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Corporate Presentation
January 2012
1
This document 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 EVRAZ plc (“EVRAZ”) or any of its subsidiaries in any jurisdiction (including, without limitation, EVRAZ Group S.A.) (collectively,
the “Group”) or an inducement to enter into investment activity. No part of this document, 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. 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 EVRAZ 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 document or its contents or otherwise arising in connection with the document.
This document contains “forward-looking statements”, which include all statements other than statements of historical facts, including, without
limitation, any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”,
“anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond EVRAZ‟s control that could cause the actual results, performance or achievements of EVRAZ to
be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others,
the achievement of anticipated levels of profitability, growth, cost and synergy of 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 the Group‟s shares or GDRs, financial risk management and the impact of general business and global
economic conditions.
Such forward-looking statements are based on numerous assumptions regarding EVRAZ‟s present and future business strategies and the
environment in which the Group will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the
date as of which they are made, and EVRAZ expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any
forward-looking statements contained herein to reflect any change in EVRAZ‟s expectations with regard thereto or any change in events, conditions
or circumstances on which any such statements are based.
Neither EVRAZ, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of
the forward-looking statements contained in this document.
The information contained in this document is provided as at the date of this document and is subject to change without notice.
Disclaimer
EVRAZ in Brief
◦ One of the largest vertically integrated steel and mining companies in the world
◦ Leader in the Russian and CIS construction and railway products markets
◦ A lead player in the European and North American plate and large diameter pipe markets
◦ One of the world’s lowest cost steel producers due to production efficiency and high level of vertical integration
◦ One of the leading producers in the global vanadium market
◦ In 2011, EVRAZ produced 16.8 million tonnes of crude steel and 15.2 million tonnes of steel products
◦ 2010 consolidated revenue amounted to US$13.4 billion; EBITDA was US$2.4 billion
◦ GDRs listed on London Stock Exchange since June 2005, shares listed in the Premium segment of the LSE since 7 November 2011
◦ EVRAZ is a FTSE 100 company and the only steel stock in UK FTSE All-Share Index
2
Recent Developments and Outlook
◦ Positive dynamics in export prices at the beginning of
2012 will have limited effect on Q1 2012 results as we
are currently selling early March export volumes
◦ Recent pricing for long products outperforms flat
◦ Visibility in the Russian market is still low after New Year
holiday season, though retail steel prices in Russia are
slightly growing
◦ Vertical integration model helps mitigate the effects of
raw materials prices volatility
◦ Current steelmaking capacity utilisation:
◦ Russia – 100%
◦ Ukraine – 100%
◦ Czech Republic – 60%
◦ North America – 100%
◦ South Africa – 100%
◦ EVRAZ order book (external sales) currently stands at
approx. US$250 mln representing 1.2 months‟
production
EVRAZ Selling Prices US$/t
Raw Material Prices (Domestic Markets)
400
600
800
1,000
1,200
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
Source: Company data
Source: Metall Expert
Recent Market Developments Update
Slabs, Russia, export (1)
Billets, Russia, export (1) Rebars, Russia, FCA
Plate, North America, FCA
4
(1) Weighted average contract prices
US$/t
0
100
200
300
400
500
Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12
Scrap, Russia, CPT Scrap, USA, CPT
Iron ore concentrate, Russia, ExW Coking coal concentrate, Russia, FCA
4,9605,396 5,436 5,379
Q1 Q2 Q3 Q4
(1) Net of re-rolled volumes
(2) Calculated as 40% of total Raspadskaya production
2011 Quarterly Production Volumes
Iron Ore (Saleable Products) „000 tonnes
Coal (Mined) „000 tonnes
Vanadium tonnes
5
Steel Products(1) „000 tonnes
Railway
Construction
Semi-Finished
Flat Rolled Products
Other, incl. tubular
3,974 3,780 3,697 3,783
Q1 Q2 Q3 Q4
Q4 to Q3 comparison:
◦ Production of steel and steel products increased by 3% following completion of scheduled maintenance
◦ Share of semi-finished steel grew due to seasonally lower demand for finished goods in Russia
◦ Coking coal production recovered after negative factors of the first three quarters were resolved
◦ Prices for steel products and coking coal declined reflecting negative seasonality and market volatility
3,261 3,197
2,611 2,699
Q1 Q2 Q3 Q4
Coking
Steam Raspadskaya (2)
4,936 5,222 4,804 5,780
4,897 5,269 5,438 5,256
0
2,000
4,000
6,000
Q1 Q2 Q3 Q4
Vanadium in Slag (gross production)
Vanadium in Final Products (saleable)
7,509 6,303
3,830
2,965
0
3,000
6,000
9,000
12,000
2010 2011
Raw Coking Coal Raw Steam Coal
6
FY 2011 Operational Results
Production of Steel Products ◦ 2011 consolidated crude steel production was 16.8 mt, +3% vs. 2010
◦Major steelmaking assets operated at full capacity through 2011
◦ Steel product mix shifted further in favour of high value-added finished goods
◦ Coking coal production decreased by 16% due to longwalll repositionings and additional implementation of safety equipment and procedures
◦ Prices for steel products and coking coal improved
„000 tonnes
0
3,000
6,000
9,000
12,000
15,000
2010 2011
Semi-finished products Construction products Railway products
Flat-rolled products Tubular products Other steel products
14,698 15,234
„000 tonnes
Production of Saleable Iron Ore Products
11,339
9,268
19,80521,170
0
4,000
8,000
12,000
16,000
20,000
2010 2011
Production of Coal
„000 tonnes
7
Trading Update for 3Q and 9M 2011
(US$ million) 3Q 2011 9M 2011 9M 2010
9M 2011/
9M 2010,
change, %
Revenue 4,157 12,537 9,729 28.9%
EBITDA 772 2,401 1,766 36.0%
Interest expense 164 551 547 0.7%
CAPEX 483 945 584 61.8%
Steel product sales * 3,390 10,094 7,862 28.4%
Iron ore product sales * 134 488 230 112.2%
Coal product sales * 102 308 263 17.1%
Vanadium product sales * 160 462 393 17.6%
Other revenues * 371 1,185 981 20.8%
As of 30 Sep
2011
As of 31 Dec
2010
Change, %
Total debt 7,214 7,811 -7.6%
Cash and cash equivalents 578 683 -15.4%
* External sales
Move to Premium Listing
EVRAZ‟s redomiciliation to the UK from Luxembourg and a premium share listing and admission to trading on the
Main Market of the LSE since 7 November 2011
◦ Existing GDR listing and trading will be cancelled following termination on 8 February 2011 of the deposit
agreement with The Bank of New York Mellon
◦ Following FTSE Committee Quarterly Review on 7 December 2011 EVRAZ became a FTSE 100 company and the
only steel stock in UK FTSE All-Share index
◦ Benefits of the premium listing :
◦ Broader shareholder base
◦ Improvement in long-term access to capital
◦ Improved liquidity
◦ Committed to high standards of corporate governance
8
9
◦ On 10 October 2011 the EVRAZ Board approved a new dividend policy and the payment of interim and special
dividends for 1H 2011
◦ First dividend payment since 2008
◦ The Company believes that the new policy and dividend payment creates a balanced approach towards return on
shareholder equity whilst retaining sufficient capital for the Group‟s investment growth
◦ Under the revised dividend policy EVRAZ will target to maintain a long-term average dividend payout ratio of at
least 25 % of the consolidated net profit calculated in accordance with IFRS and adjusted for non-recurring items,
for the relevant period. Dividends are expected to be paid semi-annually
◦ In addition to the regular dividend payments the Company may also employ special dividends from time to time at
the discretion of the EVRAZ Board to return surplus capital to shareholders
Dividend Policy
10
Outlook
Global economy and the steel industry continue to face challenges and remain very volatile
EVRAZ maintains full steelmaking capacity utilisation of major production assets
Inventories at traders and at our mills and ports are very low
Trading at the end of 2011 was impacted by the seasonal change in the product mix in favour of lower-
margin semi-finished products and lower prices for main product groups due to volatile global economic
environment
Steelmaking pricing in the beginning of 2012 is slightly better supported by expectations of growth in
scrap and iron ore prices and very low inventory level
EVRAZ continuously assesses the market environment and has significant flexibility in CAPEX plans
4Q 2011 EBITDA is expected to be in the range of US$500-600 million
EVRAZ Investment Highlights
◦ #15 steel producer by volume globally and #1 in Russia
◦ Low cost operations driven by vertically integrated business model
◦ Exposure to growing construction and infrastructure markets globally
◦ Strong position in growing Russian market
◦ Successful track record of strategic acquisitions
◦ Multiple opportunities to drive growth
◦ Focus on HSE
Investment Highlights 12
North America
South America Africa
Europe
Russia/CIS
Asia
6,420 402
4,208
1,054
410
110
110
2,607
Sea Ports
Vanadium
Coal Mining
Iron Ore Mining
Steel Mills
Mezhegey Coal Mill in Development
Global Operating Model
240
400
Third Party Steel Products Sales (Kt), 2010 # Internal Supply of Slabs and Billets from Russian Steel Mills (Kt) #
590
Russia &
CIS
42%
Africa
3%
Asia
29%
North
America
17%
Europe
9%
2010 Steel Sales Volume
by Geography
Tubular
6%
Other
4%
Semi-
finished
29%
Flat-
rolled
17%
Railway
12%
Construction
32%
2010 Steel Sales Volume
by Product
13
14
Cost Leadership
◦ High level of vertical integration into iron ore and coking
coal helps to partially mitigate negative impact of
escalating prices
◦ Approx. 60% of consolidated operating costs are rouble
denominated
◦ EVRAZ enjoys a position on the global cost curve well
within the first quartile
Source: World Steel Dynamics
Consolidated Cost of Revenues by Cost Elements
1H 2011, %
of total CoR
1H 2010, %
of total CoR
Raw materials, including 39% 37%
Iron ore 7% 6%
Coking coal 12% 11%
Scrap 14% 13%
Other raw materials 6% 7%
Semi-finished products 7% 4%
Transportation 5% 6%
Staff costs 12% 12%
Depreciation 7% 8%
Electricity 5% 5%
Natural gas 4% 4%
Other costs 21% 24%
Sep‟11 Average Steel Slab Cash Cost by Region (EXW)
Cash Cost ($/metric tonne)
0
120
240
360
480
600
720World Average: 597
Cumulative Capacity
Mid
. E
ast
Mexic
o
Russia
&
CIS
India
Bra
zil
Canada
US
A
E.
Eu
rop
e
Austr
alia
S
outh
Kore
a
Asia
W. E
uro
pe
(3)
Japan
S.A
merica
A
fric
a
Chin
a
294
349371 355
200179
216
271 280
333356 369
395
438401
354
441 459
364
246 256 265
317298
350378
411437 446479
100
200
300
400
500
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Slab Billet
Cash Cost*, Slabs & Billets US$/t
*Average for Russian steel mills, integrated cash cost of production, EXW
6.2
7.98.6
0
5
10
15
2009 2010 2011(f)
32
26
13
0
20
40
2009 2010 2011(f)
Construction Steel Consumption in Russia
MMt
Consumption of Construction Steel in Russia
Russian Government Capital Investments
US$ bn
(1) RUB 895 bn
◦ EVRAZ is best positioned to benefit from infrastructure
development in its key markets
◦ EVRAZ is the leading producer of long products in
Russia
◦ Market share of 86% in H-beams, 66% in
channels, 89% in rails and 36% in wheels*
◦ Russian construction steel demand expected to reach
pre-crisis levels in 2012
◦ We expect construction steel demand to reach
approximately 11 MMt in 2015
◦ Over US$30 bn of capital investments by the Russian
Government planned for 2011
◦ Key programmes include construction related to the
Sochi 2014 Winter Olympics, infrastructure
development for the APEC 2012 summit in Vladivostok,
Skolkovo innovation centre
◦ Russia committed to invest over US$50 bn in
preparation for the 2018 FIFA World Cup (estimated
steel requirement of 2.0-2.5 MMt)
◦ Russian Railways approved investment programme for
2011-2013 of US$18.4 bn
(1)
Exposure to Growth in Construction and
Infrastructure
Source: Russian Government, press
* As of H1 2011
15
Investment Projects
17
Growth Projects
Projects under Consideration
Projects in Progress
◦ Mezhegey coking coal deposit development
◦ Joint venture with Alrosa to develop Timir iron ore deposit in Yakutia
◦ Construction of 2nd converter shop at EVRAZ NTMK: steel capacity increase of 1-1.5 mtpa
◦ Construction of Yerunakovskaya VIII mine, 2 mtpa of coking coal
◦ Exploration of Sobstvenno-Kachkanarskoye iron ore deposit to increase KGOK production to 55 mtpa
◦ Construction of Yuzhny and Kostanay rolling mills in regions where demand is growing (South Russia and Kazakhstan): total 900,000 tpa of construction products
Projects in Final Stage of Completion
◦ Rail mill modernisation enabling production of high value-added products
◦ PCI installation at Russian steel mills
-
200
400
600
800
1,000
1,200
2008 2009 2010 1H 2011
Maintenance, Steel and other operations Coal mine development **
Iron ore mine development Investment projects*
18
CAPEX Dynamics
1,103
441
832
462
* In 2010 includes US$70 million acquisition of Mezhegey and Mezhegey East licences
** Investment into maintaining and developing mining volumes, such as preparation of coal seams
◦ Return to investment in modernisation projects and mine development in 2010
◦ FY 2011 CAPEX of US$1.2 billion
US$ mln
2011 Budget
CAPEX
(1) Total 2011 capex is ca. $US1.2 bn
(2) Acquisition of Mezhegey and Mezhegey East licences
Iron ore & coal
Project
Total CAPEX
$US mln
Cum CAPEX by 30.06.
2011
$US mln
Expansion of Kachkanar Mine 80 44
TBD 80 (2)
Update on Key Investment Projects 19
Steel
Iron ore & coal
Yerunakovskava Mine Construction 350 35
Project
Total CAPEX
$US mln
Cum CAPEX by 30.06.
2011
$US mln
Development of Mezhegey and Eastern Field Coal
Deposits (Tyva, Russia)
Project
Total CAPEX
$US mln
Cum CAPEX by 31.12.
20111
$US mln Project Targets
Construction of Yuzhny and Kostanay
Rolling Mills
Reconstruction of Rail Mill at United ZSMK
(Former NKMK)
Reconstruction of Rail Mill at NTMK
Pulverised Coal Injection (PCI)
at NTMK and ZSMK
Reconstruction of Mechanical Area at
NTMK Wheel & Tyre Mill
260 57
520 305
60 58
320 170
35 23
Coal production of 2 mtpa
On-stream by mid-2013
Iron ore production to be increased to 55 mtpa
On-stream by 2012
Maintaining self-sufficiency in high-quality hard coking coal
after depletion of existing deposits
On-stream by 2015 and 2021 respectively
Capacity: 450 ktpa of construction products each mill
On-stream by mid-2013
Capacity of 950k tonnes of high-speed rails, including 450k
tonnes of 100 metre rails
On-stream by 2013
Production of higher-quality rails
550k tonnes capacity
On-stream by 2012
20% lower coke consumption
Save annually up to 650 mcm of natural gas at NTMK and up
to 600 mcm at ZSMK
On-stream by end-2012
Production of higher-quality wheels
On-stream by 2011
20
Summary
Volatile market environment in H2 2011 and beginning of 2012 due to global economic and financial
uncertainty
Group‟s vertically integrated business model is relatively resilient to market fluctuations
Improved liquidity position and reduced debt level following continuous refinancing in 2011
Renewed investment into enhancing the mining base, production modernisation and product quality are
expected to bear fruit in 2012
The premium share listing in London and FTSE 100 inclusion to improve liquidity and shareholder base
Company now on sound footing to achieve further growth and is well prepared to efficiently operate
even in the prolonged period of market uncertainty
Appendix
22
* Consolidated adjusted EBITDA represents profit from operations plus depreciation and amortisation, impairment of assets, foreign exchange loss (gain) and loss (gain) on disposal of
PP&E. See appendix on p.30 for reconciliation of profit (loss) from operations to Adjusted EBITDA
** Net profit in 1H 2011 was negatively affected by one-off items. Without one-off losses of US$231 million relating to the conversion and early repurchase of debts the 1H 2011 net profit would have been US$494 million *** Here and throughout the presentation steel sales volumes to external customers only if not stated otherwise
Revenue 8,380 6,379 31%
Gross profit 2,197 1,460 50%
1,154 41% Consolidated adjusted EBITDA* 1,629
Adjusted EBITDA margin 19.4% 18.1%
0.42 EPS (US$ per GDR) 0.62
1H 2011 1H 2010 US$ mln unless otherwise stated Change
1H 2011 Summary
176 Net Profit** 263
Steel sales volumes*** (‟000 tonnes) 7,946 7,714 3%
49%
48%
Interim Dividend (US$ per GDR)
Short-term Debt 604
Net Debt 6,042 7,127
714
(15)%
(15)%
0.2 0
As of
30 June 2011
As of
31 Dec 2010 Change
23
803 744
390
96255
(3)
83
62
(157)(156)
-300
0
300
600
900
1,200
1,500
1,800
1H 2010 1H 2011
Steel Mining Vanadium Other operations Unallocated & Eliminations
5,7967,492
1,120
2,040
290
320
414
482
(1,241) (1,954)
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
1H 2010 1H 2011
Steel Mining Vanadium Other operations Eliminations
1H 2011 Financial Highlights
Consolidated Revenue by Segment
US$ mln
Consolidated Adjusted EBITDA
6,379
8,380
1,154
1,629
US$ mln
◦ Significant growth in revenues and EBITDA in 1H 2011 vs. 1H 2010 as a result of market recovery
◦ Revenue growth was driven primarily by prices increases as EVRAZ operated at high capacity utilisation levels in 1H
2011
◦ EVRAZ benefits from high level of vertical integration
◦ Major share of revenues coming from Steel segment, while more than half of EBITDA generated in Mining segment
24
FCF Generation
◦ Substantial free cash flow generation in 1H 2011
◦ Release of working capital in spite of higher level of activity and higher prices
◦ Major uses of FCF in 1H2011 were: US$402 million increase in cash, US$275 million net repayment of loan
principals, US$51 million purchase of non-controlling interests (Evraztrans)
*Free cash flow comprises cash flows from operating activities less interest paid, costs of early repurchase of debts and cash flows from
investing activities
US$ mln
1,6701,62941
(210)
1,594
(386)
(462)
5 751
134
0
200
400
600
800
1000
1200
1400
1600
1800
2000
EBITDA 1H
2011
Non-cash
items
EBITDA (excl.
non-cash
items)
Changes in
working
capital, excl
income tax
Income tax
paid
CF from
operating
activities
Interest paid
and costs of
early
repurchase of
debts
Capex CF from
investing
activities
(excl. capex)
Free cash
flow*
301 194
1,452 1,373
1,713
659
30
1,374
33
0
500
1,000
1,500
2,000
2011 2012 2013 2014 2015 2016 2017 2018 2019-2023
Q1 Q2 Q3 Q4
25
Liquidity and Debt Maturity Profile
Debt* Maturities Schedule (as of 30 September 2011)
* Principal debt (excl. interest payments)
US$ mln
◦ Refinancing steps significantly strengthened the Group‟s liquidity profile:
◦ In April 2011, EVRAZ issued US$850m bonds due 2018 at 6.75%, the lowest ever coupon for EVRAZ Eurobond
issues
◦ Part of the proceeds from the issue was used to purchase approx. US$622m in aggregate principal amount of
the outstanding bonds due 2013
◦ In June 2011, Evraz issued a 20 billion 5-year rouble bond (approx. US$715m) at 8.40%, and incentivised
conversion of US$648 million in principal amount of convertible bonds due 2014
◦ In October 2011, the 5-year US$500 million unsecured credit facility with Gazprombank was used to prepay the
existing US$300 million secured loan
◦ In December 2011, closed a US$610 million 5-year committed revolving credit facility for EVRAZ NA at 1.5-2%
over LIBOR, refinancing US$225 million and CAD300 million facilities at 3.25-4.25% over LIBOR
◦ EVRAZ‟s total debt was US$7.2 billion as of 30 September 2011, including US$4.7 billion of public debt and US$2.5
billion of bank loans
◦ Targeting net debt/EBITDA ratio below 2.5x
26
1,6291,1961,154
769468
19%17%18%
15%
10%
0
500
1,000
1,500
2,000
1H2009 2H2009 1H2010 2H2010 1H2011
0%
5%
10%
15%
20%
EBITDA and EBITDA Margin Performance
US$ MM
EBITDA
Improved Business Fundamentals
EBITDA Margin (RHS)
%
31 December
2009
30 June
2011
Net Debt US$7,230m US$6,042m
Leverage (Net Debt/LTM
EBITDA) 5.8x 2.1x
Average Maturity 3.4 years 3.8 years
Short-term Debt US$1,992m US$604m
◦ EBITDA and EBITDA margin progression
◦ Focus on financial management
◦ Reduction of total debt level
◦ Significant improvement of leverage
◦ Successful refinancing of short-term debt using debt
instruments with longer term maturities
◦ EVRAZ credit ratings upgraded: S&P to B+, Stable;
Moody‟s to Ba3, Stable; Fitch to BB-, Stable
27
53%68%
47%32%
0
1,000
2,000
3,000
4,000
5,000
6,000
1H 2010 1H 2011
Domestic Export
2,260 1,838
2,1002,378
785 813
387 512
0
1,000
2,000
3,000
4,000
5,000
6,000
1H 2010 1H 2011
Semi-finished Construction Railway Other
Steel: CIS
Steel Product Revenues Steel Product Sales Volumes
5,532 5,541
„000 tonnes
5,532 5,541
Steel Product Sales, Domestic vs. Export
Products Revenue,
US$m
Revenue per tonne,
US$
1H 2010 1H 2011 1H 2010 1H 2011
Semi-finished 1,112 1,159 492 630
Construction 1,275 1,833 607 771
Railway 541 734 689 903
Other steel 247 422 638 824
Total 3,175 4,148 574 749
„000 tonnes ◦ Full utilisation of Russian and Ukrainian steelmaking
capacities maintained in 2011
◦ In 1H 2011 domestic steel sales accounted for 68% of
EVRAZ‟s Russian and Ukrainian mills‟ steel sales
compared to 53% in 1H 2010, reflecting improving
demand in the CIS market and the shift to sales of higher
margin products
◦ High market share in domestic sales through own
distribution network
◦ Prices of key products strengthened in response to
demand recovery and growth in raw material prices
28
197 165
181 242
462511
436403
0
200
400
600
800
1,000
1,200
1,400
1H 2010 1H 2011
Construction & other steel Railway Flat-rolled Tubular
Steel: North America
1,276 1,321 Products Revenue,
US$m
Revenue per tonne,
US$
1H 2010 1H 2011 1H 2010 1H 2011
Construction
and other 154 153 782 927
Railway 172 249 950 1,029
Flat-rolled 400 578 866 1,131
Tubular 601 589 1,378 1,461
Total 1,327 1,569 1,040 1,188
Steel Product Revenues Steel Product Sales Volumes
„000 tonnes
◦ Gradual recovery in demand
◦ Sales volumes of steel products increased by 4% in 1H 2011 vs. 1H 2010
◦ Flat-rolled steel volumes increased by 11%; railway products by 34%
◦ Average prices of all product categories increased with the largest increase in flat-rolled products (+US$266/t)
◦ Pricing of steel products generally follows scrap price trends
29
511631
92
109
0
100
200
300
400
500
600
700
800
1H 2010 1H 2011
Flat-rolled Other
97 108
183
52
195
10
-
50
100
150
200
250
300
350
400
1H 2010 1H 2011
Construction Flat-rolled Other
Steel: Europe, South Africa
„000 tonnes
„000 tonnes
603
740
302
343
Products Revenue,
US$m
Revenue per tonne,
US$
1H 2010 1H 2011 1H 2010 1H 2011
European Operations
Flat-rolled 345 598 675 948
Other 74 104 804 954
Total 419 702 695 949
South African Operations
Construction 70 89 721 824
Flat-rolled 138 159 708 869
Other 7 36 700 692
Total 215 284 712 828
Steel Product Sales Volumes,
South African Operations
Steel Product Revenues
Steel Product Sales Volumes,
European Operations ◦ EVRAZ‟s European mills sales volumes increased by
23% in 1H 2011 vs. 1H 2010
◦ European flat-rolled product sales volumes increased
by 23%, which largely reflected the increased
demand picture in the European market
◦ Sales of EVRAZ Highveld‟s steel products were
effectively flat as domestic demand in the South
African market remained weak
8,859
10,397 10,6359,981
10,455
8,8099,955
9,60810,191 10,355
0
4,000
8,000
12,000
H1 2009 H2 2009 H1 2010 H2 2010 H1 2011
99% 96% 90% 102% 99%
(1) Self-coverage, %= total production divided by total steel segment consumption
(2) Self-coverage, %= total production (plus 40% of Raspadskaya production on pro rata basis) divided by total steel segment consumption
(3) Self-coverage excl. 40% Raspadskaya share
◦ As of 1H 2011 EVRAZ was 99% self-sufficient in iron ore and
62% in coking coal (88% including 40% share of production
from Raspadskaya)
◦ Cash cost of washed coking coal went up in 3Q 2011 due to
drop in production volumes and increased repair costs
◦ EVRAZ‟s strategy is to expand its mining division increasing
self-sufficiency
◦ The company is developing a number of projects including
the Mezhegey and Yerunakovsky VIII coal deposits and the
Kachkanar iron ore deposit
„000 tonnes
Iron Ore Self-Coverage (1), 2009-H1 2011
Consumption Production Consumption Production Excl. Raspadskaya Raspadskaya Production
Mining: Integrated Portfolio of Iron Ore and
Coking Coal
30
4,0533,850
3,2993,4992,4042,5062,191
4,021
3,4023,642
5,288
4,218
4,795
3,5013,229
0
3,000
6,000
Washed Coking Coal (Concentrate) Self-Coverage (2)
„000 tonnes
137% 125% 90% 80% 88%
78%(3) 100%(3) 54%(3) 62%(3) 62%(3)
H1 2009 H2 2009 H1 2010 H2 2010 H1 2011
„000 tonnes „000 tonnes „000 tonnes
20
30
40
50
60
70
80
90
100
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Iron ore products (Fe 58%) Washed coking coal (concentrate)
Cash Cost, Russian Iron Ore Products and Coal
US$/t