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Metinvest Commissions New Blast Furnace at Yenakiieve Steel

SCM Wins Social ProgrammeAward Page 4

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Metinvest to Invest $8bnin Mariupol Page 3

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DTEK Member of EuropeanEnergy System Page2

Mining Machines Expands in Russia Page3

4New blast furnance at Yenakiieve Steel

Metinvest, an international vertically integrated steel and mining group of companies, has commissioned a new blast furnace at its Yenakiieve Iron and Steel Works (Yenakiieve Steel) subsidiary which features state-of-the-art European steel making technology, including the latest industrial control systems. The innovative solu-tions are designed to improve the unit’s production and environmental performance while reducing operating cost.

The furnace’s bell-less charging unit made by Paul Wurth (Luxembourg) reducescoke consumption by 5% while simultaneously increas-ing the blast furnace’s pro-ductivity by 5%. In addition, a new refractory lining applied to the blast furnace hearth walls is designed to ensure 15 years of maintenance-free operation, quadrupling

the service life of the furnace.The furnace’s environmental

reliability is assured by aspira-tion and gas cleaning systems which reduce emissions. For the first time in Ukraine, a blast furnace has been equipped with Paul Wurth’s gas cleaningunit, which helps the plantefficiently resolve economicand environmental issues. Thegas cleaning unit removes 99.9% of the harmful con-taminants and then recycles the waste gas to be used as a fuel source for the plant’s production facilities, providing a substitute for natural gas, thereby improving energy efficiency.

The new furnace has a modern Siemens VAI (Austria)industrial control system. This also covers the heat and power plant steam and air blowing station, which was modernised along with the blast furnace.

The substantial upgrade of power generating facilities ensures an uninterruptablesupply of blast air to Yenakiieve Steel blast furnaces.

“The modern technologyand equipment we have introduced at our en-terprise over the past

In January 2012 mobile servicesoperator life:) marked its seventh anniversary with a set of impressive achievements.

In celebrating the milestone,

the company announced that it now has 9.7 million sub-scribers and covers some 92% of Ukraine, Europe’s second biggest country.

Despite tough economic conditions, the company has continued to expand since its launch and 2011 was no

life:) Celebrates 7th Anniversary

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exception. In the past year it focused on business development in the regions and, due to this approach, the number of users in the Eastern and Western parts of Ukraine increased by 32% and 29%, respectively. Subscribers who use its services abroad rocketed by 38% for the year 2011.

During the same period, prices for roaming internet services were drasti-cally cut, resulting in an increase in use by 300% in June-August 2011 year-on-year. The past year also saw the company receive the prestigious Global Broadband Traffic Management Award for its billing system.

In 2011 the firm strengthened its emphasis on social responsibility as well and was placed in the top ten Ukrainian companies for CSR. It also expanded its student programme, offering work for 19 students and study opportunities for another 120 young people.

The success of the company was hailed by its Chief Executive Officer, Alexander Barinov, who said, “We are grateful to all our subscribers for their loyalty and support during these seven years, and we are looking forward to closer

DTEK Power Trade joins EFETDTEK Power Trade, a company that develops electricity exports and trade, has become an associate member of the European Federation of Energy Traders (EFET).

Peter Styles, chairman of the EFET electricity committee, said, ”DTEK is the first Ukrainian company to demonstrate a commitment to our vision of sustainable, open and transparent energy markets across the whole of Europe. The approval of DTEK’s membership by the Board of EFET is a clear signal of the role our federation can play also in countries, which are still in the process of achieving liberalisation of their energy markets.”

Commercial Director of DTEK Andrey Favorov welcomed the move, ”Accession of the first Ukrainian representative to EFET proves the growing potential of the Ukrainian energy market in the European energy system. We are confident that membership will give DTEK new

DTEK Becomes Full Member of European Energy System

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life:) Celebrates 7th Anniversary

4Andrey Favorov, Commercial Director of DTEK

cooperation in 2012. We are striving to bring joy to customers in the future with attractive tariffs, the high quality of our network, good communications and world-class services. And, of course, we are adhering to our motto Get more!” The operator is 44.96% owned by SCM Group and 54.8% owned by Turkish GSM operator, Turkcell.

five years is part of the sustainable development of the plant,” said Alexander Podkorytov, Director General of Yenakiieve Steel. “Together with the improvements to our production capacity, we are also investing in human resources and focusing on developing the next generation of steel makers. For example, 90% of the crew of the new blast furnace are young special-ists who were selected to work with this new equipment. More than 120 steelmakers served internships at leading metallurgical enterprises in Russia and Europe as part of this train-ing.”

$220 million was invested in the blast furnace’s reconstruction. It will add 1.2 million tonnes of capacity to the plant’s annual hot metal production, which will eventually total 3 million tonnes of pig iron per year. The new furnace has been installed as part of Metinvest Group’s technological strategy to develop its steel making facilities.

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Metinvest Commissions NewBlast Furnace atYenakiieve Steel

4Alexander Barinov, Chief Executive Officer of life:)

opportunities for business development within European markets.“

Last December DTEK businesses, DTEK Power Trade and Vostokenergo, agreed contracts with Ukrenergo, Ukraine’s national grid operator, to access cross-border transmission capacity to export electricity in 2012.

Under the contracts both companies paid UAH 204,000 in total to export 2,130 MW to Slovakia, Romania, Hungary, Poland, Moldova and Belarus.

DTEK has struck a deal with the French power giant EDF and CEZ in the Czech Republic to export power to Central European countries.

The agreement with the energy trading units of both multinationals will enable

supplies of Ukrainian power to Hungary, Poland, Slovakia and Romania.

Andrey Favorov, Commercial Director of DTEK, welcomed the move, saying it would offer the company “good opportunities in the dynamic and promising European energy market”.

DTEK signs contracts with Ukrenergo to access cross-

border transmission capacity

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4DTEK investing in energy upgrade

DTEK has cemented its key role in the Ukrainian electricity generation and trans-mission markets after it won the tenders announced by the State Property Fund of Ukraine to buy a 25% stake in Kyivenergo, a 45.1% stake in Zapadenergo, a 40.061% stake in Donetskoblenergo and a 25% stake in Dneproenergo.

DTEK recognises its responsibility to transform the businesses after it con-

Extensive Upgrade for DTEK’s New Energy Companiessolidated controlling stakes in the energy companies and plans to invest heavily to upgrade them.

Kyiv is behind its European peers in terms of technology, the quality of electricity and heat supply and the condition of the power distribution and district heating networks because of chronic underinvestment in Kyivenergo over the last decade.

Maxim Timchenko, CEO of DTEK, made the pledge, “We commit ourselves to closing the gap. By our estimates, the required investment to upgrade the system is UAH 12-15bn. Starting from 2012, DTEK intends to invest up to UAH 1bn into the upgrade of Kyiv’s power infrastructure each year. To meet these ambitious targets, we will need the support of the city residents and authorities, and we will try to promptly present our programme on the development of the capital’s energy company for public discussion.”

DTEK also plans significant investment in Zapadenergo and Donetskoblenergo

Ukraine’s biggest producer of mining equipment, Mining Machines, which is part of the SCM Group, has finished build-ing its branch network in neighbouring Russia. Mining Machines RUS, a trading company opened in Moscow last No-vember, now has four representative of-fices in Novokuznetsk (Kemerovo Oblast), Krasnoyarsk (Krasnoyarsk Krai), Kamensk-Shakhtinskiy (Rostov Oblast) and Stary Oskol (Belgorod Oblast).

Commenting on the move, CEO of Mining Machines, Yevgeniy Romashchin said, “This is logical and complies with our strategy, to establish a representative office with headquarters in Moscow. Today the turnover of goods between Russia and Ukraine exceeds $50bn. The share of heavy engineering products in Ukraine’s total exports to Russia is about 30%. Having analysed the economic situation in Russia and the world trends we have come to the decision that it is the right time to strengthen our position in the region.”

Each of the four regional offices will also stock spare parts for the equipment made by the plants of Mining Machines. The stocks will be regularly replenished with the most sought-after spare parts.

Mining Machines Expands in Russia

The companies, which enter into service agreements with Mining Machines, can promptly get their spare parts.

Yurii Levankov, Director of Mining Machines RUS, emphasised, “The locationof the company’s representative offices in key regions and the fast access to sales and service, including spare parts, will improve customer service for clients and contribute to boosting sales in the Russian market.”

In 2011 Mining Machines increased sales to Russia by 43% year-on-year. The company’s biggest customers in Russia include SUEK, Norilsk Nickel, EvrazHolding, Uralkali, Metalloinvest, Russian Coal, Vorkutaugol, Mosmetrostroy and others.

Metinvest has announced as part of its long-term strategy that it will be investing on average $1bn every year for the next 8 years to develop its Azovstal and Iliych Iron and Steel Works in Mariupol. These investments will help to increase the joint annual steel output of these steel plants by 35% to 16 million tonnes and reduce the emissions 5 times down to 7kg per tonne of crude steel.

“We are determined to achieve a sub-stantial reduction in our impact on the environment while modernising our facilities to improve production efficiency,” said Igor Syry, CEO of Metinvest. “By 2020 we will have invested around $8bn into programmes at these two plants, which will mean average annual expenditures of about $1bn. The measures to be implemented in 2012 alone will already reduce emissions by 10%,” he went on to say.

Metinvest to Invest $1bn p.a. in

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with over UAH 10bn upgrading capital equipment, improving operational efficiency and the export potential of Zapadenergo through 2020. More than UAH 1.5bn will also be invested in Donetskoblenergo in the coming years.

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DTEK stakes in energy companies:100% Vostokenergo

72.58% Dneproenergo

72.33% Kyivenergo

71.34% Donetskoblenergo

70.94% Zapadenergo

NEWS April 2012

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For further information, or to subscribe, please contact: Jock Mendoza-Wilson, Director of International and Investor RelationsSystem Capital Management, 117 Postysheva st., Donetsk 83001, Ukraineir@scm.com.ua – www.scmholding.com

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SCM is one of the top ten Ukrainian employers according to the annual Best Employer survey among professional job seekers by the international accountancy firm Ernst&Young.

Candidates with professional experience were asked to name three companies where they would like to work. Under

the methodology used by Ernst&Young, the respondents were free to make their choices – the questionnaire did not include a list of companies, which might have affected the survey results.

The research reveals that SCM is one of the best Ukrainian employers.

SCM Voted Best Employer

SCM‘s programme Contemporary Education was selected as the best social programme among all Ukrainian companies. The accolade comes after the firm scooped the top award in a national corporate social responsibility case studies competition organised by the international CSR Development Centre.

Top CSR specialists from nine countries selected the best case study of Ukrainian companies that can serve as good examples of effective CSR strategies and showcase the achievements of Ukrainian businesses in CSR.

The award is seen as official recognition of SCM´s efforts to develop and implement a wide-ranging social programme, according to Natalia Gnilitskaya, CSR Manager of SCM.

She added, “Contemporary education is a key social programme that SCM is implementing nationwide in Ukrainian universities. One of the aims is to bridge the gap between the quality of knowledge of Ukrainian students and the demands of the ´real´ economy.”

“The SCM Group is the biggest Ukrainian employer and national investor. We know the challenges that Ukrainian graduates face when looking for a job. We know their requirements. We recognise the degree of our influence on the economies in the regions where we operate and Ukraine as a whole and that it is our duty to make investments to develop and improve Ukrainian education.”

Meanwhile, at the annual ceremony of Russian prestige HR-Brand Awards the company won prize in nomination Stolitsa (Capital) for FormulaS project, which is a series of brand new master classes taught by senior managers of SCM Group and invited speakers to the students of partner universities. The event, which recognises the most successful HR-brand building

projects, was first held in Ukraine in 2011. Natalia Gnilitskaya noted, “The goal of

FormulaS project, which is part of SCM’s Contemporary Education programme, was not only to improve the quality of education of Ukrainian students, but also to get across the idea that learning can and must be fun. A personal practice-oriented approach, the ability to work and a desire for life-long learning provide a wide range of growth opportunities and open new prospects for everyone. The FormulaS project has fully met our expectations, and we believe that it has a great future.”

For more information about SCM’s Contemporary Education projects please visit: http://www.scmholding.com/en/sustainability/scm_social_projects/contemporary_education/

SCM Wins Best Social Programme Award

4Natalia Gnilitskaya, CSR Manager of SCM

For the 6th year running SCM Group attended the annual World Economic Forum (WEF) at Davos from 25-28 January. SCM has been a strategic partner of the Forum since 2009 and is the only company in Ukraine to hold this distinction. Metinvest and DTEK are the Forum’s Industry Partners.

Attending the summit from SCM this year were SCM’s CEO Oleg Popov and Director of International and Investor Relations Jock Mendoza-Wilson. Metinvest’s CEO Igor Syry and DTEK’s CEO Maxim Timchenko also participated in the Forum.

The theme chosen for this year’s meeting, “The Great Transformation: Shaping New Models”, was driven by the shift in balance of economic power in the world and a need for many countries to cut sovereign debt - the factors that would shape a new model of the global economy. The Davos delegates discussed the ways to cut sovereign debt and return stability to currencies so that the world would avoid a return to economic crisis.

Commenting on the key theme of the WEF Annual Meeting 2012 Jock Mendoza-Wilson said, “The Forum discussions highlighted that successful development is not just about about financial resources, but also about human capital, the ability to innovate and be competitive, and restoring trustworthiness in business.”

“This shows the need to pay even greater attention to our projects for professional development of our employees, improvement of quality of education and training in Ukrainian universities, the development and adoption of occupational standards and the enhancement of efficiency and governance,” he went on to say.

For more on Jock Mendoza-Wilson’s impressions about the Davos debates please visit SCM’s corporate blog at http://blog.scm.com.ua/en/

Discussing the Global Agenda

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