Market, 2007 Export, 2007

HRC 46,4% CRC 12,1% Dow nstream 17,3% Long Products 24,2% Long Products 0,2% HRC 61,3% CRC 13,9% Dow nstream 4,5% Slabs and Billets 20,0%

Source: MMK, data on ОАО ММК

• 1. Domestic market includes Russia and CIS

Source: ММК

197 209 229 218 133 422 438 426 150 135 129 161 56 230 178 209 51 166 179 74 73 79 158 200 400 600 800 1 000 1 200 2002 2004 2006 2007 Tinplate Galvanized Flat Products Steel Strip Formed Sections Colour coated flat products Other

Source: MMK Source: MMK

’000 tons

694 1,122 1,219

% of supplies, tons % of supplies, tons

(1) 1,266

Total: 7,327 kt Total: 4,876 kt

Growth of Domestic Sales in Physical Terms

STRONG POSITIONS ON THE RUSSIAN MARKET

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ММК: Domestic Market Trends

MMK Shipments breakdown by Industries, 2007

Source: MMK

• 1. Up to 60% of spot market’s products in used in the construction sector

(1)

Construction industry growth Increased consumption

• f downstream

products Expected growth of demand from other industries Growing demand from pipe manufacturers

• High economic growth rates in Russia
• Goods with highest value added are sold in the

Russian market

• Growing demand for high quality galvanized and

polymer coated rolled products

• Building a network of metal service centers
• Growing shipments to large consumers
• Vertical integration with steel products

consumers

• Increasing share of downstream products in

the product mix

Goal and Strategy of Domestic Sales

Metalware producers 16,25% Machine building 16,87% Pipe production 19,71% Spot market 29,02% Automotiv e 10,11% Food 2,60% Construction 4,05% Power and f uel 0,95% Bridge building 0,44%

STRONG POSITIONS ON THE RUSSIAN MARKET

832 752 756 736 729 719 703 676 614 1 020 1 650 2 257 2 879 3 551 4 238 4 926 2000 4000 6000 2005 2006 2007 2008 2009 2010 2011 2012

Russian Foreign

36,5 41,9 47,3 53,2 59,5 67,6

20 40 60 80 100 2005 2006 2007 2008 2009 2010

1612 2052 2531 2550 2100 2300 2329 3017 3449 3550 3600 3700

2000 4000 6000 2005 2006 2007F 2008F 2009F 2010F

Large diameter pipes Others

CAGR 21,3% Russian Oil & Gas Pipe Consumption, th.t Real Estate Construction Volume, min m Car Consumption in Russia, th. units

Source: ТМК Forecast Source: RenCap Source: Avtostat

CAGR 8,8%

CAGR 13,1%

2

10

50 100 150 200

1К04 2К04 3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (flats) 50 100 150 200

1К04 2К04 3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (flats) 50 100 150 200

3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (flats) 50 100 150 200

1К04 2К04 3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (flats) 50 100 150 200 250

1К04 2К04 3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (long products) 50 100 150 200 250

1К04 2К04 3К04 4К04 1К05 2К05 3К05 4К05 1К06 2К06 3К06 4К06 1К07 2К07 3К07 4К07

Export Domestic Movement of CRU index (flats)

Price Development: MMK vs CRU index

Long products, % Plates, % Coated products, % Galvanized products, % HR coils, % CR products, %

Source: ММК, CRU

STRONG POSITIONS ON THE RUSSIAN MARKET

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Footprint on Promising Export Markets

The Company efficiently manages its export sales flow MMK key markets are the fast growing markets of the Middle East, Asia and Far East MMK expands its presence on the most promising markets by building greenfield steel plants and steel service centres

“(ММК) is ideally positioned for work on the growing markets of Russia and the Middle East. MMK’s strong focus on the Middle East promises good income from presence in yet another growth market” Analyst of Morgan Stanley

FOOTPRINT ON PROMISING EXPORT MARKETS

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Goal and Strategy of International Sales

Europe 25,4% Middle East 50,1% Africa 9,1% North America 2,2% Other 0,9% Asia and Far East 12,3% Asia and Far East 7,2% Middle East* 54,8% Europe 18,5% Africa 6,8% North America 7,3% Other 5,4%

* Including shipments from the Turkey plant

Goal: Maintain Competitive Position on the International Market

– Export shipments of 4.5 m tons from the MMK site in Magnitogorsk – MMK’s presence on the fast growing markets, including the Middle East, and advanced, traditionally high priced markets of the industrialized countries

FOOTPRINT ON PROMISING EXPORT MARKETS

Export structure, 2007 Export structure, 2013

13

Access to the Fast Growing Turkish Market

213 257 372 372 543 200 400 600

Turkey New EC members and candidates ЕС15 USA Japan

Location in Turkey

Per capita steel consumption in 2006, kg Consumption by product, kt Flat products production/consumption balance, kt

5 040 5 500 5 646 8 245 11 667 2 028 2 213 2 271 3 317 4 694 1148 1253 1286 1879 2658

3000 6000 9000 12000 2004 2005 2006 2010E 2015E HR sheet* CR sheet Coated sheet**

ММК – Atakas Project

• Production capacity:
• 2,300 ktpy of HR sheet
• 750 ktpy of CR sheet
• 900 ktpy of galvanized coils
• 400 ktpy of polymer coated sheet
• 2 service centres:
• 340 ktpy
• 340 ktpy
• Construction time: 3 years
• IRR: 24,3%

Istanbul Iskenderun

* Exclusive of plate ** Exclusive of tinplate

9,2 10,3 11,7 13,2 14,3 15,5 4,7 4,7 5,3 5,9 7,3 12,0

• 4,5
• 5,6
• 6,4
• 7,3
• 7,0
• 3,5
• 8,0
• 4,0

0,0 4,0 8,0 12,0 16,0 2004 2005 2006 2007E 2008E 2009E Consumption Production Balance

Source: Lehman Brothers report

FOOTPRINT ON PROMISING EXPORT MARKETS

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Competitive Edge in Costs

Low cost position of Russian steelmakers remains the investment appeal MMK’s labour productivity is the highest in the Russian steel sector MMK receives dividends from modernized assets A significant part of the investment program is aimed at costs reduction MMK is practically self-sufficient in terms of electric power supply

“Product positioning within Russia gives good exposure to higher quality growth markets (auto and pipe) in coming years. Large single site production and energy self sufficiency allow for cost containment” Analyst of ABN AMRO

COMPETITIVE EDGE IN COSTS

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MMK maintains its competitive edge thanks to the following factors:

• Low share of wages in costs
• High labour productivity
• Self-sufficiency in terms of power supply (cheap power)
• An ongoing program of modernization and costs
• ptimization
• Wastes recycling
• Up-to-date production assets
• Strategic location

MMK Production Costs and Prices, USD/ton

100 200 300 400 500 600 700 2001 2002 2003 2004 2005 2006

Average production cost, USD/t Average product price, USD/t

Competitive Edge in Costs

34% 32% 27% 17% 14% 0% 10% 20% 30% 40%

Brasil Russia Asia and Far East Europe North America

Average EBITDA Margin in Steel Sector, %

COMPETITIVE EDGE IN COSTS

18,7 20,1 20,9 25,4 26,3 28,9 30,5 36,6 39,4 10 20 30 40 2005 2006 2007 NLMK Severstal ММК

Monthly average labor productivity

(in comparable structures), t/person

Source: Chermet Source: Deutsche Bank Source: MMK

16 16

Outlook for the Raw Materials Markets in 2008

Russia has own strategic coal reserves covering the requirements of Russian steel producers Despite the growth in coal consumption, the Russian coal market is balanced with a significant potential of export decrease Russian iron ore production exceeds the current requirements of Russian steel producers for these raw materials In 1Q of 2008 iron ore prices were stable due to agreements concluded earlier

Even given permanent scrap consumption growth, Russian steel producers retain the flexibility to switch over to consumption of currently exported scrap

Coal Iron Ore Scrap

40.1 38.7 Consumption, mt Coal concentrate 47.6 2006 Production, mt Russia 49.0 2007 99.2 97.3 Production, mt 84.5 86.1 Consumption, mt 2007 2006 Russia Iron ore

COMPETITIVE EDGE IN COSTS

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Consumption and Prices of Major Raw Materials

140.3 96.1 89.4 56.1 2,411 7,440 6,378 7,452 2005 49.0 40.4 49.8 Iron ore (sinter charge) 5,813 5,834 6,384 Iron ore (pellets) 95.0 78.8 65.8 Coking Coal 76.0 56.7 83.8 Iron ore (pellets) Price per ton (US$ /t) 5,046 3,798 2,051 Scrap 7,189 7,324 7,900 Coking Coal 7,386* 8,215 7,725 Iron ore (sinter charge) Quantity (kt) 245.0 187.2 125.6 Scrap 2007 2006 2004

Consumption and price of major raw materials

Source: MMK * - excluding supplies from Bakalskoe RU

MMK Material Costs Breakdown, US$

Purchased energy 2.5% Purchased fuel 5.8% Auxiliary materials 12.9% Scrap 28.9% Coal 16.0% Other basic raw materials 14.5% Pellets 10.3% Sinter charge 9.0%

Purchased energy 1.3% Purchased fuel 6.5% Auxiliary materials 14.5% Scrap 23.0% Coal 18.7% Other basic raw materials 14.6% Pellets 10.7% Sinter charge 10.7%

2007 2006

Note

• 1. Only MMK costs constituting more than 90% of the Group’s costs

COMPETITIVE EDGE IN COSTS

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74,7% 3,1% 4,0% 12,4% 5,8% SSGPO Mihailovsky GOK Lebedinsky GOK Self Sufficiency Others

Iron-ore Supplies

Raw-materials sufficiency

15.4 mt

Coal Concentrate Supplies Scrap Supplies

56% 44% Belon Others Company Profit; 100%

8% 23% 20% 11% 1% 31% 5,9% 0%

Belon Raspadsky Ugol Kusmetugol Mechel Sibuglemet Juzhkuzbasugol Mittal Steel Timertau COAL TRADE company

78,3% 21,7%

SSGPO Self Sufficiency 28,4% 71,6% SSGPO Self Sufficiency

2009* 2016** 2007 2007 2012 2007-2016

16.95 mt 19.57 mt 6,0 mt 7,2 mt 2007 – 5,0 mt 2016 – 5,6 mt

Source: MMK

• - Own supplies increase due to increase of shipments
• from Bakalsk RU own deposits and slag processing

** - Switch to iron ore supplies from Prioskolsk GOK are possible in case of positive economic feasibility and favorable market situation. Thus MMK will be 100% self sufficient in iron ore.

COMPETITIVE EDGE IN COSTS

Self sufficiency for iron ore, coal and scrap

19

Strategic Alliance of MMK and Belon

MMK's Requirement for Coking Coal Concentrate, mt

9,48 10,17 10,30 10,60 11,00 11,48 6,60 6,00 7,20 7,00 6,90 7,00 3,35 3,68 3,90 3,73 2,00 0,58

0,00 2,00 4,00 6,00 8,00 10,00 12,00 14,00 2007 2008f 2009f 2010f 2011f 2012f

kt

MMK's pig iron production Coking coal concentrate requirement Use of Belon's coking coal concentrate in the MMK's Coke and Chemical Div ision (based on 55.8% in charge)

• Guaranteed supplies of required volumes of deficit coking coal grades
• Improved composition of coal charge
• Reduced consumption of coke (by 15.8 kg per ton of pig iron by 2010)
• Annual costs savings in the Coke and Chemical and the Blast Furnace

Divisions amounting to 35 - 40 mln US$

Note: Improvement of MMK Blast Furnace Smelting Technology (Pulverized Coal Injection, installation of Paul Wurth bell-less top charging devices and use of stabilized sinter) will allow to reduce specific coke consumption by 2012.

In March 2008 ММК acquired 50% of ONARBAY ENTERPRISES LIMITED holding 82.6% of Belon for $230.4 mln

Belon Group’s coal reserves - 446 mt Steam coal: 267 mt (60%) Coking coal: 179 mt (40%) Production in 2007 – 4.6 mt

Production growth up to 10.8 mt by 2012. x2.5 growth of coal concentrate production by 2012 up to 10 mt (including coking coal concentrate

up to 5 mt)

Discontinuance of coal purchases for beneficiation plants, thus boosting the company’s margins; Compliance with current standards of industrial safety

Investment program to raise scale and efficiency Belon Group Transaction’s Upsides for MMK

COMPETITIVE EDGE IN COSTS

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Development of Prioskol Iron Ore Deposit

Deposit Characteristics Project Parameters Project’s Strengths

• The capacity of Prioskol Plant and reserves of the deposit can cover MMK requirement for iron ore materials for

a period of over 60 years.

• Convenient geographic location enabling it to be used for both supplies to MMK’s main site and foreign projects.
• The possibility of products sales to third parties (including international consumers).
• The deposit is ready for development.
• Iron-containing minerals quality is high (up to 70.1% Fe in concentrate) and is suitable for DRI production

Production capacity: 35 mtpy of crude ore Commercial products (sinter ore, pellets, concentrate): 15 mtpy Construction time: 3 years Capex: USD 1.8 bn IRR: 19%.

In November, 2006, MMK won a tender to develop Prioskol Iron Ore Deposit. In December of 2007 MMK’s Board of Directors passed a resolution on setting up a branch of MMK in the Belgorod Region to implement the project.

The Prioskolsky Deposit is the largest deposit of rich iron

• res and ferruginous quartzites in the Kursk Magnetic

Anomaly (KMA). The deposit’s confirmed reserves comprise 45 m tons of rich ore (Fe-50,31 %) and 2.1 bn tons of ferruginous quartzites (Fe-33,5 %)

COMPETITIVE EDGE IN COSTS

21

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

• f 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

TARGET INVESTMENTS TO BOOST PROFITABILITY

22 22

Creating the most efficient steel production in Russia

2007 2008 2009 2010 2011 2012 2013

Note: 1. Expected capacity expansion based on management assessments according to MMK’s current Capex budget

Increased Efficiency + Increased Capacity

• Start-up of HDGL 2

with a capacity of 450 ktpy

• Increase of the

2,000 HSM productivity by 500 ktpy

• 5,000 Plate Mill to

roll first plate

• Galvanized steel

production level raised to 850 ktpy

• Start-up of CCL # 2
• 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)

• 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

• 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

• Production in the BOF

Shop to reach 12 Mtpy

• Production level at

2,500 HRM to go up to 5.5 Mtpy 12.2 Mtpy 13.3 Mtpy 13.0 Mtpy 14.1 Mtpy 13.2 Mtpy 14.2 Mtpy 13.2 Mtpy 14.2 Mtpy 13.2 Mtpy 14.2 Mtpy 14.0 Mtpy 15.1 Mtpy 15.0 Mtpy 16.1 Mtpy

Crude steel Production Commercial Products Production

Work under earlier contracts Plate Mill 5,000 HDGL # 2

Planned Investments

US$816 m US$1 609 m US$1 871 m US$1 476 m US$493 m US$294 m US$186 m TARGET INVESTMENTS TO BOOST PROFITABILITY

23

• Project completion time under SMS Demag contract: 32 months
• Investments: USD 1.4 billion

Contractual schedule:

• Nov. 7, 2006: signing of the contract
• Nov. 2007:

foundation works

• April 2008:

construction of the building

• July 2008: erection and installation
• May 2009: functional tests
• July 2009: rolling of the first plate

PLATE PRODUCTION

Key Projects: Plate Mill and Automotive CR Sheet

Only 8 companies ( located in Germany, France and Japan) are able to produce plate with comparable characteristics

Source: MMK

9 12 Rolling force, kt 1989 2009 Year of start-up 18 24 Length, m 12-300 8-160 Thickness, mm Up to X80 Up to X120 Strength class Up to 4400 Up to 4800 Width, mm 0.6

Severstal

1.5

MMK(1)

Capacity, mtpy

Characteristics 5,000 MM Plate Mills: MMK vs Severstal

HSLA, IF-HSS, BH, two-phase, multiphase, ТRIP Steel grades 0.28 – 3.0 Thickness, mm 850-1880 Width, mm 2000 Capacity, kt

Main Characteristics

• On 13.07.07 a contract was signed with SMS Demag
• Time for equipment manufacturing and installation: apprx 36 months
• Capex: USD1.4 billion
• Negotiations with major international banks re arrangement of

financing for the delivery contract

• Commissioning: scheduled for 2010, design capacity to be reached in

2011

AUTO BODY SHEET PRODUCTION Product unparalleled in Russia = Sales growth = Significant margin’s growth

The implementation of the Project will allow to produce high quality auto body sheet meeting the requirements of the leading international auto makers (GM, Ford, Toyota, etc )

TARGET INVESTMENTS TO BOOST PROFITABILITY

24

3 000 6 000 9 000 12 000 15 000

Investments into Improving Performance

Commercial slabs Long products Flat products

Production, ktpy

Downstream products EBITDA /t*

$ 265 $ 185

EBITDA / ton: CAGR – 7.5%

Total EBITDA growth in 2013 against 2008: USD1,575 mln *

* - Calculation made on estimate prices and costs for 2008. Going forward the costs and prices are fixed

CAPEX to increase the share of value added products

19% 4% 14% 12% 13% 8% 8% 34% 29% 17% 38% 51% 66% 48% 47% 67% 68% 50% 36% 26% 44% 0% 20% 40% 60% 80% 100% 2007 2008 2009 2010 2011 2012 2013

Equipment maintenance Reduction of current costs and increase in billets' products Downstream production

TARGET INVESTMENTS TO BOOST PROFITABILITY

25

927 640 1029 861 221 221 2 797 628

927

387

10 000 12 000 14 000 2007 2013

Higher profitability through organic growth

Production increase in 2013 compared to 2007 Change of current product mix through modernisation and new facilities commissioning Reduction of commercial slab volume

12 203 15 000 High quality CR flat products 2 mtpa Plate 1.5 mtpa Color-coated steel products Galvanized products

• th. t

30% 42% 40% 48% EBITDA margin*

* - in 2007 prices

TARGET INVESTMENTS TO BOOST PROFITABILITY

26 26

Intercos-IV Project

Project parameters

Goal: Sales of up to 300 ktpy of MMK cold rolled and galvanized steel products in the North-West Region of Russia by means of creating

production facilities for stamped and stamp-welded components for

auto makers and white goods producers. 1 stage: Acquisition of a 75% stake in CJSC Intercos-IV for RUB 509 m. 2 stage: Construction of a steel service center and a stamping plant in Kolpino, Leningrad Region, designed to process up to 300 ktpy of cold rolled and galvanized products. Construction time is 2.5 years.

Project location

• St. Petersburg

Interkos -4

thousand pcs.

TARGET INVESTMENTS TO BOOST PROFITABILITY

Home appliances market in Russia, 2005-11

2000 4000 6000

2011E 2010E 2009E 2008E 2007E 2006 2005 ref rigirators washing machine

Source: Euromonitor, Forecasts of EIU

1000 2000 3000 4000

2013E 2012E 2011E 2010E 2009E 2008E 2007E 2006 2005

Russian brands import localization of f oreign companies production

Cars output in Russia, 2005-13

thousand vehicles

Source: Companies forecast, ASM-Holding, forecast of ING

C A G R

• 8

, 4 %

CAGR : Refrigerators – 6%, Washing machines – 7,1% 832 752 756 736 729 719 703 676 614 1 020 1 650 2 257 2 879 3 551 4 238 4 926 2000 4000 6000 2005 2006 2007 2008 2009 2010 2011 2012

Russian Foreign CAGR 21,3%

Car Consumption in Russia, th. units

Source: Avtostat

27

Experienced Management

MMK is headed by a unique management team with rich production experience. The average work record of MMK top managers is over 24 years

“Having invested heavily in sufficient upgrades of its asset base since the beginning of 1990-s the company today boasts to be one of the most modern integrated single-site steel complexes in Russia equipped with a skilful operating team”. Analyst of Goldman Sachs

EXPERIENCED MANAGEMENT

28

Exceptional Management Team

Marina A. Zhemchueva Chief Accountant Work record with MMK: 26 years Arkady V. Chernov Head of Staff of the President of MMK Managing Company Work record with MMK: 31 years

Management Team Achievements

• Total modernization of production facilities
• Steel products output nearly doubled in

1996-2006 from 5.9 m to 11.3 m tons

• US GAAP audited consolidated financial

statements since 2001

• Installation of a state-of-the-art MIS on the

largest production site

• MMK has been one of the first Russian steel

producers to enter the international financial markets

• High corporate governance standards

Victor F.Rashnikov Chairman of MMK’s Board of Directors, President of MMK Managing Company Work record with MMK: 40 years Vladimir I.Shmakov Vice President for Finance and Economics Work record with MMK: 24 years Guennadi S.Senichev Chairman of MMK’s Management Board Vice President for Operations, Managing Director Work record with MMK: 35 years Rafkat S.Takhautdinov Vice President for Strategic Planning Work record with MMK: 28 years Serguei V.Krivoschekov Vice President for Property Management Work record with MMK: 24 years

EXPERIENCED MANAGEMENT

29

2007 FINANCIAL RESULTS

30

Key EBITDA Drivers

Sales and EBITDA Dynamics

US$ m

• Attractive Russian economy driving strong steel

demand growth

• Growing demand for high value-added and

customised products especially from the pipe-making, construction, energy and automobile industries

• Increased demand for large diameter pipe plate and

coated steel

Strong Domestic Demand

• In 2007 domestic sales amounted to 66% of the total

sales vs. 62% in 2006 and 61% in 2005

• Higher share of domestic sales allows MMK to further

benefit from the favourable domestic price environment

• Strategic relationships with key customers and limited

exposure to spot sales

Growing Exposure to Domestic Markets

• Both Russian and international steel prices are high

and showed a positive trend in 2007

• Domestic market price premium remains high

–

High market concentration and growth in demand

–

Higher costs related to imports (eg. tariffs, logistical costs and other transport-related expenses)

Favourable Steel Price Dynamics

• Value-added projects

–

launch of galvanizing and coating facilities

• Cost reduction projects

–

reconstruction of sinter plants and blast furnaces

Projects for New Products and Costs Reduction

• Growth of COGS, which mostly depended of prices for

raw materials growth in 2007 was compensated by MMK’s increased revenues thanks to rising production levels and higher steel prices.

Raw Material Prices & Payroll

Source: MMK

• 1. Аudited

(1) 3 047 4 829 6 424 8197 1 003 1 735 1 511 2 005 2342 5 380

1 000 2 000 3 000 4 000 5 000 6 000 7 000 8 000 9 000 2003 2004 2005 2006 2007 0% 10% 20% 30% 40% Sales EBITDA Margin %

ANNEXES

31

56.4 1,130 11.3 725 1,426 31.2 2,005 19.4 6,424 2006 58.3 585 7.1 217 608 32.9 1,003 48.3 3,047 2003 58.2 1,010 8.4 407 1,232 35.9 1,735 58.5 4,829 2004 2,342 1,511 EBITDA 28.6 28.0 margin, % 1,772 947 Net income 1,257 580 Capex 15.3 10.8 % of sales 56.8 83.1 % EBITDA 1,331 1,255 Operating cash flow 27.6 11.4 % of growth 8,197 5,380 Sales 2007 2005

Key Financials

Key Financials

Source: MMK Group US GAAP Consolidated Financial Statements

US$ m

500 1000 1500 2000 2500 2004 2005 2006 2007 0,2 0,4 0,6 0,8 Debt EBITDA Debt/EBITDA 2000 4000 6000 2004 2005 2006 2007 0,2 0,4 Total debt Equity Total debt /Equity

Debt / EBITDA Total debt/ Equity

ANNEXES

32

Market valuation of MMK growth potential

Analysts TP premium over monthly average MMK MP

Source: MMK

MMK Р/Е and EV/EBITDA compared with industry average

ANNEXES

6 6,5 7 7,5 8 8,5 9 9,5 10 10,5 11 4,5 4,7 4,9 5,1 5,3 5,5 5,7 5,9 6,1 6,3 6,5 EV/EBITDA P/E ММК Russia EMEA NLMK Severstal Evraz

ABN Ренессанс Капитал Merrill Lynch HSBC Morgan Stanley Troika ING Citigroup GoldmanSachs UniCredit (Атон) Uralsib Deutsche UFG CSFB

13,00 14,00 15,00 16,00 17,00 18,00 19,00 20,00 21,00 22,00

$ Average MP, March 08 Analysts TP consensus 21%

33

ANNEXES

34

Volga Region 22% Urals 40% NW Region 2% Central Region 14% South 4% Belarus 1% Siberia 8% CIS 9%

Geography and evolution of domestic sales4, tons

Middle East 43% Europe 22% North America 11% Af rica 8% Central and Latin America 4% Asia and Far East 12% Europe 25% Middle East 51% Central and Latin America 1% Af rica 9% North America 2% Asia and Far East 12%

Sales Geography, 2007

Moscow South of Russia Volga Region Siberia Far East NW Region Central Region Urals CIS 8.0% 22.9% 12.7% 7.6% 0.2% Novorossiysk Eysk

• St. Petersburg

17.2% 5.1% 1.7% 8.4% % % 1.8% 4.3% 1.2% Geography and evolution of export sales3, tons

2006 2007

R/w frontier points to non-CIS states 1.7%

Volga Region 21% Central Region 13% Urals 38% South 3% NW Region 2% Belarus 2% Siberia 8% CIS 13%

2006 2007

Notes:

• 1. Region share in OJSC MMK’s total sales in physical terms
• 2. Port share in OJSC MMK’s total shipment in physical terms.
• 3. Region share in OJSC MMK’s total export sales in physical terms
• 4. Region share in OJSC MMK’s total export sales in Russia and CIS in physical terms

Russia1 Export2

Source: MMK

Belarus 1.3% Astrakhan Olya Port 3.9% 0.1% Vladivostok 1.9% Nakhodka 0.8% Makhachkala STRONG POSITIONS ON THE RUSSIAN MARKET

35

Natural Gas Supplies to OAO MMK MMK’s Power Production Cost against Power Purchase Price

Power and Gas Self-Sufficiency

43,25 49,84 58,87 24,12 19,68 16,6 10 20 30 40 50 60 70 2005 2006 2007 Price of pow er purchased from other companies MMK's pow er production cost

US$ / MW*h

Source: ММК

160% 153%

Power Balance

642 705 810 617 627 622 200 400 600 800 2005 2006 2007 Consumption Pow er generation

MW

Source: ММК

144% 28% 72% ChelyabinskRegionGaz Novatek

Power Self-Sufficiency (1)

Source: ММК, annual reports and companies’ issue prospects

COMPETITIVE EDGE IN COSTS 76% 43% 40% 55% 24% 57% 60% 45% 0% 20% 40% 60% 80% 100% MMK Severstal NLMK Evraz Captive pow er Purchased pow er

36 36 Sintering Oxygen Converters Continuous Casting Machines Hot Rolled Products Long Products Cold Rolled Products High Value-Added Downstream

1. Construction of sinter stabilization units at Sintering Plants # 2 and 3 and installation of Bell-less Top Charging Systems at Blast Furnace Shop:

• Decrease of coke consumption by 15 kg/ton of iron, on average
• A 2-3% increase in blast furnace productivity
• Higher degree of gas utilization

Mil 5000

• 2. Construction of oxygen converter #4 and continuous casting

machine #6:

• estimated increase of converter crude steel capacity of up to ~12

mtpy

• increased continuous casting capacity
• higher degree of converter gas utilization

Oxygen Converter #4

• 3. Construction of Mill 5000:
• creation of an unprecedented facility for production of plate for oil

and gas pipe industry

• Estimated increase of plate production capacity to 1.5 mtpy
• Increased margins of plate sales
• 4. Expansion of HR capacity:
• Overall increase of over 2 mtpy in the capacity of the 2000 mm and

2500 mm hot rolling mills

• enhanced quality of HR products
• 5. Expansion of CR capacity:
• Increase in CR products’ output
• Creation of a world level production of auto body sheet

Rolling Shop

#11

• 6. Expansion of the downstream value-added products capacity:
• Output of commercial galvanized steel expected to increase up to

1.35 mtpy

• Output of polymer coated steel sheet expected to increase up to 400

ktpy

A Comprehensive Investment Program for 2007-2013

Note: Expected capacity expansions based on management assessments according to MMK’s current Capex budget

Increased Efficiency Increased Capacity

Blast Furnaces Electric Arc Furnaces Coke Production

Continuous Casting Machine #6

INVESTMENTS IN RAISING MARGINS

37

790 900 850 500 540 300 1500 1350 1200 1200 500 540 300

400 800 1200 1600

ММК Severstal VMZ Uralskaya Stal Evraz (NKMK) AMZ Mechel

2007 2010

37

Strong positions in Russia’s fast growing pipe making sector

Pipeline Projects in Russia up to 2015 Pipe Consumption Forecast in Russia Largest Plate Mill Facilities in Russia, kt Forecast of heavy plates consumption in Russia, kt

Source: ММК Источник: MMK

• ths. tn

Source: MMK Forecast Source: MMK According to announced plans Start-up of the 1.5 mtpy 5000 mm Plate Mill in in 2009, completion of the 2500 mm Mill revamping 1612 2052 2531 2550 2100 2300 2329 3017 3449 3550 3600 3700 2000 4000 6000

2005 2006 2007Е 2008Е 2009Е 2010Е

Large diameter pipes Other

1421 3600 1932 2600 2000 4000 6000 8000 2006 2015

Pipe industry (for Large diameter pipes) Other

Market growth 85 % CAGR 8,8%

TARGET INVESTMENTS TO BOOST PROFITABILITY

28,1 36 418 Total 4,3 5 539 2006-2015 Transneft projects 23,8 30 879 2006-2015 Gazprom projects Tonnage (mt) Length of pipeline (km) Period Projects

38 38

Disclaimer

THIS PRESENTATION IS FOR INFORMATION ONLY. THIS PRESENTATION IS FOR DISTRIBUTION IN UK ONLY AMONG THE PEOPLE HAVING PROFESSIONAL SKILL IN THE ISSUES RELATED TO INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON FINANCIAL SERVICES AND MARKETS 2000, OR THOSE PEOPLE, AMONG WHICH IT MAY BE LAWFULLY DISTRIBUTED. THIS INFORMATION IS CONFIDENTIAL AND PROVIDED TO YOU EXCLUSIVELY FOR YOUR REFERENCE. BY ACCEPTANCE OF THIS INFORMATION THE RECIPIENT HEREOF CONFIRMS THAT HE OR SHE IS A SPECIALIST IN THE SPHERE OF INVESTMENTS WITHIN THE MEANING OF ARTICLE 19(5) OF DIRECTIVE ON FINANCIAL ADVERTISEMENT APPROVED IN 2005 ON THE BASIS OF LAW ON FINANCIAL SERVICES AND MARKETS 2000, ACTING IN HIS OR HER NATURE. 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SUCH STATEMENTS HAD BEEN DONE BASING ON THE ASSUMPTIONS AND ASSESSMENTS, WHICH MAY OCCUR FAULTY, THOUGH THE COMPANY CONSIDERS THEM REASONABLE AT THE CURRENT MOMENT. SUCH STATEMENTS RELATED TO THE FUTURE ARE LINKED TO THE RISKS, UNCERTAINTIES AND ASSUMPTIONS, AS WELL AS TO OTHER FACTORS, WHICH MAY LEAD TO THE EVENT THAT ACTUAL RESULTS OF THE COMPANY’S ACTIVITY AND ACTIVITY OF THE MARKETS, ON WHICH IT OPERATES OR INTENDS TO OPERATE IN, THEIR FINANCIAL STATUS, LIQUIDITY, CHARACTERISTICS, PROSPECTS AND ABILITIES COUILD MATERIALLY DIFFER FROM THOSE, WHICH ARE EXPRESSED WITH THE HELP OF SUCH STATEMENTS RELATED TO THE FUTURE. THE IMPORTANT FACTORS, WHICH MAY RESULT IN SUCH DIFFERENCES, INCLUDE, INTER ALIA, CHANGING BUSINESS CONDITIONS AND OTHER MARKET CONDITIONS, COMMON ECONOMIC CONDITIONS IN RUSSIA, EU COUNTRIES, THE UNITED STATES OF AMERICA OR ANYWHERE ELSE, AS WELL AS THE ABILITY OF THE COMPANY TO MEET THE TRENDS IN THE INDUSTRY. THE MATERIAL DIFFERENCE OF THE ACTUAL RESULTS, FEATURES AND ACHIEVEMENTS MAY BE THE RESULT OF ADDITIONAL FACTORS. THE COMPANY AND ALL ITS DIRECTORS, OFFICERS, EMPLOYEES AND ADVISORS HEREWITH STATE THAT THEY ARE NOT OBLIGED TO ISSUE ANY UPDATE OF OR REVISE ANY STATEMENTS RELATED TO THE FUTURE CONTAINED HEREIN, OR DISCLOSE ANY CHANGES IN THE FORECASTS OF THE COMPANY OR EVENTS, CONDITIONS AND CIRCUMSTANCES, WHICH SUCH STATEMENTS RELATED TO THE FUTURE ARE BASED ON, SAVE AS IN THE CASES PROVIDED FOR BY THE APPLICABLE LAWS. RECEIPT OF ANY COPY OF THIS INFORMATION TESTIFIES THE ACCEPTANCE OF THE ABOVE LIMITATIONS.

End of Presentation