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New leader in Russian steelNew leader in Russian steel
Magnitogorsk Steel (MMK)Magnitogorsk Steel (MMK)
October 2010
2
MMK – New Industry Leader
2
Largest single-site steelmaker in Russia with current crude steel capacity of 14 mln tons
Production growth of more than 60% by 2014
Share of HVA products to grow from current 35% to 50% by 2014
Import substitution strategy: favorable geographical location to meet solid demand from the most intensive steel consuming regions of Russia – the Urals and Volga regions
Great play on Russian infrastructure:
• 16% of the domestic steel market - domestic sales are priced with premium
• Largest exposure to pipe-manufacturing, auto-building and heavy machinery
• More than 50% of steel production for pipes output in Russia
Disciplined investment strategy with “high-return projects” and “high-quality assets”investments approach
ММК Geography
2.3 mln tpy production.New, modern steel making complex and two service
centers.
Metals service center and stamped-product factory.
630 mln tons coal reserves5.9 mln tons mined in
2009.Largest iron-ore deposit,more than 2 bln tons of
reserves.
Interkos-IV
Prioskolsky GОК
MMK Atakas
ENRC
Belon
One of Russia’s largest metalware producers
ММК Metiz
Profit
Source: MMK
Covers 100% of MMK’s scrap needs.
ММК trading house
59%
14%18%
5%
2%
High-priority (domestic)Priority (export)Major (export)
Markets
Other (export)
ММК1st by steel output in Russia (2009)1st by rolled products in Russia (2009)9,6 mln tons of steel (2009)8,8 mln tons of finished products (2009)
% Share of sales, mln tons
Profit’s scrap collecting yards
CAGR (2010-15) = 2,3%CAGR (2010-15) = 5,5%
CAGR (2010-15) = 5,0%
3
CAGR (2010-15) = 6,7%
Long-term agreement withММК (to 2017).
Currently MMK’s main iron-ore supplier.
ММК controls 5%оf Fortescue Metals Group,
one of Australia's largest iron-ore producers.
Fortescue Metals Group
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
2009 2010E 2011E 2012E 2013E 2014Е
MMK MMK-Atakas HVA products
8066
182 190
246
280
343
0
100
200
300
400
Long steel HR flat steel CR flat steel Mill 5000 plate Formedsections
Galvanizedsteel
Colour-coatedsteel
0%
20%
40%
EBITDA/t EBITDA margin
34%
66%
0%
10%
20%
30%
40%
50%
60%
70%
MMK
2011 2012 2013 2014
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
2010E 2011E 2012E 2013E 2014Е
ММК, currently run capacities MMK, operational upside on current capacities
MMK, new capacities MMK-Atakas
Дополнительные графикиMMK growth prospects
Finished steel products structure evolution
Crude steel growth drivers
Sourсe: MMK
Sourсe: ММК4
8 831
17 252
Crude steel output growth plans18 617
MMK suggests highest growth potential among its Russian peers
EBITDA per ton of finished steel products
Thousand tons
HVA share ≈ 50% starting from 2012
≈ 50 %44 %
38 %
34 %27 %
46 %
HVA (Higher Value-Added products)
> 60% growth
Thousand tons
Производство толстого листа - Стан 5000
2.3Capacity, mtpy finished steel
increase presence in key export regionsgeographical diversificationRationale
Middle East, EU, AfricaMarketUSD 1.7 bnCAPEX
14%IRR
HRC, galvanized, colour-coatedProduct types
state-of-the-art full-cycle steel productionProfile
Building on the value
5
Mill 2000 (RUSSIA)Belon (RUSSIA)
MMK-Atakas (TURKEY) Mill 5000 (RUSSIA)
5.9 in 2009, 9.8 by 2013Capacity, mtpy coal
better business profile and higher profitabilityRationale
Russia, EUMarketUSD 0,543 bnAcquisition cost
19.5%IRR
coking coal 6.8, thermal coal 3.0Product types
growing producer of high-quality coalProfile
1.5Capacity, mtpy finished steel
#1 supplier to pipe sectorimports replacementRationale
Russian oil&gas infrastructureMarketUSD 1.5 bnCAPEX
25%IRR
Heavy plates up to x120 strength classProduct types
HVA rolling facilitiesProfile
2.0Capacity, mtpy finished steel
#1 supplier to automotive sectorimports replacementRationale
Russia, automotive industryMarketUSD 1,5 bnCAPEX
20.6%IRR
CR & galvanized automotive steelProduct types
HVA rolling facilitiesProfile
What is MMK investment style?
HIGH RETURN RATESYNERGETICVALUE-ADDING
CONSEQUENTTAPPING KEY MARKETSWELL-THOUGHT
ENJOYING STATE SUPPORT
STRENGTHENING LEADERSHIPFOCUSEDBEATING THE CYCLE
HIGH RETURN RATESYNERGETICVALUE-ADDING
CONSEQUENTTAPPING KEY MARKETSWELL-THOUGHT
ENJOYING STATE SUPPORT
STRENGTHENING LEADERSHIPFOCUSEDBEATING THE CYCLE
Производство толстого листа - Стан 5000
• Project completion time under SMS Demag contract - 32 months• November 2007–May 2009: construction of new mill• July 2009: first production• December 2009: launch of Continuous Slab Caster # 6• February 2010: launch of secondary steel-processing complex
ММК is one of ten premium quality producers of thick plates worldwide (in China, Germany, France, Russia and Japan)
which are able to manufacture comparable thick plate
12 000Rolling force, tons
2009Launch
24Length, m
8-160Thickness, mm
up to Х120Strength class
up to 4,800Width, mm1.5Capacity, mln tpy
Specifications
Plate Mill 5000
Future use of Mill 5,000 products
• Cooperation agreement with Gazprom
• Strategic cooperation agreement with TMK
• Cooperation agreement with ChTPZ
• Government asked pipemakers to reduce share of imported plate
6
0
1 000
2 000
3 000
4 000
5 000
6 000
2008 2009 2010Е 2011Е 2012Е 2013Е 2014Е 2015Е0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mill 5,000 products LDP Bridge buildingBoiler building Ship building OtherMMK, % of domestic market
’000 tons
Use of thick plate in Russia by sector
Source: ММК
Agreements
MMK44%
Severstal28%
Mechel2%
Import17%
NLMK0,2%
Uralsteel9%
Mill 5000 - Strengthening Positions in Pipe Sector
Growth in LDP consumption in Russia
(1,000)
(500)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2002 2003 2004 2005 2006 2007 2008 2009 2010Е 2011Е 2015Е
Production of LDP LDP importsLDP exports Apparent consumption of LDP in Russia
‘000 ton
Key steel suppliers to pipe-builders in Russia
Total: 2.415 kt
1H2010
0
500
1 000
1 500
2 000
2 500
2009 2010Е
Export
Gazprom, Transneft, TEK
BTS-2
VSTO-2
Sakhalin-Khabarovsk-Vladivostok
Yamal Europe
Nord Stream
Use of LDP Produced in Russia by Project
Source: MMK
Source: MMK 7
Geography of Main Pipelines
BTS-20,1 mt
VSTO-20,2 mt
Sakhalin-Khabarovsk-Vladivostok0,5 mt
Yamal-Europe0,5 mtNord Stream
0,1 mt
Source: ММК, 2010-2015 outlook
CAGR = 12%
Russia
Source: MMK
2010Е
Укрепление позиций в автопромеStrengthening Position in Auto Industry
HSLA, IF-HSS, BH, biphase, monophase, ТRIPSteel grades
0.28 – 3.0Thickness, mm
850-1,880Width, mm
2,000Capacity, ’000 tpy
Key Mill 2,000 specifications
Key equipment supplier - SMS DemagMill 2,000 Complex
8
Production volumes:• 700,000 tpy of galvanized steel annealed• 400,000 tpy cold-rolled (after annealing) products• 900,000 tpy unannealed productsKey customers:• Carmakers• White goods
1120
89112
210215
384424
447
522
575
0
100
200
300
400
500
600
700
Germany UK US
Czech Rep
Poland
South Korea
Russia
Brazil
Turkey
China
India
Private Car Ownership
Private car ownership, vehicles per 1,000 people
Russian vehicle fleet by age
Source: Global Insight, Rosstat
Source: Rosstat
33%
44%
23%
less than 10 yrs
more than 10 yrs
more than 20 yrs
1 037
3 388
1 515
4 559
0
1 000
2 000
3 000
4 000
5 000
2009 2010 2011 2012 2013 2014 2015 2020
All vehicle types output, th.pieces
Steel consumption by car-makers
12%
13%
60%
15%
Volga federal region
North-w est federal region
Central federal region
Other
Укрепление позиций в автопромеMill 2000 Cold Rolled Steel ComplexHigh strength steels use
Cold-rolled automotive steel consumption in Russia*
9Source: ММК
Car-making projects in Russia by 2015E
Steel consumption by auto-makers in Russia
Source: MMK
Source: World Steel Association
Source: boronextrication.com
Mild Steel30,8%
HSS44,5%
AHSS15,6%
UHSS9,1%
0
500
1 000
1 500
2 000
2 500
3 000
2010 2015 2020
UHSS (MS, TWIP, HS)
AHSS (DP, CP, TRIP)
HSS (IF - HS, MA, BH,HSLA)
Mild Steel (03-10, IF, IS)25%
700
1 290
2 451
High strength steel types to reach 60% in overall
consumption
≈ 60% by 2020
60%
49%
* Data for motor cars only
Выход на быстрорастущий рынок Турции
Locations of Key Markets
Source: TUIK – Turkish Institute of Statistic
Entry to Rapidly Growing Turkish Market
Istanbul
Iskenderun
Flat Steel Market in Turkey, mln tons Turkish Flat Steel Market Structure
Source: ING
6%
12%
13%
28%
18%
13%
7%
Pipe production
Metal Service Centers
Spot sales
Auto industry
Packaging
Boiler making
Other
Europe
Middle East
Africa
10
Priority export markets
Important export markets
8,9
10,110,9
10,3
7,88,5 8,7
9,310,4
-5,1-6,0
-6,6-5,8
-3,2-2,6
11,1
9,710,8
4,64,54,34,13,8
5,9
7,58,5
-0,7-1,2 -0,8 -0,3
-8,0
-4,0
0,0
4,0
8,0
12,0
2005 2006 2007 2008 2009 2010Е 2011Е 2012Е 2013Е 2014Е
Consumption Production Balance
0
500
1 000
1 500
2 000
2 500
2009 2010Е 2011Е 2012Е 2013Е
Coil w ith a polymer coatingGalvanized coilHot rolled coil
Schedule of MMK-Atakash Project and Construction Costs
Capacity for crude steel
Forecast production output
•Announcement on the realization of the joint venture
280,000 tons1,825,000 tons
Total construction expenses: $1,175 mln
2,197,000 tons
67,000 tons
2007 2008 2009 2010 2011 2012
•Launch of metal service center
•Launch of hot galvanizing line
•Launch of etching line•Launch of reverse mill
•Launch of polymer coating line
•Launch of metals service center
•Launch of galvanized line•Launch of color-coating line
Iske
nder
unIs
tanb
ul
2,317,000 tons2,317,000 tons
Source: MMK estimates
$100 mln $195 mln $265 mln $572 mln $43 mln
•Launch of mill for hot rolled coil and steel production
Production Output
67
280
1 825
2 197 2 252
11
‘000 ton
Belovskaya Concentration Plant
Source: MMK estimates
Steam Coal Segment
Coking Coal Segment
Source: MMK estimates
MMK owns 82.6% of Belon
3448
43064920
5280
6790
24602978
3340
4340
3360
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
2009 2010Е 2011Е 2012Е 2013Е
Coking coal production Concentrate production
2460
31563000 3000 3000
2019
2479
27932958 2958
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2009 2010Е 2011Е 2012Е 2013Е
Steam coal production Concentrate production
Belon Coal Company
‘000 tons
‘000 tons
12
Belon development programme will result in:• increase in coking coal production to 6.8 mln tons by 2013
• increase in coal concentrate production to 4.3 mln tons by 2013
Advantages of the deal for MMK: • Guaranteed supplies of deficit high grade coking coal
• Stable chemical properties of coal used in steelmaking process, lower consumption of coke
• Natural hedge against rising coal prices
Following the growth strategy Belon acquired license to develop Nikitinsky site with 200 mln reserves of rare “Zh”grade coals in June 2010
3 448
4 306
4 9205 280
6 790
Uch. Erunakovsky-2
84
Novobachtsky Slit (KC)
10
Chertinskaya-Koksovaya (Zh)
43
Listviazhnaya (DR)260
Prisalairskaya stripe
11
Kostomov-skaya (Zh)
156
Chertinskaya-Yuzhnaya (2h)
66
Novobachatskyvent
Uch. Erunakovsky
Chertinskaya-Yuzhnaya mine
TsOF BelovskayaChertinskaya-Koksovaya mine
Listvyazhnaya mineKostromovskayamine
OF Listvyazhnaya
Kemerovo
Belovo
Compact location (with a 60 km radius) secures effective
management and logistics
•Securing the delivery of the necessary volumes of coking and steam coal.
•Stability in the coal mixture content, reduction in coking coal expenses.
•Natural hedging of MMK financials from changes in coal concentrate prices.
Synergies for MMK
Coking coal mine
Steam coal mine
Concentration plant
Transport distance – 2,125
Coal reserves, mln tons
Total: 630 mln tons
Structure of OAO BelonCoking coal segment
Extraction2008 - 3,082,000 tons2009 - 3,404,000 tons
Processing2008 - 4,977,000 tons2009 - 4,892,000 tons
Extraction2008 – 2,449,000 tons2009 – 2,460,000 tons
Processing2008 – 2,812,000 tons2009 – 3,082,000 tons
Steam coal segment
13
Uch. Nikitinsky
Geography of Belon Assets
2Q10 1Q10 2009 2008 2007 2006
Crude steel output, kt 2 984 2 732 9 618 11 957 13 261 12 455
Finished steel, kt 2 623 2 453 8 764 10 911 12 203 11 346
Revenues, $ mln 2 068 1 652 5 081 10 550 8 197 6 424
EBITDA, $ mln 437 374 1 285 2 204 2 407 2 005
EBITDA margin, % 21% 22,6% 25% 21% 29% 31%
Net profit, $ mln 53 94 219 1 081 1 306 1 426
Net margin, % 3% 6% 4% 10% 16% 22%
Assets, $ mln 15 594 15 822 14 833 14 197 15 887 5 689
Credit & loans, $ mln 2 880 2 438 2 118 1 726 1 454 1 006
short-term* 931 866 828 1 295 1 224 400
long-term* 1 949 1 572 1 290 431 230 606
Shareholder capital, $ mln 9 673 10 416 9 957 9 852 11 786 4 027
Cash, $ mln 220 173 165 1 106 256 338
10 550
8 197
6 424
5 081
2 2042 4072 005
1 2851 0811 3061 426
219
0
2 000
4 000
6 000
8 000
10 000
12 000
2006 2007 2008 2009
Revenues EBITDA Net profit
Key Indicators Trends Key Indicators
Source: Company
$ mln
* includes leasingSource: Company. 2006-2007 financials under US GAAP, starting from 2008 – under IFRS
Financials
14
100213
309437
2 068
1 404
1 038965
1 6521 674
374
670
537659
-110
94219
-500
0
500
1 000
1 500
2 000
2 500
1Q09 2Q09 3Q09 4Q09 1Q10 2Q2010
Rev enues EBITDA Net prof it
BB, outlook positive(outlook changed from “stable” on Sep 17, 2010)
Ba3, outlook positive(outlook changed from “stable” on July 22, 2010)
MMK credit ratings
Unique Cost PositionSlab сash-cost and raw-material price changes
256
356
491
552
449
243223 240 250
280320
0
100
200
300
400
500
600
2007 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10-150%
-100%
-50%
0%
50%
100%
150%
200%
Slab cash cost, $/ton Iron ore, % Coal, % Scrap, %
USD/т
Slab cash-cost structure, 2Q10Material and resource self-sufficiency
0%
25%
50%
75%
100%
Iron ore* Coal** Scrap ElectricityOwn Purchased
* 70% comes under contract with ENRC till 2017** including sales to third parties
15
Key raw-material supplier structureIron ore
30%
70%
MMK 10-y ear contract till 2017
Coal 6%11%
35%
48%
MMKSiberian Businness Union (f iv e-y ear contracts)Raspadskay aOthers
Scrap
100%
MMK
Electricity
75%
25%
ММК Others
Other
7%
Coal
24%
Other
resources
7%
Fuel & energy
purchases
10%
Wages
3%
Iron ore 29%
Scrap
purchased
17%
Cash cost: 320 USD/t
1H2010
*- cost of electricity production for MMK ** - cost of purchased electricity
~ $30*(‘000 kWHrs)
~ $70**(‘000 kWHrs)
Outlook
16
Production
• Output volumes in Q3 2010 at about Q2 2010 levels
Markets
• We see recovery in volumes and prices from summer months to September
and in Q4 2010
• Continuing solid demand from pipe manufactures, improvements for auto
makers and heavy machineries
• Some demand in construction steel emerges starting from the second half
of August
• Better situation on export markets: limited production in China due to
electricity cuts and closure of old inefficient plants
• Commodity prices are expected to slow down in Q4 2010
17
ENRC
Investment Highlights
17
• Key beneficiary of steel market recovery – more than 60% production growth
within next 4 years
• Growing volumes and share of HVA products (50% by 2014) to secure
sustainably high efficiency
• Focus on specialty steel products to replace imports in Russia and to enjoy
domestic market price premium
• Access to lucrative Turkish flat steel market with high-quality steel products
• Emphasized direct exposure to growing industry sectors in the domestic
market – pipe-building, automotive and heavy machinery industries
• Technological flexibility to address raw-material market fluctuations – crude
steel production using iron ore/coking coal vs. scrap
• Strong balance to secure further growth
• Plans for further strengthening in commodities
Question Answer
How much is MMK vertically integrated?
MMK has been most active in increasing its vertical integration in the last 12 months. Iron ore: MMK is 100% covered with stable supplies of iron ore. 30% comes from captive sources (up from 20% in 2008), 70% comes under 10-year agreement with ENRC (till 2017). Options for the development of Prioskol depositCoking coal: through acquisition of Belon MMK has covered 50% of its requirement of coking coal to bring up the self-coverage rate up to 80% by 2013 through the development of Belon asset baseScrap: MMK owns the largest scrap collector in Russia – 100% self-sufficiency in scrapElectricity: 85% self-sufficiency.
What are growth plans of MMK in terms of volumes?
MMK presents highest growth bid among Russian steel names through existing leverage, organic growth and expansion projects – more than 60% by 2014.
How would you assess MMK corporate governance standards?
MMK pursues best corporate governance and disclosure practices (recognized by S&P as #3 in Russia for 2009). Half of the Board members are independent. 4 BoD committees are in place, HR & Remuneration Committee and Audit Committee are built entirely of independent directors.
Why does MMK focus its development strategy on the domestic market?
Domestic market suggests price premiums and best growth prospects. It is a privilege for MMK to be able to maintain high domestic sales volumes. It took a decade of technical overhaul to turn from a mere exporter (63% of overall production in 1999 was exported) to a key supplier to the domestic pipe industry, heavy engineering and automotive industry (domestic shipments stood at 65% in H1 2010).
How much can MMK benefit from infrastructure and constructionrecovery?
Besides indisputably high exposure to infrastructure and corporate spending in Russia due to high quality flat steel products (currently MMK supplies to construction of all the pipe-line projects of Gazprom and Transneft), MMK has the most modern in Europe facilities to produce 2 mtpy of the widest possible range of long steel products.
What are MMK exporting abilities?
MMK historically exported around 4.7 mtpa on average to customers in more than 60 countries. Given weaker demand in international markets this year the Company plans to export 3,6 mt in 2010. In terms of global expansion MMK finalizes its MMK-Atakas project in Turkey to produce 2.3 mtpa of finished steel goods in order to increase shipments to MMK key export region – Middle East – and get bigger exposure to the EU market.
Key Q&A
18
AppendicesAppendices
MAGNITOGORSK STEELMAGNITOGORSK STEEL
Leading positions in the industry
Источник: ММК, Metal Courier
MMK’s share in Russia
163%37%Hot-rolled sheet
26%Color-coated rolled products 2%
30%Galvanized flat products
24%Cold-rolled sheet
65%Cold-rolled narrow strip
6%
100%Tin plate 2%
12%
1%
47%Special sections 1%
1
1
2
1
3
3
Place in Russia
Leading position on domestic market
Hot-rolled sheet5.51 mln tons (63%)
Cold-rolled sheet1.09 mln tons (12%)
Long products1.00 mln tons (11%)
Downstream1.15 mln tons (13%)
Billets and slabs0 mln tons (0%)
Picture
Picture
Picture
Picture
Various Product Types
Source: ММК, 2009
Share in MMK’s total production
20
6%
13%
7%
16%
5% 5%4%
15%28%
ММК
Severstal
NLMK
Urals Steel
ZSMK
NTMK
Chelyabinsk MK
Others
Imports
MMK’s share of Russian steel market, 2009
6,000
8,000
10,000
12,000
1999 2001 2003 2005 2007 2009
ММК Severstal NLMK
th. tonsThe leader in finished steel production
Source: Company Источник: ММК, Metal Courier
Source: MMK
MMK’s Strong Positions on the Domestic MarketDomestic Sales Structure
Russian Sales by Sector
Bridge building0.4%
Fuel and energy companies
0.4%
Spot sales in Russia
14%
Hardware and semi-integrated factories
8%
Food industry1%
Automobile sector6%
Pipe production33%
Machine building14%
Spot sales in CIS10%
Construction Sector12%
21%
56%
12%
12%Hot rolled steel(including thick plate)
Downstream products
Long products
Cold rolled steel
Total: 3 276 kt
Source: MMK
4813 4876
7155
5112
50034761
41854198
3532
28132599
2678
2141
6071
4903
7327
5275
3861
5088
513353125482
5146
48704164
383737223755
0
1000
2000
3000
4000
5000
6000
7000
8000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Domestic market (Russia + CIS) Export
Dynamics of Domestic and Export Sales, ‘000 tons
Source: MMK
21
Domestic Price Premium
78
162150 156
225
158171
0
50
100
150
200
250
2004 2005 2006 2007 2008 2009 1H2010
USD/t
Source: MMK
1H2010
1H2010
12%
74%
1%1%
13% Hot-rolled steel
Cold-rolled steel
Downstream products
Long products
Slabs and billets
Strong Presence on Export MarketsExport Development Strategy
Regional Sales Structure
Asia & Far East5%
Middle East15%
Europe 10%
Africa2%
America4%
Domestic Market65%
Source: ММК
Export-Sales Structure
Total: 1,800 kt
54% 59% 61% 66% 72%64%
46% 41% 39% 34% 28%36%
71%
29%
0%
50%
100%
2004 2005 2006 2007 2008 2009 1H2010
Domestic Exports
Share of Export Sales in Revenues
• Company successfully managing export sales
• Key export markets – rapidly-growing markets of Middle-East, Asia and Far-East.
• MMK expanding presence on most promising markets such as Turkey by building new steel making operations and expanding service center network.
Source: ММК
Total: 5,076 kt
Source: ММК
22
1H2010
1H2010
1 447
811
1 154
4,13
2,57
1,61
0
500
1000
1500
ММК Sev erstal Ev raz
0
2
4
6
8
10
EBITDA Debt/EBITDA
616
207
484
630624
0
100
200
300
400
500
600
700
2011Е 2012Е 2013Е 2014Е 2015 и далее
931 9891 756
5 303
6 180
1 949 4 287
2 660
7 261
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
MMK Sev erstal Ev raz
$ mln
Short-term debt Long-term debt Net debt
Показатели Группы ММК в сравнении с конкурентами
Steel Companies’ Debt Loads Debt/EBITDA
MMK Group Indicators Compared to its Competitors
23
At 1 July 2010
Maturity of Long-term Borrowings
$ mln
Source: Company data, 6 months 2010Source: Company data, 6 months 2010
$ mln
Source: MMK
400
1 224 1 295828 931
606
230431 1 290
1 949
0
500
1 000
1 500
2 000
2 500
3 000
3 500
2006 2007 2008 2009 2Q2010
Short-term debt Long-term debt
Debt Structure by Maturity$ mln
At 1 July 2010
MMK-Atakas Production PlanTo
tal p
rodu
ctio
n,
‘000
tons
per
yea
rPr
oduc
tion
Cap
acity
, ‘0
00 to
ns p
er y
ear
Source: MMK estimates 24
Total: 2 252 kt
100
60
HR
gal
vani
zed
Poly
mer
s in
shee
ts
Hot Rolled Coil Mill2,317
Pickling aggregate1,165
Cold rolled coil mill759
Galvanizing line867
636 460 300 196
Gal
vani
zed
coil
Color-coating line403
160 340
2,252
Gal
vani
zed
coil
Poly
mer
s In
coi
l
1,096 300 456 400
Hot
rolle
d co
il
Hot
rolle
d sh
eet
HR
pic
kled
coil
coil
20%
62%
18%
Hotrolled steel
Galvanized flatproducts
Color-coated rolledproducts
Finished products structure
Схема производственных процессовProduction Process
100%
25
98%100%
Galvanized steel(0.92 mln tons p.a.)
100%
Coke production(5.5 mln tons p.a.)
Long products(1.5 mln tons p.a.)
Hot coiled flat production(8.7 mln ton p.a.)
Blast furnace production(10.3 mln tons p.a.)
Coke – 432 kg/t
Agglomerate –1,015 kg/t
BOF(9.84 mln ton p.a.)
EAF(2.24 mln tons p.a.)
Cast iron – 606 kg/t
Cast iron – 895 kg/t
Pellets – 596 kg/t
Production of agglomerates(10.8 mln tons p.a.)
Iron OreScrap – 526 kg/t
Scrap – 230 kg/t
Coking coal –1,272 kg/t
Mill 5000(1.5 mln tons p.a.)
Cold rolled products(2.5 mln tons p.a.)
Slab –1,119 kg/t
Slab –1,028-1,034 kg/t
Half-finished1,027-1,037 kg/t
Hot rolled coil –1,100 kg/t
Long productionSlab preparation
EAF – Electric arc furnaceBOF –Converter ShopCM – Coating materials
Rolling facilitiesSteel production
- Production capacity
Notes:
Alloys – 15 kg/t
Alloys – 11 kg/t
Thick plate
Cold rolled products
Hot rolled coil –1,046 kg/t
CR Coil –1004/1010 кг/т*
Hot Rolled products –1,229 kg/t
Narrow strip(0.2 mln tons p.a.)
Color-coating steel(0.35 mln tons p.a.)
Tin plate(0.24 mln ton p.a.)
CM–115 g/m2
Zinc– 207г/м2
Tin –11 g/m2
Hot rolled coil
Finished Dow
nstream Products
Iron Ore
- External supplies of raw materials- Own raw materials
Pipes(0.05 mln tons p.a.)
Hot rolled production –1,055 kg/t
Sections(0.09 mln tons p.a.)
Hot rolled –1,049 kg/t
1,040 kg/t
* 1,004 kg/t – expense of cold rolled coil on galvanized steel1,010 kg/t – expense of cold rolled coil on galvanized steel with a polymer finish
100%
56%74%
90%
90%
81%
86%
87 %
62%
47%
Source: MMK
30%
•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 2005ON 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. •THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER OR A PART THEREOF, OR INVITATION TO SELL OR TO ISSUE, OR TO SUBSCRIBE FOR OR OTHERWISE PURCHASE ANY SHARES IN THE COMPANY OR ANY OTHER SECURITIES AND NOTHING CONTAINED HEREIN SHALL FORM THE BASIS OF ANY CONTRACT OR COMMITMENT WHATSOEVER.•THE INFORMATION CONTAINED HEREIN IS SUBJECT TO VERIFICATION, COMPLETION AND MAY BE SIGNIFICANTLY CHANGED. NONE OF THE PERSONS IS LIABLE TO UPDATE OR MAINTAIN TOPICALITY OF THE INFORMATION CONTAINED HEREIN, AND THIS INFORMATION AND OPINIONS REFLECTED THEREIN COULD BE CHANGED WITHOUT ANY NOTIFICATION THEREABOUT.•THIS PRESENTATION SHOULD REMAIN CONFIDENTIAL UNTIL THE REPORT IS PUBLISHED. SOME INFORMATION CONTAINED HEREIN IS STILL A DRAFT INFORMATION AND WAS NOT LEGALLY CONFIRMED AND WILL BE FINALY DETERMINED ONLY AT THE MOMENT OF FILING THE APPLICATION FOR FINAL ACCEPTANCE FOR TRADING AT THE STOCK EXCHANGE.•THIS INFORMATION DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES TO BE SOLD IN RUSSIA, THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933,AS AMENDED, AND MAY NOT BE OFFERED OR SOLD INTO THE UNITED STATES EXCEPT IN A TRANSACTION REGISTERED UNDER SUCH ACT, OR NOT REQUIRED TO BE REGISTERED THERE UNDER, OR PURSUANT TO AND EXEMPTION FROM REGISTRATION REQUIREMENTS THEREOF. NO OFFERING OF SECURITIES IS BEING MADE INTO THE UNITED STATES. NO SECURITIES WILL BE REGISTERED UNDER THE APPLICABLE SECURITIES ACT OF ANY STATE OR TERRITORIAL ENTITY OF CANADA AND JAPAN. THIS PRESENTATION IS NOT SUBJECT TO MAILING, TRANSFERRING OR OTHER TYPE OF DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA AND JAPAN, OR TO THE TERRITORY OR FROM THE TERRITORY OF THE SPECIFIED COUNTRIES TO THE NAME OF ANY ANALYST IN THE SPHERE OF SECURITIES OR OTHER PERSON IN ANY OF THE SPECIFIED JURISDICTIONS. YOU AGREE TO AVOID FROM DISTRIBUTION OF ANY REPORT RESULTING FROM THE SURVEY OR SIMILAR DOCUMENTS ON THE TERRITORY OF THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA AND JAPAN, SAVE AS IN ACCORDANCE WITH THE FEDERAL LAWS OF THE UNITED STATES ON SECURITIES INCLUDING SECURITIES ACT, AS WELL AS THE APPLICABLE LAWS OF CANADA, AUSTRALIA AND JAPAN, ACCORDINGLY.•THIS PRESENTATION INCLUDES THE STATEMENTS RELATED TO THE FUTURE, WHICH REPRODUCE THE INTENTIONS, OPINIONS AND CURRENT EXPECTATIONS OF THE COMPANY. THE STATEMENTS FOR THE FUTURE INCLUDE ANYTHING, WHICH IS NOT A FACT OCCURED. THE COMPANY TRIED TO HIGHLIGHT SUCH STATEMENTS RELATED TO THE FUTURE BY MEANS OF THE WORDS, SUCH AS “MAY”, “WILL”, “SHOULD”, “EXPECT”, “INTEND”, “EVALUATE”, “ASSUME”, “PLAN”, “TO HAVE AN OPINION”, “TRY”, “FORECAST”, “CONTINUE” AND SIMILAR WORDS OR THEIR NEGATIVE FORMS. 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.
Disclaimer
ENRC
Contacts
26
Evgeny KovtunovHead of IR
Magnitogorsk Iron & Steel WorksKirova st., 93, Magnitogorsk, 455002, Russia
Tel +7 (3519) 249-355Mobile +7 (909) 747 99 00
Ludmila LeliavskaiaVice President
BNY Mellon Depositary Receipts
Tel 212.815.4493 Fax 212.5713.050 Mobile 347.803.9198
Dmitry UsanovDirector for Capital Markets
Magnitogorsk Iron & Steel WorksMalaya Yakimanka st., 18, Moscow, 119180, Russia
Tel +7 (495) 662 35 52Mobile +7 985 998 75 61
MMK at stock exchanges: LSE (MMK:LI) MICEX (MAGN); RTS (MAGN)
