June 2012

Magnitogorsk Steel (MMK)

2

MMK – Russian Steel Leader

Largest single-site steelmaker in Russia with current crude steel capacity of 14 mln tonnes

Currently planned production growth of more than 30% by 2013 from 2011

Production of HVA products currently expected to grow by almost 50% by 2013 from 2011, representing 45%

share of total production volumes

Import substitution strategy: favorable geographical location to meet strong demand from the most intensive steel

consuming regions of Russia – the Urals and Volga regions

Great play on Russian infrastructure:

• 18% domestic steel market share enables MMK to benefit from premium pricing for domestic sales

• Largest exposure to pipe-manufacturing, auto-building and heavy machinery

Disciplined investment strategy with priority given to investments in high-return projects and high-quality assets

investments approach

The most modern asset base – over USD 7 bn of investments over the last 4 years

Mill 5000 Shop Mill 5000 Galvanizing Line

3

ММК Geography

2.3 mln tpy capacity

by 2012.

Steel making complex

and two service

centers.

Metals service center

and stamped-product

factory with 250 th.

tpy capacity.

4.2 mln tonnes of

coking coal mined in

2011. Covers 40% of

MMK needs. Largest iron-ore

deposit, more than 2

bn tonnes of reserves.

Interkos-IV

Prioskolsky GОК

MMK Metalurji

ENRC

Belon

One of Russia’s

largest hardware

producers.

465 th. tonnes

produced in 2011.

ММК Metiz

Profit

Source: MMK

Covers 100% of MMK

scrap needs.

ММК trading house

67%

3% 21%

6%

1%

High-priority (domestic)

Priority (export)

Markets

Other (export)

ММК (2011)

№1 by rolled products output in Russia

11.7 mln tonnes of steel

10.6 mln tonnes of finished products in Russia

% Share of MMK shipments,

mln tonnes

Profit’s scrap collecting yards

CAGR (2010-15) = 5.5%

CAGR (2010-15) = 5.0%

CAGR (2010-15) = 6.7%

Currently MMK’s main

iron-ore supplier.

Long-term agreement

with ММК (until 2017).

ММК controls 5%

оf Fortescue Metals

Group, one of

Australia's largest

iron-ore producers.

Fortescue MG

MMK benefits from a central location,

with proximity to Russian industrial

heartland and proximity to export

markets

Flinders Mines

Proposal to acquire

100% of the company

with 917 m tonnes of

high grade resource

5,8% 5,6%

3,4% 3,2%

3,9%

2%

3%

4%

5%

6%

CIS Turkey China EU-15 World

1130

1295

1373

1422

1486

1000

1100

1200

1300

1400

1500

2009 2010 2011 2012E 2013E

Global Steel Industry Highlights

World Steel Consumption, mln tonnes Steel Demand CAGR 2011-2020, %

World Steel Production, mln tonnes Crude Steel Capacity Utilization, %

4

Source: WSA, HSBC

Source: WSA Source: WSA

15%

6%

4%

World steel consumption

continues to grow MMK domestic market demonstrates

the highest growth rates

5%

791

627

830

683

845

715

873

745

0

250

500

750

1 000

ROW China

2010 2011 2012E 2013Е

83% 83%

86% 89%

74%

79% 79% 80%

60%

55% 58%

59%

76%

80% 80% 82%

50%

75%

2010 2011E 2012E 2013E

Russia United States Middle East World

Source: WSA, HSBC

0,9 1,2 1,2 0,8 1,4 1,6 1,6

0,3 0,4 0,3

0,2

0,4 0,5 0,5 1,0

1,3 0,9

0,9

1,1 1,1 1,3 0,7

0,6 0,5

0,4

0,7 0,9 0,8 1,7

2,7

1,9

1,0

1,7

2,1 2,0

0

1

2

3

4

5

6

7

2006 2007 2008 2009 2010 2011 2012E

Coated products CRC Thick plate HRC Long products

5,1 8,0 8,5 9,3

4,9

6,7 7,7

8,6

1,4

2,6 2,9

3,2

2,2

2,3 2,5

2,7

0,1

0,2 0,2

0,2

0

5

10

15

20

25

2009 2010 2011E 2012E

Construction Pipe plants Machinery Coating and metalwork Other

Russian Steel Dynamics

BOF Shop Domestic Flat Steel Consumption, mln tonnes

Steel Consumption in Russia and Export, mln tonnes Russian Import Structure, mln tonnes

5

Source: Metal Expert

HVA products

Source: Metal Courrier

Source: Metal Expert

13,7

19,8 21,9

24,0

Russia sees solid import

volumes, mostly of HVA

products

13,7 19,8 21,9 24,0

10,4

13,7 15,1

16,5 3,2

4,0 4,4

4,8 30,0

27,3 30,1

32,9

0

20

40

60

80

2009 2010 2011E 2012E

Flat steel Long steel Other steel products Export

8,0

3,9

5,2

2,0

9,2

4,8

6,8

2,3

9,8

4,9

7,4

2,4

0,0

2,0

4,0

6,0

8,0

10,0

12,0

Pipe making Construction Machine building (incl.car-makers)

Metalware

2010 2011 2012E

Russian Market Growth Prospects

Capacities Utilization in Russia, % MMK* Finished Products Output, th. tonnes

Domestic Steel Price Dynamics, USD/tonne Russian Steel Consumption by Industry, mln tonnes

6

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Cast Iron Crude Steel Rolled Steel Steel Pipes

Steel consumption by major industries is

bound to grow by more than 20%

Pipe-making hits 100% utilization rate

Source: Chermet Source: MMK * - MMK – mother company only

Source: Metal Courrier Source: Metal Torg

400

600

800

1 000

1 200

Re-bar HRC CRC Galvanized steel

0

500

1 000

1 500

2 000

2 500

3 000

Q1 2

011

Q2 2

011

Q3 2

011

Q4 2

011

Q1 2

012

91

48 81

140

245

361

187

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

50

100

150

200

250

300

350

400

Long steel HR flatsteel

CR flatsteel

Mill 5000plate

Galvanizedsteel

Formedsections

Colour -coated steel

EBITDA/t (LHS) EBITDA margin (RHS)

0

5 000

10 000

15 000

20 000

2010 2011 2012E 2013E 2014Е

ММК, currently run capacities MMK, upside on current capacities

MMK, new capacities MMK Metalurji

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

2009 2010 2011 2012E 2013E 2014Е

MMK MMK Metalurji HVA products

MMK Growth Prospects

Finished Steel Products Structure Evolution, th. tonnes EBITDA per ton of Finished Steel Products, USD

Product Structure Dynamics, % Crude Steel Growth Drivers, th. tonnes

7

>30% output growth by 2013 from 2011

HVA share ≈ 45% by 2013

HVA (Higher Value-Added products)

8 831

≈15 300

34 %

Sourсe: MMK Sourсe: MMK

Sourсe: MMK, Q1 2012 Sourсe: MMK

11 419

≈16 400

45 %

13% 14% 13% 18% 19% 20%

12% 11% 10% 9% 8% 10%

5% 13% 11% 14% 14% 14%

58% 50% 51%

45% 43% 42%

11% 10% 14% 15% 15% 15%

0%

20%

40%

60%

80%

100%

2009 2010 2011E 2012E 2013Е 2014Е

Downstream products Flat cold-rolled products Thick plate (incl. Mill 5000)

Flat hot-rolled products Long products Slabs and billets

1,50

0,25

1,64

0,42

0,13

0,46

1,16

0,29

1,27

0,29

0,75 0,82

0,43

1,84

0,66

2,01

0

1

2

3

4

5

6

7

ММК 2011 (growth to 2010)

Import 2011 ММК 2012Е (growth to 2010)

Import 2012Е

Coated steel Cold-rolled steel Thick plate Hot-rolled steel Long product

0,31

0,22

0,44

0,29

0,43

0,23

0,03

0,11

10,00

10,50

11,00

11,50

2011 2012Е

Coated steel Cold-rolled steel Thick plate Hot-rolled steel Long product Other

7%

40%

29%

22%

32%

8%

41%

34%

26%

34%

11%

32% 32%

31%

51%

0%

10%

20%

30%

40%

50%

Long steel H/r steel Thick plate C/r steel Coated steel

2010 2011E 2012E

-5 381

-1 583

453

995

-5 932

-1 746

500

1 097

-6 496

-1 911

547 1 202

-7 000

-6 000

-5 000

-4 000

-3 000

-2 000

-1 000

0

1 000

2 000

Hot-rolled steel Long product Thick plate Coated steel

2010 2011E 2012E

MMK Growth Prospects

MMK Production Portfolio Change y-on-y, m tonnes MMK Share in Russian Production, %

Russian Import / Export Balance, th. tonnes MMK Growth in RF by Product Type vs. Import Structure, m tonnes

8 Source: MMK Source: MMK

Source: Metal Expert, MMK Source: Metal Expert

Russia remains net exporter of ordinary steel,

while shortage of HVA products persists

Dominating position on the Russian

market

Expected imports

provide more than

enough room for

MMK HVA output

growth

3,6 4,2 4,2 3,9 3,9

4,6 5,1 5,1

6,2

2,5 3,0

3,2 2,8 2,8

3,4 3,7 3,7

4,5

0

1

2

3

4

5

6

7

2009 2010 2011 2012Е 2013Е 2014Е 2015Е 2016E 2017E

Coking coal production Concentrate production

Competitive Cost Position (Continued)

30% 40%

100%

75% 10%

70%

50%

25%

0%

25%

50%

75%

100%

Iron ore Coal Scrap Electricity

Own Purchased

Self-sufficiency Level, % MMK Facilities in Turkey

Integration in Coking Coal, mln tonnes

0

2 000

4 000

6 000

2008 2009 2010 2011E 2012E 2013E

M. Kuibas Podotvalnoe Slag Processing Sosnovskoe Bakal

Integration in Iron Ore, th. tonnes

9

-19

Sourсe: MMK

Others

Others

Federal

Grid

MMK

MMK

(Belon)

MMK

(Profit) MMK RASP

Sourсe: MMK

Sourсe: MMK

Coal concentrate production to grow by

more than 40% by 2017 compared to 2011

Iron ore mined to grow by more than

13% by 2013 compared to 2011

7 000

8 000

9 000

10 000

11 000

12 000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ММК Severstal NLMK

Leading Positions in the Russian Steel Industry

Diversified Product Mix Leading Position on Domestic Market

Leader in Finished Steel Production, th. tonnes MMK Share of Russian Steel Market, %

10

Hot-rolled sheet: 5.7 mln tonnes (54%)

Cold-rolled sheet: 1.0 mln tonnes (10%)

Long products: 1.5 mln tonnes (14%)

Downstream: 1.4 mln tonnes (13%)

Plate (mill 5000): 0.9 mln tonnes (8%)

Picture

Picture

Picture

Picture

Source: Company data Source: ММК, Metal Courier, 2011

Source: ММК, Metal Courier

MMK retains leadership in Russia

while drastically changing its

product mix

Source: ММК, 2011

MMK's share

in Russia

Share in MMK's

total production

Place in

Russia

Hot-rolled sheet 37% 62% 1

incl. thick plate 27% 11% 1

Cold-rolled sheet 21% 10% 3

Galvanized flat products 23% 5% 3

Tin plate 100% 1% 1

Colour-coated rolled products 28% 3% 2

ММК; 18%

Severstal; 17%

NLMK; 15%

Urals Steel; 3% ZSMK; 9%

NTMK; 7%

Chelyabinsk MK; 5%

NKMK; 2%

Others; 25%

Pipe production

30,0%

Spot sales in Russia 18,1%

Spot sales in CIS

9,6%

Construction sector 12,9%

Machine building 12,5%

Metalware and semi-

integrated factories

9,1%

Automobile sector 6,4%

Food industry 0,6%

Fuel and energy

companies 0,4%

Bridge building 0,4%

H/r steel 40%

Long steel products

18%

Thick plate 12%

Coated & Downstream

products 19%

C/r steel 11%

2,1

7,3 7,2

3,7

4,9

3,5

2

3

4

5

6

7

8

1996 1999 2002 2005 2008 2011

Domestic market (Russia + CIS) Export

MMK’s Dominating Domestic Market Position

Domestic Sales by Region, 2011 Domestic Sales by Sector, 2011

MMK Domestic and Export Sales, mln tonnes Domestic Sales Structure, 2011

HVA

Products,

42%

Total: 7,181 kt

Source: MMK

Source: MMK Source: MMK

Source: MMK

MMK organically grows its share in

Russian market as demand in export

markets remains sustainable

Total: 7,181 kt

MMK is located in most intensive

steel consuming region of Russia

11

78

162

150 156

225

158

190

243

50

75

100

125

150

175

200

225

250

2004 2005 2006 2007 2008 2009 2010 2011

Strong Presence on Export Markets

Domestic Price Premium, USD/tonne Regional Sales Structure, 2011

Share of Export Sales in Shipments, % Export Sales Structure, 2011

12

Total: 3,465 kt

Total: 10,646 kt

Source: ММК Source: ММК

Source: ММК Source: MMK

Domestic price premium makes Russian market

attractive. 2011 domestic market price premium

equaled to 243 USD/t

54% 59% 61% 66% 72% 64% 69% 67%

46% 41% 39% 34% 28% 36% 31% 33%

0%

25%

50%

75%

100%

2004 2005 2006 2007 2008 2009 2010 2011

Domestic Exports

Hot-rolled steel 81%

Cold-rolled steel 6%

Downstream products

1%

Long products 5%

Slabs and billets 5%

Thick plate 2%

Russia &CIS 67%

Middle East 21%

Far East & Asia 3%

Europe 6%

Africa 1%

Americas 2%

CAPEX USD 1.5 bn

Market Russia, EU, automotive industry,

construction, white goods production

Profile HVA rolling facilities

Capacity, mtpy finished steel 2

Product types CR galvanized high strength steel

Rationale #1 supplier to automotive sector, imports

replacement

Acquisition cost USD 0.543 bn

Market Russia

Profile growing producer of high-quality coal

Capacity, mtpy coking coal 4.2 in 2010, 6.2 by 2017

Rationale Vertical integration and higher profitability

CAPEX USD 1.5 bn

Market Russian oil&gas infrastructure, ship and

bridge building

Profile HVA rolling facilities

Capacity, mtpy finished steel 1.5

Product types Heavy plates up to x120 strength class

Rationale #1 supplier to pipe sector

imports replacement

Investments USD 2.1 bn

Market Middle East, EU, Africa

Profile state-of-the-art full-cycle steel

production

Capacity, mtpy finished steel 2.3

Product types HRC, galvanized, colour-coated

Rationale

increase presence in key export

regions

geographical diversification

Building Value

Belon (RUSSIA) Mill 2000 (RUSSIA)

MMK (TURKEY) Mill 5000 (RUSSIA)

13

MMK’s investment approach is…

HIGH RETURN RATE VALUE - ADDING

ENJOYING STATE SUPPORT

STRENGTHENING LEADERSHIP FOCUSED BEATING THE CYCLE

HIGH RETURN RATE CREATING SYNERGIES VALUE - ADDING

CONSISTENT TARGETTING KEY MARKETS WELL - THOUGHT OUT ENJOYING STATE SUPPORT

STRENGTHENING LEADERSHIP FOCUSED BEATING THE CYCLE

Plate Mill 5000

Consumers of Mill 5,000 Products

ММК is one of 10 producers of premium quality thick plates globally Use of Thick Plate in Russia by Sector, th. tonnes

• Project completion time under SMS Demag contract - 32 months

• November 2007 – May 2009: construction of the mill

• July 2009: first production start up

• December 2009: launch of Continuous Slab Caster # 6

• February 2010: launch of secondary steel-treatment complex

Agreements with major customers

• Cooperation agreement with Gazprom

• Strategic cooperation agreement with TMK

• Cooperation agreement with ChTPZ

• Government suggested pipemakers to reduce share of imported

plate

14

Specifications

Start-up 2009

Capacity, mln tpy 1,5

Max Plate Width, mm up to 4,800

Plate Length, m 24

Plate Thickness, mm 8-160

Rolling force, tonnes 12 000

Strength class up to Х120

Source: pipe-producers’ estimates, ММК

0%

30%

60%

90%

120%

0

2 000

4 000

6 000

2008 2009 2010 2011Е 2012Е 2013Е 2014Е 2015Е

LDP Bridge building

Boiler building Ship building

Other MMK market share (RHS)

MMK; 36%

Import; 16%

Others; 48%

0

500

1 000

1 500

2 000

2 500

3 000

3 500

2009 2010 2011Е Nord Stream Yamal-Europe

Sakhalin-Khabarovsk-Vladivostok VSTO-2

BTS-2 Current pipelines replacement

Export

-1 000

0

1 000

2 000

3 000

4 000

Production of LDP LDP imports

LDP exports Consumption of LDP in Russia

Mill 5000 - Strengthening Positions in Pipe Sector

Use of LDP Produced in Russia by Project, th. tonnes Geography of Main Pipelines

Growth in LDP Consumption in Russia, th. tonnes Key Steel Suppliers to Pipe-builders in Russia, 2011

15

BTS-2

VSTO-2

Sakhalin-Khabarovsk-Vladivostok

Yamal-Europe*

Nord Stream

Russia

1 882

3 025

Source: pipe-producers’ estimates, MMK

Source: pipe-producers’ estimates, MMK Source: MMK

MMK produces 35% of

steel, used for pipe-making

in Russia

MMK steel is used in

construction of all pipelines

Demand for LDP remains

strong

3 400

* - Incl. Pochinki-Gryazovets and Bovanenkovo-Uhta

Shtokman

765

565 519

426 399

261

156

67 12 10

0

100

200

300

400

500

600

700

800

Strengthening Position in Auto Industry

Russian Vehicle Fleet by Age, %

Mill 2,000 Complex Private Car Ownership, vehicles per 1,000 people

16

Key Mill 2,000 specifications

Capacity, th. tpa 2,000

Sheet width, mm 850-1,880

Sheet thickness, mm 0.28 – 3.0

Steel grades HSLA, IF, HSS, BH, DP, CP,

ТRIP

Production volumes:

• 700,000 tpy of galvanized steel annealed

• 1,300,000 mln tonnes of cold-rolled steel

Key customers:

• Car-makers, White goods producers, Construction sector

Source: Rosstat, 2010

Source: UNO, 2010

Russia is on the way to

diminish the lag to

developed countries

less than 10 yrs; 44%

more than 10 yrs; 33%

more than 20 yrs; 23%

Current situation: • Products with thickness from 0.28 mm and width up to 1860 mm are launched

in production;

• Products for galvanizing at MMK facilities or at facilities of other companies

are launched in production;

• Quality of mill 2000 products (calibration, surface quality, etc.) is better than of

Russian peers;

• Samples of the products were shipped to major MMK clients

Further steps: • Launch production of all the product mix of the mill, including high-strength

steels;

• Annealing and galvanizing lines to be commissioned in Q2 2012;

• Mill 2000 products supply to foreign car makers

3 678

4 240

0

1 000

2 000

3 000

4 000

2008 2009 2010 2011Е 2012Е 2013Е 2014Е 2015Е 2020Е

All vehicle types output, th.pieces Steel consumption by car-makers

75%

51% 40%

17%

24%

10%

7%

22%

40%

2% 3% 10%

0%

25%

50%

75%

100%

2010 2015Е 2020Е

Mild Steel AHSS HSS UHSS

Mill 2000 Cold Rolled Steel Complex

High Strength Steels Use Russian Car-makers Steel Consumption

Russian Cold-rolled Automotive Steel Consumption, % Car-making Projects in Russia by 2015E, %

17

Source: boronextrication.com

Mild Steel 30.8%

UHSS 9.1%

HSS 44.5%

AHSS 15.6%

High strength steel

types to reach 60% in

overall consumption

Source: WSA

Source: MMK estimates Source: MMK estimates

60%

15%

13%

12% Volga federal region

North-west federalregion

Central federal region

Other

Steel consumption to reach 2.7 mln tonnes by

2012 and more than double by 2020 from 2010

60%

25%

49%

Entry to Growing Turkish Market

Flat Steel Market in Turkey, mln tonnes Long Steel Market in Turkey, mln tonnes

Locations of Key Markets

18 Source: Metal Expert

Source: ING

Istanbul

Iskenderun

Europe

Middle East

Africa

Priority export markets

Important export markets

Turkish Flat Steel Market Structure, %

4,0

5,5 6,8

8,7 9,2 9,2 9,2 8,0

8,6 9,2

9,9 10,6

11,3 12,2

-4,0 -3,1

-2,4 -1,2 -1,4

-2,1 -2,9

-6

-4

-2

0

2

4

6

8

10

12

14

2009 2010E 2011E 2012E 2013E 2014E 2015E

Flat steel production Flat steel consumption Balance

MMK will focus on flat steel in

Turkey, where there is a

structural shortfall

Pipe production;

25%

Metal Service Centers; 19%

Spot sales; 18%

Auto industry; 13%

Packaging; 7%

Boiler making; 6%

Other; 12%

20,5

24,0 24,5 24,9 25,7 25,7 25,7

9,7 10,2 10,7 11,3 11,9

12,5 13,2

10,8

13,8 13,7 13,6 13,8 13,2 12,5

0

5

10

15

20

25

30

2009 2010E 2011E 2012E 2013E 2014E 2015E

Long steel production Long steel consumption Balance

Source: Metal Expert

0

500

1 000

1 500

2 000

2 500

2009 2010 2011 2012Е 2013Е

Flat hot-rolled products Galvinized steel Colour-coated steel

2008 2009 2010 2011 2012E

• Steel service center

Iskenderun site

Istanbul site

Start-up schedule

• Reversing mill

• Hot-dip galvanizing line

• Pickling line

• Polymer coating line

• Steel service center • Hot-dip galvanizing line

• Polymer coating line

• Steel making facilities

68 156

505

≈ 1.8 mt

19

Project Ramp-up and Growth Plans

Ramp-up schedule • Key production line (Iskenderun) – 2.3 million tons per year

• Two service centers: Iskenderun & Istanbul

• Output: hot-rolled steel, galvanized and color-coated steel products

• Production launch: 2010

• Reaching full production capacity: 2012

• Investments in the project: US$ 2.1 bn

• Hot rolling mill

≈ 2.3 mt

Poz.

No.

Lenght

m.

Width

m.

Min. Water

Dept.

Max. Water

Dept.

Biggest Ship

to Berth

1 265 42 (-13,50 m.) (-14,00 m.) 100.000DWT

2 265 42 (-12,00 m.) (-13,50 m.) 80.000DWT

3 155 30 (-5,00 m.) (-6,20 m.) 10.000DWT

4 200 17 (-6,20 m.) (-9,00 m.) 20.000DWT

5 200 17 (-9,00 m.) (-11,50 m.) 40.000DWT

6 160 17 (-11,50 m.) (-12,00 m.) 60.000DWT

7 265 42 (-12,00 m.) (-13,50 m.) 80.000DWT

8 265 42 (-13,50 m.) (-14,00 m.) 100.000DWT

20

MMK METALURJI Sea Port

The largest private seaport in Turkey, it is capable to

berth and handle any kind of vessels up to 100.000 DWT.

This significantly expands exporting abilities and

facilitates supplies of raw materials for steel-making.

The port can berth and handle:

• Dry bulk vessels

• General Cargo vessels

• Scrap iron carriers

• Container ships

• Ro-Ro vessels

Key characteristics

• The port has 1800 meters of berthing length

• Total 12 vessels can be berthed simultaneously

• Ships Berthing Capacity: 600 Ship / Year

• Cargo Handling Capacity: 12 million tons per year

• Main and auxiliary handling equipment is in place

• On April 5, 2010 the port was certified and since then is in

operation

21

MMK METALURJI: largest private seaport, СR & color-coating lines, steel service center

MMK METALURJI financing

deal won Deal of the Year

prize from three

international magazines:

Global Trade Review,

Project Finance and Trade

Finance

State of the art facilities,

ensuring high quality and low

operating costs

Financials

Financial Highlights, USD mln

Consolidated IFRS Summary Financial Highlights, USD mln

22

Source: MMK

Source: MMK

* includes leasing

Source: MMK 2006-2007 financials under US GAAP, from 2008 – under IFRS

BB+, outlook Negative

(Changed from “stable” on May 16, 2012)

Ba3, outlook Stable

(outlook changed to “stable” on December 22, 2011)

MMK credit ratings

10 550

5 081

7 719

9306

2 204

1 309 1 606 1336 1 081

219 232

-125 -500

1 500

3 500

5 500

7 500

9 500

11 500

2008 2009 2010 2011

Revenues EBITDA Net profit

Q1 2012 2011 2010 2009

Crude steel output, kt 3,417 12,195 11,419 9,618

Finished steel, kt 3,021 11,158 10,245 8,764

Revenues, $ mln 2,425 9,306 7,719 5,081

EBITDA, $ mln 293 1,336 1,606 1,309

EBITDA margin, % 12.1% 14.4% 20.8% 25.8%

Net profit, $ mln 14 -125 232 219

Net margin, % 0.6% -1.3% 3.0% 4,3%

Assets, $ mln 17,453 16,295 16,738 14,833

Credit & loans, $ mln 4,246 4,416 3,548 2,118

short-term* 1,171 1,334 1,087 828

long-term* 3,075 3,082 2,461 1,290

Shareholder capital, $ mln 10,389 9,289 10,257 9,957

Cash, $ mln 197 424 515 165

2216 2417 2430

2243 2425

403 380 350 203

293 134

13

-205 -67

14

-250

250

750

1250

1750

2250

1Q11 2Q11 3Q11 4Q11 1Q 12

Revenues EBITDA Net profit

23

Investment Highlights

• Key beneficiary of steel market recovery – fully financed production growth currently planned at >30%

by 2013

• Growing volumes and share of HVA products (45% by 2013) to secure sustainably high efficiency

• Focus on specialty steel products to replace imports in Russia and to capture 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

• Plans for further strengthening in commodities

Magnitogorsk Steel (MMK)

Fixed 52%

Floating 48%

USD 44%

Euro 21%

RUR 35%

828 1 087

1 334 1 171

1 290

2 461

3 082 3 075

0

500

1 000

1 500

2 000

2 500

3 000

3 500

4 000

2009 2010 2011 1Q 2012

Short-term debt Long-term debt

MMK Group Debt

Debt Structure by Interest Rate, 1Q 2012 Maturity of MMK Borrowings, USD mln

MMK Debt Structure by Maturity, USD mln Debt Structure by Currency, 1Q 2012

25

MMK improved its debt structure with short-

term debt below 30%

Source: MMK, as of April 1, 2012

Source: MMK Source: MMK, as of April 1, 2012

Source: MMK, as of April 1, 2012

4,246 m USD

4,246 m USD

1167

1605

623

300

531

0

500

1000

1500

1-st year 2-nd year 3-rd year 4-th year 5-th year andbeyond

Iron ore; 35%

Coal; 25% Scrap purchased;

13%

Other raw materials; 10%

Fuel and energy

purchased; 9%

Wages; 3%

Others; 5%

Competitive Cost Position

Galvanizing line Slab Cash-Cost Structure, Q1 2012

Slab Cash-cost and Raw-material Price, USD/tonne

26

Cash cost: 442 USD/t

Slab Cash-Cost Sensitivity, Q1 2012, USD/tonne

Sourсe: MMK

Sourсe: MMK

* - Q1 2012 slab cash-cost

450 495 490 459 442

60

100

140

180

220

260

0

100

200

300

400

500

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12Slab Cash-cost Scrap Iron ore (RHS)

Pellets (RHS) Coal (RHS)

Iron Ore Price Change

-50% -40% -30% -20% -10% 0% 10% 20%

Co

kin

g C

oa

l P

rice

Ch

an

ge

-30% 329 347 365 383 401 419 437 455

-20% 337 355 373 391 409 427 445 463

-10% 345 363 381 399 417 435 453 471

0% 352 370 388 406 424 442* 460 478

10% 360 378 396 414 432 450 468 486

20% 368 386 404 422 440 458 476 494

MMK material costs; 1 539

Other Group Companies; 105

Labour costs; 225

Amortisation; 239

Others; 37

Change in uninvoiced products

balance; -46

-100

400

900

1 400

1 900

1

Sinter 15%

Pellets 14%

Coals 23% Scrap

17%

Other main materials

12%

Auxiliary materials

9%

Fuel 8%

Power 2%

MMK Group Cost of Sales Breakdown

MMK 1Q 2012 Material Costs Breakdown, % MMK 2011 Material Costs Breakdown, %

Cost of Sales 1Q 2012, m USD Cost of Sales 2011, m USD

27 Sourсe: MMK Sourсe: MMK

Sourсe: MMK Sourсe: MMK

35% of input costs

are sourced

internally and

therefore not

exposed to price

volatility

Total: USD 2,099 m

Sinter 16%

Pellets 15%

Coals 25% Scrap

14%

Other main materials

12%

Auxiliary materials

9%

Fuel 7%

Power 2%

MMK material costs; 6 107

Other Group Companies; -

224

Labour costs; 900

Amortisation; 864

Others; 245

Change in uninvoiced products

balance; -137

-600

400

1 400

2 400

3 400

4 400

5 400

6 400

7 400

8 400

1 Total: USD 7,756 m

Individual Executive Body:

General Director

28

High Standards of Corporate Governance

The 1st Russian company to adopt corporate

governance code

Managing company established

5 independent directors on the Board

3 board committees in place

Publication of IFRS and RAS financial

statements

General Shareholders’ Meeting

Committee for Audit

(headed by an independent director)

Board of Directors

(10 members, including 5 independent

directors)

Committee for Nominations and

Remuneration (headed by an

independent director)

Committee for Strategic Planning

and Corporate Governance

Executive bodies

MMK annual report took the 1st place

in contests run by MICEX and RTS as

“The Best Annual Report in the Steel

Sector”.

Russian Directors’ Institute an rating

agency Expert RA ranked MMK among

2 best companies in Russia from the

point of view of corporate governance.

Contacts

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.

•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

GDR Depositary - BNY Mellon

Contact person at the depositary

Ludmila Leliavskaia Vice President

Tel +1.212.815.4493 ludmila.leliavskaia@bnymellon.com

MMK (Magnitogorsk Iron & Steel works)

Ordinary shares listed at MICEX and RTS in June 2006.

GDRs listed at LSE in April 2007

ISIN / СUSIP US5591892048/559189105

Andrey Serov Head of IR

Tel +7 (3519) 24 52 97 serov.ae@mmk.ru

www.mmk.ru

Contacts at MMK

Tickers

MICEX, RTS: MAGN

LSE: MMK

Bloomberg: MMK:LI

29