12 November ‘14

MMK and TMK agree on price formula for rolled sheet intended for LDP production

OJSC Magnitogorsk Iron and Steel Works ("MMK" or "the Company") (LSE: MMK) announces that is has signed an agreement with TMK to apply a formula when calculating the pricing of wide hot rolled plate shipped to TMK enterprises. The agreement was signed at METAL-EXPO 2014, an international industrial exhibition held in Moscow. The mutually beneficial agreement, which sets out the price formula applied to steel products supplied up to the end of 2015, was signed by MMK CEO Pavel Shilyaev and TMK CEO Alexander Shiryaev.

MMK is expected to ship wide hot rolled sheets to TMK's Volzhsky Pipe Plant, for the production of large diameter pipes (LDP) intended for Gazprom’s major Russian gas pipeline projects, including Power of Siberia, South Stream, and Bovanenkovo-Ukhta. The agreement demonstrates MMK's commitment to supply metal products to pipe companies, producing large-diameter pipe for strategic cross-country pipelines. In addition, agreements with pipe producers will allow MMK's steel plate production facilities to run at guaranteed capacity, namely at Mill 5000. In turn, the key parameters of the price formula for MMK sheets were agreed in line with the LDP formula applied by TMK and Gazprom.

"Following the commissioning of our Mill 5000 in 2009, it was TMK that received the first batch of the newly manufactured products. We are fully aware of the significance and scale of the projects and tasks carried out by gas and pipe companies. In response, we have been adopting state-of-the-art steel rolling technologies in line with the most advanced global standards. Reassured by the tests completed to date, we can confidently state that MMK products meet the most stringent requirements for pipeline application in extreme depths, temperatures, and aggressive environments," said Pavel Shilyaev, MMK CEO.

About MMK

MMK is among the world's largest steel producers and is one of the leaders of Russia's steel industry. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of higher value added products. In 2013 MMK Group produced 11.9 mln tons of crude steel and 11 mln tons of commercial steel products. The MMK Group's revenue in 2013 totalled USD 8.190 bln, with EBITDA at USD 1.223 bln.


Investor Relations Department

Andrey Serov

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e-mail: serov.ae@mmk.ru

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Sergei Vykhukholev

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e-mail: vykhukholev.sv@mmk.ru

Dmitry Kuchumov

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e-mail: kuchumov.do@mmk.ru

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