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Investor presentation January 2015 Disclaimer This document does - - PowerPoint PPT Presentation

Investor presentation January 2015 Disclaimer 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


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SLIDE 1

Investor presentation

January 2015

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SLIDE 2

1

Disclaimer

Investor presentation, January 2015

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, the Group or any of its affiliates, advisors

  • r 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
  • therwise 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 the Group’s control that could cause the actual results, performance or achievements of the Group 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

  • f 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 the Group’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 each of EVRAZ and the Group 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 or the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Group, 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.

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SLIDE 3

2

One of the world’s largest vertically integrated steel and mining companies

 Top-20 steel producer in the world based on crude steel production  Leader in Russian and CIS construction steel products  Global leader in railway product markets  No 1 producer of rails and large diameter pipes in North America  Listed in the London Stock Exchange; constituent of the FTSE 250 index  EVRAZ employs more than 90,000 people

Key financial indicators, $m (IFRS) 2013 1H 2014

Revenue

14,411 6,805

EBITDA

(2)

1,821 1,080

Dividends paid

  • 90.4

Net debt

(3)

6,534 6,095

(1) Total EVRAZ’s Iron ore saleable products (2) EBITDA represents profit from operations plus depreciation and amortization, impairment of assets, loss (gain) on disposal of PP&E and foreign exchange loss (gain) (3) Net Debt represents long-term loans, net of current portion, plus short-term loans and current portion of long term loans less cash and cash equivalents (excluding restricted deposits).

Key operational indicators, mtpa 2013 2014

Crude steel Production

16.1 15.5

Iron ore

(1)

22.6 22.8

Raw coking coal

18.9 21.1

Moscow

Chicago NTMK KGOK Evrazruda ZSMK Timir Highveld Steel and Vanadium DMZ Sukha Balka Stratcor Pueblo Portland Regina Camrose Red Deer Calgary

Legend

Steel production Iron ore mining Coal mining Vanadium production Logistics and Trading

Map of EVRAZ operations Investor presentation, January 2015

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SLIDE 4

Segmental and Geographical Overview

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SLIDE 5

4 Production of steel and steel products 3Q vs 4Q 2014, kt Production of steel and steel products 2013 vs 2014, kt

Steel: consolidated production

 Decrease in consolidated crude steel and steel product output y-o-y as a result of the disposal of EVRAZ Vitkovice Steel and the shutdown of EVRAZ Claymont  Growth in production of semi-finished goods driven by the rouble devaluation  6% increase q-o-q in production of steel products, net of re-rolled volumes, mostly driven by a higher production

  • f semi-finished products due to more profitable export shipments of billets and slabs

 Seasonally weaker demand in Q4 2014 for construction products in Russia and decreased orders from Russian railcar producers  The EVRAZ Caspian Steel rolling mill in Kazakhstan was commissioned and began mass production of rebars from EVRAZ ZSMK’s billets

Investor presentation, January 2015

Source: Company data 3,843 4,314 5,186 5,105 1,903 1,830 1,989 1,017 936 1,065 825 618 16,121 15,535 14,683 13,949 2013 2014 Other steel products Tubular products Flat-rolled products Railway products Construction products Semi-finished products Crude Steel 1,066 1,327 1,302 1,250 410 377 221 224 257 279 152 156 3,859 3,884 3,408 3,613 3Q2014 4Q2014 Other steel products Tubular products Flat-rolled products Railway products Construction products Semi-finished products Crude Steel

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SLIDE 6

5 Rebar prices Production of steel and steel products, kt

Steel: Russia

 Crude steel and steel products output was broadly flat in 2014 vs 2013  2014 production of semi-finished products increased by 6% with production of finished steel products decreasing by 4%, due to higher export sales driven by weakening Russian rouble  Construction product volumes were stable despite increased competition, due to strong demand and lower imports  Average cash cost of slabs was $292/t in H1 2014

Investor presentation, January 2015

Source: Company data, Metal Expert

Billet prices

350 400 450 500 550 600 Billet CFR East Asia import $/t Billet FOB Black Sea export $/t 4,517 4,787 4,185 4,187 1,409 1,292 687 529 11,904 11,798 10,799 10,795 2013 2014 Other steel products Railway products Construction products Semi-finished products Crude steel 20,000 21,000 22,000 23,000 24,000 25,000 26,000 27,000 300 350 400 450 500 550 600 650 700 750 800 Jan-13 Feb-13 Mar-14 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 RUB/t $/t

Rebar, CPT Moscow USD/t (lhs) RUB/USD Rebar, CPT Moscow RUB/t (rhs)

30.26RUB/$ 33.46RUB/$ 55.54RUB/$

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SLIDE 7

6 Market steel prices, $/t Production of steel and steel products, kt

Steel: North America

 No 1 producer of rail and large diameter pipe in North America  Diversified product portfolio enhanced by targeted investments into quality and product expansion  Strong customer relationships  Asset optimisation programme complete including suspension of unprofitable EVRAZ Claymont operations  Increase of production of steel products by 4% in 2014 vs 2013  14% growth in production of tubular products driven by strong demand for small diameter pipe and operational improvements implemented at EVRAZ North America’s OCTG facilities  2.5% y-o-y increase in production of LD pipes due to another strong year for large diameter market Investor presentation, January 2015

Source: Company data, North American Steel Market Tracker *Production volumes excluding EVRAZ Claymont ** Total demand in 2014-2017 = 5.5mt 200 300 400 500 600 700 800 900 1000 2013 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Plate Wire rod Scrap, shredded, Midwest

EVRAZ LD pipe mills

75% 12% 8%

Share of LD pipe project

Share of announced LD pipe projects by region**

LD pipe mills of peers

3% 2%

940 1,065 665 621 493 537 348 324 1,940 1,999

2,447 2,548

2013* 2014 Construction products Railway products Flat-rolled products Tubular products Crude steel

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SLIDE 8

7 Coking coal production, kt Market coking coal prices Cash cost of washed coking coal, $/t*

Coal

 Low risk long-term growth options underpinned by 2.1bn tonnes of high quality P&P reserves  Focus on quality, attractive portfolio of premium hard and semi-hard coking coal grades (Zh+GZh, K, KO)  Efficient stable operations at Yuzhkuzbassugol  Successful ramp-up of Raspadskaya mine  Washed coking coal (concentrate) self-coverage of 171% in H1 2014  Domestic prices expected to increase 20-25% in Jan-Feb 2015 due to rouble devaluation which also supports export sales profitability

*The data in this chart is derived from the unaudited monthly management accounts of EVRAZ in respect of the indicated periods 73 74 66 63 55 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Investor presentation, January 2015

2500 2550 2600 2650 2700 2750 2800 2850 2900 2950 3000 100 105 110 115 120 125 130 135 140 145 150 HCC Australia FOB, $/t GZh coal Russia FCA, RUB/t 11,110 10,789 7,824 10,223 51 18,933 21,062 2013 2014 Yuzhkuzbassugol Raspadskaya Mezhegeyugol

+11%

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SLIDE 9

8

Raspadskaya & Yuzhkuzbassugol production in 2014

 Longwall 4-9-25 was launched in November at Raspadskaya mine which is currently operates at four longwalls  Ramp-up of Raspadskaya mine was successfully completed in 2014  Raspadskaya coal company’s total raw coking coal

  • utput increased by 31% to 10.2 mtpa with

12 mtpa as a target for 2015 (including 5.2 mtpa from Raspadskaya mine)

Investor presentation, January 2015

2012 2013 2014 Raspadskaya mine 2,675 1,380 4,091 Raspadsky open-pit 2,324 4,062 3,657 MUK-96 1,315 1,489 1,261 Raspadskaya-Koksovaya 687 892 1,214 7,002 7,824 10,223

Raw coking coal production volumes by mines, kt Raspadskaya Yuzhkuzbassugol

 Stable production volumes by Yuzhkuzbassugol in 2014  Yerunakovskaya VIII mine launched in 2013 successfully ramped up to the 3 mtpa capacity in 2014

Raw coking coal production volumes by mines, kt

2012 2013 2014 Yesaulskaya 1,502 1,835 1,239 Ossinikovskaya 1,310 1,252 1,180 Yerunakovskaya VIII 300 1,393 2,948 Uskovskaya 2,100 2,352 2,564 Alardinskaya 1,758 3,325 2,759 Abashevskaya 1,546 952 65 8,517 11,110 10,754

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SLIDE 10

9

68 70 66 61 52 H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Iron ore

 EVRAZ KGOK is a large, stable low cost operation

  • rganically integrated with EVRAZ NTMK

 Evrazruda is re-emerging as a compact operation after a major turnaround programme, feeding 40% of EVRAZ ZSMK’s needs at competitive costs  Expansion project in Evrazruda’s Sheregesh mine to be completed by 2017  High cost assets closed or sold in 2013-2014  Iron ore self-coverage of 77% in H1 2014  Timir is a strategic reserve base of cost competitive

  • pen pit iron ore for EVRAZ ZSMK in the long term

* Production volumes of iron ore in 2013, excluding EVRAZ VGOK ** A+B+C1 reserves of Tayezhnoe deposit under Russian geological classification *** The data in this chart is derived from the unaudited monthly management accounts of EVRAZ in respect of the indicated periods

Cash cost, Russian iron ore products (Fe 58%), $/t***

H1 2012 H2 2012 H1 2013 H2 2013 H1 2014

Production of iron ore products in Russia, kt

EVRAZ ZSMK EVRAZ NTMK EVRAZ KGOK Evrazruda Timir Steel mills Operating iron ore mines Greenfield project

Map of iron ore operations in Russia

Asset P&P ore reserves*, mt KGOK 8,225 Evrazruda 100 Timir** 682

Investor presentation, January 2015

11,224 11,134 6,301 6,444 17,524 17,578 2013 * 2014 Sinter Pellets

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SLIDE 11

Liquidity and Financial Position

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SLIDE 12

11

Liquidity and debt maturity profile

 Cash and short-term deposits of $1,353m as at 30 June 2014 compared to short-term debt of $1,244m  Debt currency (as at 30 June 2014) composition: USD – 96% (incl. synthetic USD); RUB – 3%, other – 1%  In August 2014, EVRAZ signed a $425m syndicated pre-export financing facility which was upsized to $500m in October 2014  RUB 20bn bonds due 2019 (with an investor put in October 2014) were fully repaid in October 2014  8.25% Eurobonds due in 2015 were partly bought back in the amount of $439m in December 2014 - January 2015

* Figures based on management accounts

Debt* maturities schedule for next 4 years (as at 31 December 2014), $m Investor presentation, January 2015

976 1,369 1,226 1,577 300 600 900 1,200 1,500 2015 2016 2017 2018 Q1 Q2 Q3 Q4

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SLIDE 13

Overview of H1 2014 Results

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SLIDE 14

13 Consolidated EBITDA by segment, $m

(161) (111) 651 771 109 132 231 216 34 20 61 52 925 1,080 H1 2013 H1 2014 Total Other operations Vanadium Iron ore Coal Steel Eliminations and unallocated*

Revenue drivers, $m Consolidated revenue by segment, $m

H1 2014 financial highlights

(1,429) (1,106) 6,393 5,898 722 665 900 659 268 255 465 434 7,319 6,805 H1 2013 H1 2014 Total Other operations Vanadium Iron ore Coal Steel Eliminations * Includes unallocated expenses and intersegment unrealised gains/(losses)

 Consolidated revenue decreased primarily due to lower prices in line with negative global price trends and a lag in domestic steel prices in Russia and Ukraine in adjusting to the depreciation of local currencies  H1 2014 EBITDA margin was 15.9% vs. 12.6% in H1 2013

7,319 (71) (58) (267) 92 (73) (18) (28) (92) 6,805

Revenues H1 2013 Steel, quantity Steel, mix Steel, prices Coal, volumes Coal, prices Iron ore, volumes Iron ore, prices Other Revenues H1 2014

Investor presentation, January 2015

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SLIDE 15

14

Analysis of cost of revenue

Source: Management accounts

Item H1 2014, $m % of revenue H1 2013, $m % of revenue Relative change Comments on changes Revenue 6,805 7,319 (7)% Cost of revenue 5,192 76% 5,886 80% (12)% Raw materials, incl. 1,731 25% 1,819 25% (5)% Iron ore 432 6% 371 5% 16% Higher external purchases following disposals of iron ore assets Coking coal and coke 272 4% 368 5% (26)% Lower prices Scrap 636 9% 710 10% (10)% Lower prices and decreased consumption due to suspension of EVRAZ Claymont Other 391 6% 370 5% 6% Semi-finished products 95 1% 217 3% (56)% Increase of slab internal consumption at EVRAZ North America and EVRAZ Vitkovice Steel Auxiliary materials 393 6% 516 7% (24)% Effect of cost optimisation, primarily in Coal segment and rouble depreciation Services 360 5% 351 5% 3% Goods for resale 276 4% 298 4% (8)% Transportation 340 5% 437 6% (22)% Lower production volumes and rouble weakening partially

  • ffset by tariff increase

Staff costs 851 13% 988 13% (14)% Headcount reduction, asset disposal and optimisation, rouble depreciation Depreciation 379 6% 487 7% (22)% Changes in accounting for the depletion of coal mining assets; revision of asset life of Russian and Ukrainian steel plants; rouble and hryvnia depreciation Electricity 238 3% 258 4% (8)% Lower consumption due to asset optimisation and

  • perational improvements

Natural gas 175 3% 225 3% (22)% Reduced consumption due to operational improvements at EVRAZ DMZ as well as asset disposals and suspensions Other costs* 354 5% 290 4% 22% Decrease in stock of WIP and finished goods

* Includes taxes, change in WIP and finished goods, certain items of energy costs Note: See details on cost optimisation on slides 8 and 29

Investor presentation, January 2015

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SLIDE 16

15

98 59 36 Cost cutting initiatives at

  • ngoing operations

Optimisation of asset portfolio Increase in production

Efficiency improvement plan: H1 2014 progress update

* Actual results excluding effect of forex rates

 Implementation of efficiency savings plan resulted in savings of $193m*  Total 2014 target is $400m

Cost cutting initiatives at ongoing operations: $98m

Reduction of headcount and related G&A costs $33m Optimisation of coal mining costs $20m Improving yields, raw material and conversion costs in steel mills $40m Cost optimisation at iron ore mines $5m

Optimisation of assets portfolio: $59m

Mines shutdown and disposal at Evrazruda and Yuzhkuzbassugol $38m Suspension of EVRAZ Claymont, disposal of Central Heat and Power Plant and shutdown of plate rolling mill at EVRAZ ZSMK $21m

Increase in production: $36m

Growth in volumes at EVRAZ North America at ongoing assets $30m Recovery of production at Raspadskaya mine $6m

Efficiency improvement, $m 193 Investor presentation, January 2015

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SLIDE 17

16

H1 2014 FCF generation

 Working capital increased by $175m due to the repayment of a $312m payable to Yuzhny GOK (supplier of sinter to EVRAZ DMZP) which was offset by other improvements  Interest payments were $235m compared to $273m last year due to lower debt and refinancing at lower rates  Capex reduced to $365m from $492m as a result of the ongoing capex optimisation programme  Proceeds from disposals (mainly EVRAZ Vitkovice Steel) amounted to $296m  Strong cash flow of $444m US$ million

1,080 (175) (94) 33 844 (235) (365) (102) 296 19 (13) 444

EBITDA Changes in working capital,

  • excl. income tax

Income tax paid Other Cash flows from

  • perating

activities Interest and similar payments Capex, incl recorded in financing activities Purchases of subsidiaries, net

  • f cash

acquired, and purchase of interests in associates/joint ventures Proceeds from sale of disposal groups classified as held for sale, net of transaction costs CF from other investing activities Equity transactions Free cash flow

Investor presentation, January 2015

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SLIDE 18

17

H1 2014 debt bridge and net leverage

US$ million

Investor presentation, January 2015

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SLIDE 19

Capex and Investment Projects

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SLIDE 20

19 Capex historic performance and outlook, $m excl. VAT H1 2014 capital expenditure breakdown by projects, $m

Capex

Investor presentation, January 2015

 No major capital spending in 2014 as key investment projects were completed in 2013  Significantly increased capex flexibility going forward  Capex is mostly channelled to maintenance  Priority is given to cash cost reduction projects with projected IRR of >40%  In 9 months of 2014, capital expenditures amounted to $540m, including $365m in H1 2014 and $175m* in Q3 2014  The company is on track to meet its commitment to achieve capital expenditure of less than US$900 million per annum for 2014 and beyond

30 22 15 7 6 48 237 Yerunakovskaya VIII mine Mezhegey (Phase I) coal project PCI at EVRAZ ZSMK EVRAZ ZSMK rail mill modernisation EVRAZ Caspian Steel Other development projects Maintenance

365

1,261 902 825 <900 200 400 600 800 1,000 1,200 1,400 2012 2013 2014E 2015E Maintenance, Steel & other Maintenance, Coal Maintenance, Iron ore Development, Steel & other Development, Mining * Management accounts

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SLIDE 21

Appendix

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SLIDE 22

21

Performance by regions

EBITDA, EVRAZ South Africa, $m

  • Note. (1) Consolidated EBITDA also includes Unallocated EBITDA of $(100)m and $(115)m and Other regions EBITDA of $(1) and $(2)m in H1 2013 and H1 2014

respectively (2) EVRAZ North America includes EVRAZ Inc. NA, EVRAZ Inc. NA Canada, Stratcor; EVRAZ Ukraine includes EVRAZ DMZ, Sukha Balka and coking plants; EVRAZ Europe includes EVRAZ Palini e Bertoli, EVRAZ Vitkovice Steel (before its disposal in April 2014), Nikom and attributable trading margin

EBITDA, EVRAZ Europe, $m EBITDA, EVRAZ Ukraine, $m EBITDA, EVRAZ Russia, $m EBITDA, EVRAZ North America, $m

870 1,000 H1 2013 H1 2014 81 129 H1 2013 H1 2014 40 53 H1 2013 H1 2014

16 27

H1 2013 H1 2014 21 (12) H1 2013 H1 2014

Investor presentation, January 2015

slide-23
SLIDE 23

22 Steel sales volume breakdown (H1 2014)

Russia & CIS, 49% Americas, 19% Asia, 22% Europe, 6% Africa & ROW, 4% By geography Semi- finished 30% Construc tion 36% Railway 14% Flat- rolled 10% Tubular 7% Other 3% By product

Global vertically integrated steel, mining and vanadium business with strong positions in highly attractive markets

EVRAZ’s global business

North America South America Africa Europe Russia/CIS Asia 349 1,716 124 237 16 479 3,718 1,301 Sea ports Vanadium Coal mining Iron ore mining Steel mills Mezhegey coal mine in development Third party steel products sales (Kt)*

#

Internal supply of slabs and billets from Russian steel mills (Kt)

#

7.7 Mt 7.7 Mt

*

Excluding routes with sales volumes below 35kt each, together totalling 67kt

Investor presentation, January 2015

141

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SLIDE 24

23

Steel market in Russia – key drivers

Investor presentation, January 2015

Source: Metal Expert, Agency for Housing Mortgage Lending, Rosstat

Rebar and sections import volumes, kt Mortgage market in Russia

656 153 380 717 1,032 1,354 770 16.9 14.3 14.6 17.6 20.9 24.6 26.4 5 10 15 20 25 30 200 400 600 800 1000 1200 1400 1600 2008 2009 2010 2011 2012 2013 H1 2014 Amount of mortgage loans granted, bln RUB share of mortgage deals on the housing market, % 12% 20% 26% 30% 48% 65% 65% 68% Russia Russia 2020 E France Italy Norway USA Sweden UK

Share of buildings using steel frame in 2013 Construction in Russia, 2014E By financing By type

95% 3% 2% Private construction State Mixed 74% 26% Residential Industrial / infrastructure / commercial 25 50 75 100 125 150 175 200 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Rebar Sections

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SLIDE 25

24

Unique proposition in construction long steel products

 EVRAZ benefits from wide proprietary distribution network in Russia  81% clients consider EVRAZ’s service the best in Russia (+6% y-o-y)*  Loyalty level of steel traders and end users increased to 85% (+3%)*  Share of permanent clients is 88%*

* According to Gfk 2013 report ** Excluding intercompany sales *** EVRAZ estimates for 2013

Rebars Channels and angles Beams 1,743 789 1,106 19% 79% 44% Products Market position and share*** 2013 EVRAZ sales volume in Russia, kt** EVRAZ Peer 2 Peer 3 Peer 4 Peer group proposition Peer 1

          

#1 #1 #1

Investor presentation, January 2015

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SLIDE 26

25

20 40 60 80 100 120 140 160 500 1000 1500 2000

тыс.

Cautious view on global iron ore market prospects

Source: CRU, IB Consensus, EVRAZ analysis

 Long-term outlook is conservative as market fundamentals are changing  China steel production could be close to peak  Flattening of global cost curve due to new low cost capacities entering and high cost mines shutting down  EVRAZ anticipated smoother transition to the new reality – the 2014 year iron ore price dynamics was surprisingly weak  However, current expectations comprehend possibility of short-term price fall to $50-60/t levels (due to tactical reasons)  Long-term price forecast $90-100/t

Iron ore price, 62%, CFR China, $/t Flattening of global cost curve, $/t (ExW)

2013 2018 Cash costs are 62% Fe equivalent

50 100 150 200 250 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Investor presentation, January 2015

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SLIDE 27

26

Vertical integration in Russia

 Fundamentally the best production model for integrated steel mills is to have resources nearby  That’s how Russian steelmaking capacities were built during the Soviet time: iron ore and steelmaking facilities were set in clusters  As a result, Russian steelmaking companies are usually vertically integrated in iron ore  Non-integrated iron ore market is limited

Iron ore self-coverage, 2014E

15% 61% 74% 87% >100% >100% >100% 0% 50% 100% 150% MMK (SSGPO) Mechel ERVAZ NLMK CherMK (Severstal) Ural Steel (Metalloinvest) OEMK (Metalloinvest)

Main Russian vertically integrated metallurgical clusters

Legend:

Metallurgical plant

ZSMK

Iron ore deposit

EVRAZRuda

EVRAZ

NTMK KGOK

EVRAZ

SGOK NLMK

NLMK

LGOK MGOK OEMK

Metalloinvest

MMK CherMK Olkon Karelskiy ok.

Severstal

Investor presentation, January 2015

slide-28
SLIDE 28

27

16% 21% 1% 12% 13% 4% 4% 12% 13% 34% 32% 78% 84% H1 2013 H1 2014 Other Energy Depreciation Staff costs Transportation Raw materials

Cost structure of Vanadium segment, % of segment revenue Cost structure of Coal segment, % of segment revenue Cost structure of Steel segment, % of segment revenue

Cost structure by segment

Investor presentation, January 2015

16% 14% 11% 9% 11% 11% 6% 6% 3% 2% 4% 4% 9% 8% 4% 3% 7% 7% 13% 15% 82% 79% H1 2013 H1 2014 Other Energy Depreciation Staff costs Transportation Semi-finished products Other raw materials Scrap Coking coal Iron ore Revenue: 6,393 5,898 CoR: 5,260 4,649 12% 13% 26% 25% 24% 20% 4% 4% 23% 22% 89% 84% H1 2013 H1 2014 Other Energy Depreciation Staff costs Transportation Raw materials Revenue: 722 665 CoR: 640 557

  • Note. Numbers may not add to totals due to rounding. Percent changes based on numbers prior to rounding

Cost structure of Iron ore segment, % of segment revenue

6% 10% 12% 7% 21% 19% 6% 6% 14% 14% 15% 11% 74% 67% H1 2013 H1 2014 Other Energy Depreciation Staff costs Transportation Raw materials Revenue: 900 659 CoR: 669 441 Revenue: 268 255 CoR: 210 215

slide-29
SLIDE 29

28

Efficiency improvement plan: update on progress

 Operating cost savings plan is $350m in 2014  Actual result in 1H 2014 is $193m  G&A expenses to be reduced by $100m on an annualised basis from 2015, with $50m already to be achieved in 2014

Initiative H1 2014 achievements H1 2014* vs. H1 2013 actual results, $m

Restructuring of production assets

  • Shutdown and disposal of inefficient Russian iron ore, coal mines,

workshop at ZSMK, Central Heat and Power Plant and mill at EVRAZ North America (59) Optimisation in steelmaking

  • Decrease in EVRAZ North America’s costs, including volume

increase effect and improved yields TPG

  • Decrease in overtime, fixed costs and quality claims at EVRAZ North

America (36) Staff cost

  • ptimisation
  • Reduction of headcount and related G&A costs at Russian, Ukraine

and North America assets (33) Optimisation of raw materials in steelmaking

  • Changes in iron and ferroalloys mix and improved coke yields at

EVRAZ ZSMK. Decrease of coke consumption per tonne of pig iron at EVRAZ DMZ at the same production volumes (28) Decrease in coal production expenses

  • Optimisation of tunneling works, maintenance, degassing and

ventilation costs at Yuzhkuzbassugol

  • And increasing volumes at Raspadskaya

(24) Decrease in iron

  • re production

expenses

  • Lower mineral extraction and land tax rates at Evrazruda and

decrease in prices for auxiliary materials at EVRAZ KGOK (5) Decrease in repairs

  • Optimisation of repairs at EVRAZ ZSMK and EVRAZ NTMK steel

mills (5) Decrease in energy costs

  • Lower electricity consumption at EVRAZ DMZ and Yuzhkuzbassugol

(3)

Total: (193) * Actual results excluding effect of forex rates

Investor presentation, January 2015

slide-30
SLIDE 30

29

EVRAZ’s public debt structure

Investor presentation, January 2015

EVRAZ plc Raspadskaya, OJSC

US$ 400m 7.75% Loan Participation Notes due 2017

Evraz Group S.A.

US$ 138m 8.25% Notes due 2015 Guaranteed by Mastercroft S.à r.l. US$ 600m 7.40% Notes due 2017 US$ 509m 9.50% Notes due 2018 US$ 850m 6.75% Notes due 2018 US$ 1,000m 6.50% Notes due 2020

Mastercroft S.à r.l. Evraz North America plc EVRAZ Inc.N.A. Canada

US$ 350m 7.50% Senior Secured Notes due 2019

Operating companies Guarented by EVRAZ NORTH AMERICA plc, EVRAZ Inc. NA and their subsidiaries EvrazHolding Finance, LLC

RUB 3.9bn* 8.75% Bonds due 2015 RUB 15.0bn 9.95% Bonds due 2015 RUB 20.0bn 8.40% Bonds due 2016

Guarented by Evraz Group S.A.

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London +44 207 832 8990 Moscow +7 495 232 1370 IR@evraz.com www.evraz.com

January 2015