Investor Presentation November 2013 Disclaimer THIS PRESENTATION - - PowerPoint PPT Presentation

Investor Presentation

November 2013

2

Disclaimer

THIS PRESENTATION IS FOR INFORMATION ONLY AND IS CONFIDENTIAL. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OF FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE RUSSIAN FEDERATION OR ANY JURISDICTION WHERE SUCH RELEASE, PUBLICATION OR DISTRIBUTION IS UNLAWFUL THIS PRESENTATION DOES NOT, AND IS NOT INTENDED TO, 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. THIS PRESENTATION IS CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, RETRANSMITTED, FORWARDED, FURTHER DISTRIBUTED TO ANY OTHER PERSON OR PUBLISHED, IN WHOLE OR IN PART, BY ANY MEDIUM OR IN ANY FORM FOR ANY PURPOSE AND IN PARTICULAR, MAY NOT BE FORWARDED TO ANY U.S. PERSON (AS DEFINED IN THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR TO ANY U.S. ADDRESS OR TO ANY PERSON AND/OR IN ANY JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS

• UNAUTHORISED. FAILURE TO COMPLY WITH SUCH LIMITATIONS MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

THIS PRESENTATION IS ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA THAT HAVE IMPLEMENTED THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC, AS AMENDED) WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE IN PARTICULAR, IN THE UNITED KINGDOM, THIS PRESENTATION IS FOR DISTRIBUTION ONLY TO AND DIRECTED ONLY AT (I) INVESTMENT PROFESSIONALS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER") OR (II) HIGH NET WORTH ENTITIES, AND OTHER PERSONS TO WHOM IT MAY LAWFULLY BE COMMUNICATED, FAILING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER (ALL SUCH PERSONS IN (I)-(II) ABOVE BEING "RELEVANT PERSONS"). BY ACCEPTANCE OF THIS INFORMATION THE RECIPIENT HEREOF CONFIRMS THAT HE OR SHE IS A RELEVANT PERSON. THE INFORMATION IN THIS PRESENTATION HAS NOT BEEN INDEPENDENTLY VERIFIED. THE OPINIONS PRESENTED HEREIN ARE BASED ON GENERAL INFORMATION GATHERED AT THE TIME OF WRITING AND ARE SUBJECT TO CHANGE WITHOUT NOTICE. THE COMPANY RELIES ON INFORMATION OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE BUT DOES NOT GUARANTEE ITS ACCURACY OR COMPLETENESS. THE INFORMATION CONTAINED IN THIS PRESENTATION IS SUBJECT TO VERIFICATION, COMPLETION AND MAY BE SIGNIFICANTLY CHANGED. NONE OF THE COMPANY OR ANY OTHER PERSON IS LIABLE TO UPDATE OR MAINTAIN TOPICALITY OF THE INFORMATION CONTAINED IN THIS PRESENTATION OR TO PROVIDE THE RECIPIENT WITH ACCESS TO ANY ADDITIONAL INFORMATION OR TO CORRECT ANY INACCURACIES IN ANY SUCH INFORMATION WHICH MAY BECOME APPARENT. THIS PRESENTATION CONTAINS STATEMENTS ABOUT FUTURE EVENTS AND EXPECTATIONS THAT ARE FORWARD-LOOKING STATEMENTS, BASED ON CURRENT EXPECTATIONS AND PROJECTIONS ABOUT FUTURE EVENTS. THESE STATEMENTS TYPICALLY CONTAIN WORDS SUCH AS "BELIEVES", "INTENDS", "EXPECTS" AND "ANTICIPATES" AND WORDS OF SIMILAR IMPORT. ANY STATEMENT IN THESE MATERIALS THAT IS NOT A STATEMENT OF HISTORICAL FACT IS A FORWARD-LOOKING STATEMENT THAT INVOLVES KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NONE OF THE FUTURE PROJECTIONS, EXPECTATIONS, ESTIMATES OR PROSPECTS IN THIS PRESENTATION SHOULD BE TAKEN AS FORECASTS OR PROMISES NOR SHOULD THEY BE TAKEN AS IMPLYING ANY INDICATION, ASSURANCE OR GUARANTEE THAT THE ASSUMPTIONS ON WHICH SUCH FUTURE PROJECTIONS, EXPECTATIONS, ESTIMATES OR PROSPECTS HAVE BEEN PREPARED ARE CORRECT OR EXHAUSTIVE OR, IN THE CASE OF THE ASSUMPTIONS, FULLY STATED IN THE PRESENTATION. NEITHER THE COMPANY NOR ANY OTHER PERSON ASSUMES ANY OBLIGATIONS TO UPDATE THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN TO REFLECT ACTUAL RESULTS, CHANGES IN ASSUMPTIONS OR CHANGES IN FACTORS AFFECTING THESE STATEMENTS. BY ACCEPTING OR ACCESSING THIS PRESENTATION OR ATTENDING ANY PRESENTATION OR DELIVERY OF THIS PRESENTATION YOU AGREE TO BE BOUND BY THE FOREGOING LIMITATIONS AND CONDITIONS AND, IN PARTICULAR, WILL BE TAKEN TO HAVE REPRESENTED, WARRANTED AND UNDERTAKEN THAT YOU HAVE READ AND AGREE TO COMPLY WITH THE ABOVE LIMITATIONS.

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

4

Key Credit Highlights

Leading position in the Russian steel market  MMK is the second largest steel producer in Russia by volume of production  Moreover, MMK not only managed to maintain its share but also grow it over the recent years Dominant portion of sales to domestic market  MMK sales (by volume) to fast growing Russian and CIS market amount to 77% of total sales (as of 2012FY)  MMK benefits from premium pricing with respect to domestic sales - 231 USD/tonne in 2012 Diversified sales mix  Low customer concentration  Top ten customers account for only 1/4th of MMK‘s total shipments* Competitive cost position  Slab costs are among the lowest in the industry - USD385 per tonne (as of Q2 2013)  MMK benefits from long-term iron-ore contracts World class corporate governance  5 out of 10 directors on Board are independent in compliance with the UK Corporate Governance code The largest single sight facility in Russia  The large size of Magnitogorsk site allows the company to exploit economies of scale and reduce costs in areas, such as logistics through lower transportation costs Leader among peers  Strong positioning among peers is reflected by well-invested, best rolling facilities as well as the highest portion of HVA products

*Note: Top 10 customers are based on Total MMK shipments, i.e. domestic and exports

5

ММК – Global Player with Strong Russian Presence

Benefits from central location with proximity to local and export markets

2.3 mln tpy capacity. Steel making complex and two service centers. 900 th tonnes of steel products output in 2012 Metals service center and stamped-product factory with 250 th. tpy capacity. 4 mln tonnes of coking coal mined in 2012. Covered 36% of MMK needs in coal concentrate in 2012

Interkos-IV MMK Metalurji Belon

One of Russia‟s largest hardware producers. 493 th. tonnes produced in 2012.

ММК Metiz Profit

Covers 100% of MMK scrap needs. ММК trading house

77% 3% 10% 7% 1% ММК (2012)

Leading producer of rolled products in Russia 12.25 mln tonnes of steel 11.03 mln tonnes of finished products in Russia

%

Share of MMK shipments, mln tonnes Profit‟s scrap collecting yards ММК owns 5% оf Fortescue Metals Group, one of Australia's largest iron-

• re producers.

Fortescue MG

Source: MMK

ММК Group consist of 3 main segments Russian Steel Segment Turkish Steel Segment Coal Segments

6

78 162 150 156 225 158 190 243 231 50 100 150 200 250 2004 2005 2006 2007 2008 2009 2010 2011 2012

OJSC MMK Dominant Share of Sales to Emerging Market High Growth Countries and Russia in Particular

The portion of Russian & CIS sales has been gradually increasing

Source: MMK

Domestic Price Premium(1) Based on Average Price, USD/tonne Regional Sales Structure based on Volumes, 2012

Source: MMK reports Source: MMK

Domestic price premium makes Russian market attractive

Steel consumption is expected to be the highest in the CIS region

Source: HSBC Metals Quarterly Broker reports

• 8%
• 4%

0% 4% 8% 12% 16% 2011 2012 2013e 2014e 2015e Europe CIS

• N. America

Asia ME/Africa

Note: Domestic price premium is calculated in comparison to export prices

Russia &CIS 77% Middle East 10% Far East & Asia 3% Europe 7% Africa 1% Americas 2%

Total: 11,029 kt

69% 67% 77% 31% 33% 23% 0% 25% 50% 75% 100% 2010 2011 2012 Domestic Export

7

22% 36% 100% 72% 78% 64% 28% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased 459 442 413 385 374 60 100 140 180 220 300 350 400 450 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12

Slab Cash-cost Scrap Iron ore (RHS) Pellets (RHS) Coal (RHS)

Competitive Cost Position

MMK benefits from relatively low input materials prices

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

Source: MMK reports

Limited vertical integration benefits MMK in the current market Self-sufficiency Level, 2012

 Limited vertical integration levels in raw materials do not pose a weakness to the company  Weak raw materials prices in the current market are beneficial to MMK‟s profit margins  MMK holds long-term iron ore off-take contracts with ENRC and Metalloinvest‟s subsidiaries until 2017 and 2015 respectively

MMK’s Slab Cash-Cost vs. peer, USD/tonne

Source: MMK and Company reports Source: MMK

MMK MMK (Belon) MMK (Profit) MMK

450 495 490 459 442 413 385 374 399 385 361 406 405 405 395 411 383 361 364 348 340 390 440 490 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 ММК Russian Peer

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

9

Long products 16% Flat hot- rolled 50% Thick plate (Mill 5000) 7% Flat cold- rolled 12% Downstream 15%

Russian Steel Segment

Main revenue contributor – 92% of Group’s revenue*

• All significant assets of the segment are located in Magnitogorsk,

Russia

• Magnitogorsk Steel is the major production site:

 Russia‟s second largest integrated plant with more than 14m tonnes of crude steel production capacity  Ranks among country‟s most competitive producers with a diverse mix and strong focus on flat products  Enjoys proximity to some of its biggest customers (Chelyabinsk Pipe and Uralvagonzavod) and main supplier (ENRC – 300km away)  Includes wide-gauge plate Mill 5000 and cold-rolling rolling Mill 2000 with annealing, pickling and galvanising facilities

• MMK-METIZ Metalware and Sizing Plant (Magnitogorsk)
• The downstream steel processing plants MMK-Profil-Moscow

Region and Intercos-IV (Spb Region)

• Trading companies – wide network all over Russia
• –
• –

Note: * as per 2012 FY results

• MMK’s Russian steel segment finished products composition, 2012FY

–

Source: MMK

–

MMK's share in Russia Place in Russia Hot-rolled sheet 36% 1

• incl. thick plate

26% 2 Cold-rolled sheet 27% 3 Galvanized flat products 28% 1 Tin plate 100% 1 Colour-coated rolled products 25% 3 Leading Domestic Market Position

Source: MMK, Metal Courier

Total: 11,029 th. tonnes

prospectus: „

• f volume …

10

Turkish Steel Segment

Poised to become #2 flat steel producer in Turkey

ММК Metalurji  Located at two sites in Turkey: Iskenderun and Istanbul  Favourable geographic position (growing markets of Turkey and other Middle East countries)  Good logistics (own sea port and up-to-date production logistics in place)  Key production site (Iskenderun) – capacity of 2.3 million

• f crude/finished tons per year

 Production start of operation: 2010  Finished products: hot-rolled steel, galvanized and color- coated steel

• Steel-making and manufacturing of hot-rolled products was

suspended in November 2012

• –
• –

MMK will benefit from the structural shortfall of flat steel in Turkey

Istanbul

Iskenderun Europe Middle East Africa Priority export markets Important export markets

Locations of Key Markets MMK Metalurji production breakdown, 2012FY

Source: MMK operational results

• Text comes from Moody’s
• Total: 900 th. tonnes
• Flat hot-

rolled 34% Galvanized steel 30% Colour- coated steel 36%

Source: MMK

MMK Facilities in Turkey

11

23,4 7,9 17,5 5,2 >30 >30 >30 10-12 10 20 30 40 5 10 15 20 25 Chertinskaya- Koksovaya Chertinskaya- Yuzhnaya Kostromovskaya Novobachatsky Operational reserves, mt Reserves life (RHS), years 3,6 4,1 4,0 4,0 2,5 3,0 3,2 3,3 1 2 3 4 5 2009 2010 2011 2012 m tonnes Coking coal production Concentrate production

Coal Segment

Belon is one of Russia’s largest coal producers

Belon Group comprises coal mining and processing assets  Located in Belovo, Kemerovo Region, Russian Federation  Assets include

• 3

underground mines: Chertinskaya-Koksovaya, Chertinskaya-Yuzhnaya and Kostromovskaya

• 1 open pit mine: Novobachatsky
• Belovskaya coal washing plants with production capacity of

6.2mt of coal  Aggregate output: 4.0 mt of coking coal and 3.3 mt of coal concentrate  Covered 36% of Group‟s requirements in 2012  MMK Group holds 82.6% stake in Belon

• –
• –

Integration in Coking Coal

 company‟s

• Source: MMK

Source: MMK

MMK Coal reserve life vs. operational reserves (as of 2012)

• Acquisition of Belon

Acquisition cost USD 0.543 bn Market Russia Profile Growing producer of high-quality coal Capacity, mtpy coking coal 4.0 in 2012, 6.2 by 2017 Rationale Vertical integration and higher profitability 4.0 in 2012,

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

13

10,0 12,0 14,0 16,0 18,0 20,0 22,0 24,0 1 6 11 16 21 26 31 36 41 46 51 2013 2012 2011 2010

1306 1385 1430 1475 1523 1200 1300 1400 1500 2010 2011 2012 2013e 2014e

Global Steel Industry Highlights

World Steel Consumption, mln tonnes Chinese Steel Inventory Level vs. Steel Price, mln tonnes Chinese Average Daly Steel Production, mln tonnes Chinese Historical Steel Inventory Levels 2010 – 2013, mln tonnes

6,1% 3,3% 3,1%

World steel consumption continues to grow After significant hike in early 2013 inventory levels are close to their average historical values

Source: MySteel Source: WSA Source: MySteel Source: NBS

3,3% 1,5 1,6 1,7 1,8 1,9 2,0 2,1 2,2 2,3 Jan Mar May Jul Sep Nov

2011 2012 2013

300 350 400 450 500 550 600 650 10 12 14 16 18 20 22 24

06.01.12 06.04.12 06.07.12 06.10.12 06.01.13 06.04.13 06.07.13 06.10.13

Inventory (LHS) HRC EXW, $/t Re-bar EXW, $/t

14

• 6,6
• 2,8

0,1 0,4

• 5,4
• 1,6

0,4 1,0

• 5,0
• 0,8

0,5 1,4

• 4,3

0,3

• 0,2

1,7

• 7,0
• 6,0
• 5,0
• 4,0
• 3,0
• 2,0
• 1,0

0,0 1,0 2,0 Hot-rolled steel Long product Thick plate Coated steel 2009 2010 2011 2012

Key markets fundamentals: Russia

Market with significant growth potential

Sources: Metal Expert

Russian Steel Consumption in MMK’s Product Mix, mln tonnes Russian Steel Consumption Growth by Industry

Source: Metal Courier, ММК

Russian Import / Export Balance, mln tonnes

Source: Metal Expert, MMK

Russia remains net exporter of

• rdinary steel, while shortage of

HVA products persists

Russia is one of key exporters due to strong cost advantage

• Largest reserves of the low cost raw materials
• Integrated steel players
• Modern facilities
• Geographic proximity to developed markets

Growth of domestic market

• Domestic steel demand is increasing driven by construction,

machine building and energy sectors

• Growth in FAI envisaged: current depreciation level

is 80%

• Further infrastructure development required
• Delayed consumption of 90-s

32 34 36 38 40 42 44 2011 2012 2013e 2016e

Russian steel consumption in MMK‟s product mix is expected to grow c.15% by 2016 from 2012 level

6,1%

• 5,9%

2,8% 2,8% 9,7% 7,7% 4,1% 11,3% 7,1% 1,3% 13,0% 13,3%

• 10,0%
• 5,0%

0,0% 5,0% 10,0% 15,0% Pipe making Auto making Ship building 2013e 2014e 2015e 2016e

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

16

Strategic Objectives of MMK Group

Focus on organic growth 1 Emphasized direct exposure to niche segments 2 Maximising share of domestic sales 3 Maintaining good progress achieved in self-sufficiency 4 Achieving quality balance sheet 5

17

20% 30% 40% 50% 60% 70% 2 000 4 000 6 000 8 000 10 000 2010 2011 2012 2013E MMK HVA products share 14% 13% 15% 20% 11% 10% 12% 17% 9% 8% 7% 8% 54% 54% 49% 39% 10% 14% 16% 15% 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013Е Downstream products Flat cold-rolled products Thick plate (Mill 5000) Flat hot-rolled products Long products Slabs and billets

Focus on organic growth

…with increasing share of high value added products in MMK production

MMK Steel Output Growth, th. tonnes

Source: MMK

MMK Increasing Share of HVA Products, th. tonnes

Source: MMK Source: MMK

1

Source MMK

HVA Products

>45 %

MMK Finished Product Output, %

HVA 5 000 7 000 9 000 11 000 13 000 2010 2011 2012 2013E

18

248 195 245 244 100 120 140 160 180 200 220 240 260 Q1 Q2 2012 2013 1 000 2 000 3 000 4 000 2011 2012 2013E 2014E 2015E 2016E 2017E Domestic demand Domestic supply Estimated LDP export

Emphasized direct exposure to niche segments

Mill 5000 - Strong positions in Pipe sector

LDP Demand/Supply in Russia, th. tonnes

Source Metal Expert, Broker reports

Geography of Main Pipelines

Demand for LDP remains strong

* - Incl. Pochinki-Gryazovets and Bovanenkovo-Uhta

2

Mill 5000 Utilization rates, th. tonnes

Source: MMK, Broker Reports

Higher demand for thick plate in H1 2013 supports Mill 5000 utilization rates

19

9 940 5 496 3 686 2 024 1 919 1 891 1 532 1 058 976 642 623 2 000 4 000 6 000 8 000 10 000

Emphasized direct exposure to niche segments

Strengthening position in Auto industry

Key Mill 2,000 specifications Light Vehicle Production in 2012, ‘000 units

Source: IHS Autoinsight

Mill 2000 commercial products output ramp-up, th. tonnes

Russia is on the way to diminish the lag to developed countries

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

2

High Strength Steels Use

Source TIPSA

Mild Steel 30.8% UHSS 9.1% HSS 44.5% AHSS 15.6%

10 20 30 40 50 60 70 80 90 January March May July September December 2012 2013

20 MMK Domestic and Export Sales, mln tonnes

Source MMK

Domestic Sales by Region, 2012

Source MMK

Maximising share of domestic sales

... in order to enhance profit margins and reduce exposure to the seaborne market 3

2,1 8,4 3,7 2,6 2 4 6 8 1996 1998 2000 2002 2004 2006 2008 2010 2012

Domestic market (Russia + CIS) Export MMK organically grows its share in Russian market while demand in export markets remains sustainable MMK is located in most intensive steel consuming region of Russia Pipe production 26,3% Spot sales in Russia 23,7% Spot sales in CIS 10,9% Construction sector 12,5% Machine building 10,9% Metalware and semi-integrated factories 9,3% Automobile sector 4,6% Food industry 0,6% Fuel and energy companies 0,4% Bridge building 0,8%

H/r steel 40% Long steel products 20% Thick plate 9% Coated & Downstream products 18% C/r steel 13%

Domestic Sales Structure, 2012

Source MMK 2012 reports

Domestic Sales by Sector, 2012

HVA Products, 40%

Total: 8,449 kt Total: 8,449 kt

Source MMK 2012 reports

21

MMK has been active in terms of increasing the level of vertical integration, particularly in respect of raw materials, since its IPO

• Acquisition of 100% share in “Profit” scrap company in June 2009
• Increase of stake in Belon coal company to 82.6% in October 2009
• Increase of in-house production of iron ore (mining and tailings processing)
• Generation of 71.5% of electricity supplies in 2012

Maintaining good progress achieved in self-sufficiency

Levels remain balanced across all business segments

2007 Self-sufficiency Level, %

Source MMK

Impressive progress has been achieved over the past 5 years 2012 Self-sufficiency Level, %

Source MMK

4

10% 85% 90% 100% 100% 15% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased 22% 36% 100% 72% 78% 64% 28% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased

22

62,2% 60,3% 59% 60% 61% 62% 63% 2011 2012 Raw materials cost /Revenue

Achieving quality balance sheet

Continuous deleveraging 5

• The group of focussed on achieving quality balance sheet

by continuous deleveraging

• MMK has adopted a debt tolerance principle of Total Debt

/ EBITDA <=2x at any time through the cycle

• In order to manage its leverage at a comfortable level

within the limit, MMK can use the following levers:  Capex revision by almost half y-o-y  Limitation of M&A activity  Improving operating performance led by cost cutting initiatives  Sustainable cash-flow due to improved operational performance (including cost effects)

Healthy deleveraging is combined with EBITDA growth

Source MMK annual and semi-annual reports

Portion of raw material costs is falling, USD/tonne

Source MMK

CAPEX has dropped by almost half (Y-o-Y)

Source MMK

0,6 0,7 1,2 2,1 1,6 2,2 1,2 0,6 0,0 0,5 1,0 1,5 2,0 2,5 2005 2006 2007 2008 2009 2010 2011 2012 CAPEX (USDbn)

1 336 1 215 1 356 1 241 3,31 3,04 2,86 2,69 2,66 2,86 3,06 3,26 3,46 500 1 000 1 500 31.12.2011 30.06.2012 31.12.2012 30.06.2013 EBITDA Gross Debt/EBITDA (RHS)

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

24

Financial Highlights

Demonstrating relative financial strength

Summary of key results MMK Group Financials, USD mln

Source MMK

Revenue growth continued into 2012, USD mln

Source MMK

H1 2013 2012 2011 2010 Crude steel output, kt 6,154 13,037 12,195 11,419 Finished steel, kt 5,686 11,936 11,158 10,409 Revenues, $ mln 4,444 9,328 9,306 7,719 EBITDA*, $ mln 547 1,356 1,336 1,606 EBITDA margin, % 12,3% 14.5% 14.4% 20.8% Net profit, $ mln

• 136
• 94
• 125

232 Net margin, %

• 3.1%
• 1.0%
• 1.3%

3.0% Assets, $ mln 14,284 16,292 16,295 16,738 Debt**, $ mln 3,343 3,880 4,416 3,548 short-term 1,450 1,631 1,334 1,087 long-term 1,883 2,249 3,082 2,461 Shareholder capital, $ mln 8,631 9,665 9,289 10,257 Cash, $ mln 164 362 424 515 Net debt, $ mln 3,179 3 518 3 992 3 033 Debt / EBITDA (x) 2,69 2,86 3,31 2,21

* - EBITDA means, for any year, the consolidated profit from operations for that year as would be reflected

• n the Consolidated Statement of Comprehensive Group Income prepared in accordance with the

International Accounting Standards, as consistently applied, adjusted by adding: a) the amount for the Group‟s depreciation and amortisation for the relevant year; b) the amount of loss on disposal of property, plant and equipment and amount of impairment of fixed assets; and c) the share in the results and impairment of associates

5 081 7 719 9306 9328 1 309 1 606 1336 1356

• 500

1 500 3 500 5 500 7 500 9 500 11 500 2009 2010 2011 2012 Revenues EBITDA

** - Debt represents sum of short-term borrowings, long-term borrowings including current portion, obligations and under finance lease and fair value of interest rate swaps.

2425 2516 2319 2068 2283 2161 293 369 398 296 256 291

12,1% 14,7% 17,2% 14,0% 11,2% 13,5%

5% 9% 13% 17% 21% 500 1000 1500 2000 2500 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13

Revenues EBITDA EBITDA margin (RHS)

25

Prudent Financial Policy

Debt Tolerance Target leverage <= 2.0x through the cycle Management’s commitment to Gross Debt/ EBITDA below 2x on a long-term basis Key management considerations CAPEX In accordance with leverage target Flexible Capex which can be adapted to market conditions Funding of the planned CAPEX mostly with internal cash flow Flexibility to revise CAPEX to bring it down to maintenance only (below USD300 mln) Liquidity and debt management Cash on hand Available committed lines Good relationship with banks and willingness to enter the bond market as an alternative source of funding Keep cash on balance sheet of USD362m at the end of 2012 Available bank lines amount to USD1.3bn as of 2012YE M&A Focus on organic growth Management is focused on organic growth and does not envisage external growth Dividends 20% payout ratio Commitment to 20% payout ratio, can be soften in case of stressed financial profile. Additional liquidity 5% stake of Fortescue Metals Group The Group holds liquid stock on its balance sheet, i.e. 5% of Fortescue Metals Group shares, currently worth close to USD800m Principles Accounting IFRS as external and internal standard Independent Audit Use of IFRS Risk Management Regular monitoring Regular monitoring and active management of various risks

26

925 (1 154) 879 519 427 (347) (576) 314 (674) (4) (222) 201

• 800
• 600
• 400
• 200

200 400 600 800 1000 1200 1400 FFO 2011 WoC PPE FCF 2011 FFO 2012 WoC PPE FCF 2012 FFO H1 2013 WoC PPE FCF H1 2013

MMK Free Operating Cash Flow Generation

Sound Free Operating Cash Flow Generation to support deleveraging

Free Operating Cash Flow Generation Bridge 2011 – H1 2012, USD mln

• Despite the difficult economic conditions and unlike in prior years, MMK generated strong FCF in 2012 and H1

2013

• MMK expects to continue generating sound level of free cash flow that will support the deleveraging objectives
• f the Company

H1 2013 FY 2012 FY 2011

Note: FFO = cash flow from operations before change in working capital and after tax on interest paid FCF excludes other investing and financing items PPE: property, plant and equipment

• 1. MMK at a Glance
• 2. Business Overview
• 3. Industry Overview
• 4. Strategic overview
• 5. Financial overview
• 6. Appendix

Table of contents

500 1000 1500 2000 2500 3000 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13

High value-added (HVA) products Flat hot-rolled products Long products Slabs and billets

28

Key operational indicators

• MMK Group finished products output in Q2

2013 is at the level of Q1 and amounted to 2.8 mln tonnes

• Q2 2013 MMK Group HVA products output

amounted to 1,382 ths. tonnes, 2.0% higher q-

• -q
• Belon's production of coking coal concentrate

in Q2 2013 was 829 ths. tonnes, 24% higher q-

• -q

OJSC MMK finished products sales are supported at high level, th. tonnes

Growth Output Driven by HVA Products

Q2 '13 Q1 '13 % H1 '13 H1 '12 % Cast iron

2 466 2 426 2% 4 892 5 037

• 3%

Crude steel incl.

3 079 3 075 0,1% 6 154 6 711

• 8%

MMK

3 079 3 075 0,1% 6 154 6 129 0,4%

MMK Metalurji

• 582
• OJSC MMK Finished products output

2 757 2 744 0,5% 5 501 5 542

• 0,7%

MMK-Metiz finished products*

146 134 9% 280 251 12%

ММК Metalurji finished products*

168 178

• 6%

346 538

• 36%

Belon coking coal concentrate

829 669 24% 1 498 1 537

• 3%

* - incl. made from MMK's steel

2162 2055 175 160 88 102

• 142
• 156
• 200

300 800 1300 1800 2300

Q1 2013 Q2 2013 Steel (Russia) Steel (Turkey) Coal Eliminations

MMK Group Revenue, USD mln

29

EBITDA and EBITDA margin, USD mln ММК Group financial highlights, USD mln

• Sales in Q2 2013 decreased 5,3% q-o-q and totaled USD

2,161 mln.

• Cost of sales in Q2 2013 decreased by 6.8% q-o-q and

equaled USD 1,834 mln. This decrease was mostly due to weaker Iron ore and coking coal prices at the beginning of 2013

• MMK Group Q2 2013 EBITDA increased by 13,7% q-o-q and

equaled USD 291 mln, securing EBITDA margin of 13.5%

MMK Group Q2 2013 Financial Highlights

Q1 2013 Q4 2012 +/- % Revenue 2 161 2 283

• 122
• 5,3%

Cost of sales

• 1 834
• 1 968

134

• 6,8%

Operating profit 25 1 24

• EBITDA

291 256 35 13,7% EBITDA margin 13,5% 11,2%

USD 2 283 mln USD 2 161 mln 256 291 11,2% 13,5% 10,0% 11,0% 12,0% 13,0% 14,0% 15,0%

100 200 300 Q1 2013 Q2 2013

EBITDA EBITDA margin (RHS)

OJSC MMK material costs; 1282 Other Group Companies; 160 Labour costs; 232 Amortisation; 237 Others; 50 Change in uninvoiced products balance;

• 127
• 200

300 800 1 300 1 800 Q2 2013

ММК Group operational costs

ММК Group operational costs, USD mln

30

OJSC ММК material costs structure Cost of sales structure, USD mln

Q2 2013

ММК Group Operating Costs and Cost of Sales Structure

Iron ore (sinter) 16% Iron ore (pellets) 14% coals 20% Scrap 14% Other main materials 14% Auxiliary materials 11% Fuel from

• utside

sources 8% Pow er from

• utside

sources 3%

Q2 2013

Q2 13 Q1 13 +/- % Cost of sales 1 834 1 968

• 134
• 6,8%

Selling and distribution expenses 139 172

• 33
• 19%

General and administrative expenses 140 133 7 5% Other operating (expenses)/income, net 23 9 14 156% Total operating costs 2 136 2 282

• 146
• 6%

85,9% 6,5% 6,6% 1,1%

Q2 2013

Cost of sales Selling and distribution expenses General and administrative expenses Other operating (expenses)/income, net

32% 25% 23% 24% 68% 75% 77% 76% 0% 25% 50% 75% 100% 2010 2011 2012 H1 2013

Secured Unsecured

1336 1215 1356 1319 1241 3,31 3,04 2,86 2,75 2,69

2,67 2,87 3,07 3,27 3,47 300 600 900 1200

31.12.2011 30.06.2012 31.12.2012 31.03.2013 30.06.2013

EBITDA (LTM) Debt/EBITDA (RHS)

1 449 777 543 262 301 400 800 1 200 1 600 1-st year 2-nd year 3-rd year 4-th year 5-th year and beyond 32% 45% 23%

30.06.2013

RUR USD Euro

Debt structure dynamics by security Debt maturity profile*, USD mln Effective Debt control, USD mln

31

Debt structure by currency

3,343 USD mln

MMK Group Debt Profile

* Interest rate SWAP not incl.