MMK Corporate Presentation February 2015 DISCLAIMER THIS - - PowerPoint PPT Presentation

MMK Corporate Presentation

February 2015

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

3

• 2. Business Overview 8
• 3. Strategic overview

12

• 4. Financial overview

20

• 5. Appendices 24

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 82% of total sales (as of FY2014)  MMK benefits from premium pricing with respect to domestic sales - 132 USD/tonne in FY2014 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 – USD308 per tonne (as of Q3 2014)  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. 690 th tonnes of steel products output in 2014 3.7 mln tonnes of coking coal mined in

• 2014. Covered 37% of

MMK needs in coal concentrate in 2014

MMK Metalurji Belon

One of Russia’s largest hardware producers. 508 th. tonnes produced in 2014.

ММК Metiz Profit

Covers 100% of MMK scrap needs. ММК trading house 82% >1% 10% 6% 1%

ММК (2014)

Leading producer of rolled products in Russia 13.03 mln tonnes of steel 11.65 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

78 162 150 156 225 158 190 243 231 177 132 50 100 150 200 250 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

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, 2014

Source: MMK reports Source: MMK

Domestic price premium makes Russian market attractive

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

Total: 11,650 kt

Russia 72% CIS 10% Middle East 10% Europe 6% Africa 1% Americas 1%

69% 67% 77% 84% 82% 31% 33% 23% 16% 18% 0% 25% 50% 75% 100% 2010 2011 2012 2013 2014 Domestic Exports

7

18% 37% 100% 69% 82% 63% 31% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased

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, 2014  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, USD/tonne

Source: MMK Source: MMK

MMK MMK (Belon) MMK (Profit) MMK

450 495 490 459 442 413 385 374 399 385 363 356 337 322 308 300 400 500 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 459 442 413 385 374 399 385 363 356 337 322 308 40 80 120 160 200 100 200 300 400 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Slab Cash-cost Scrap Iron ore (RHS) Pellets (RHS) Coal (RHS)

• 1. MMK at a Glance

3

• 2. Business Overview 8
• 3. Strategic overview

12

• 4. Financial overview

20

• 5. Appendices 24

TABLE OF CONTENTS

9

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 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
• –
• –
• MMK’s Russian steel segment finished products composition, 2014FY

–

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: 11,650 th. tonnes

prospectus: ‘

• f volume …

Slabs 1% Long steel products 16% H/r steel 46% Thick plate 8% C/r steel 12% Downstream products 17%

10

Hotrolled steel 9% Galvanized flat products 55% Color-coated rolled products 36%

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

• ther 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 of 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, 2014FY

Source: MMK operational results

• Text comes from Moody’s
• Total: 690 th. t
• Source: MMK

MMK Facilities in Turkey

HVA Products, 91%

11

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

• Belovskaya coal washing plants with production capacity of

6.2mt of coal  Aggregate output: 3.7 mt of coking coal and 2.9 mt of coal concentrate in 2014  Covered 37% of Group’s requirements in 2014  MMK Group holds 95% stake in Belon

• –
• –

Integration in Coking Coal

 company’s

• Source: MMK

Source: MMK

MMK Coal reserve life vs. operational reserves (as of 2013)

• 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

17,5 23,4 7,9 >30 >30 >30 5 10 15 20 25 30 35 Kostromovskaya Chertinskaya-Koksovaya Chertinskaya-Yuzhnaya Operational reserves, mt Reserves life (RHS), years

4

3,6 4,2 4,2 4,0 3,6 3,6 2,5 3,0 3,2 3,3 2,9 2,9 1 2 3 4 5 2009 2010 2011 2012 2013 2014 Coking coal production Concentrate production

• 1. MMK at a Glance

3

• 2. Business Overview 8
• 3. Strategic overview

12

• 4. Financial overview

20

• 5. Appendices 24

TABLE OF CONTENTS

13

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

14

18% 19% 23% 27% 26% 11% 9% 11% 14% 12% 13% 10% 10% 11% 11% 50% 50% 45% 37% 40% 6% 9% 10% 12% 11% 0% 20% 40% 60% 80% 100% 2010 2011 2012 2013 2014

Downstream products Flat cold-rolled products Thick plate (incl. Mill 5000) Flat hot-rolled products Long products Slabs and billets

5 000 10 000 2010 2011 2012 2013 2014

ММК MMK Metalurji

0% 10% 20% 30% 40% 50% 60% 70% 2 000 4 000 6 000 8 000 10 000 12 000 2010 2011 2012 2013 2014 MMK MMK Metalurji HVA products share

MMK Group Steel Output Growth, th. tonnes

Source: MMK

MMK Group Increasing Share of HVA Products, th. tonnes

Source: MMK Source: MMK Source MMK

HVA Products

45%

MMK Group Finished Product Output, %

HVA 11 419 12 195 13 037 11 941 11 060 11 937 11 158 10 409 12 158 13 031

FOCUS ON ORGANIC GROWTH

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

1

15 1,8 1,7 2,6 2,4 2,5 4,5 4,8 5,1 4,3 4,6 1 2 3 4 5 6 2012 2013 2014 2015E 2018E Deamand for LDP Demand for MDP

799 843 924 200 400 600 800 1 000 2012 2013 2014

EMPHASIZED DIRECT EXPOSURE TO NICHE SEGMENTS

Strong positions in Pipe sector

LDP & MDP Demand in Russia, m tonnes

Source Metal Expert, Broker reports

MMK Share in Supplies to Russian Pipe Industry in 2014

Demand for LDP remains strong

2

Mill 5000 Production Dynamics, th. tonnes

Source: MMK

Higher demand for thick plate in 2014 supported Mill 5000 utilization rates +5,5%

Product Mix Supplied to Pipe Industry in 2013-2014, th. tonnes

Source: MMK Source: MMK

1 488 543 100 71 1 764 757 121 105 500 1 000 1 500 HRC Thick Plate (m. 5000) H/r Plate CRC 2013 2014

+9,6%

Import; 9% MMK; 40% Others; 51%

MMK was the biggest supplier to Russian pipe industry in 2014

16

Pipe production 29,1% Spot sales in Russia 25,0% Spot sales in CIS 12,6% Construction sector 9,2% Machine / Railcar building 9,7% Metalware and semi- integrated factories 9,2% Automobile sector 3,6% Ship building 0,8% Bridge building 0,5% Other 0,5%

H/r steel 39% Long steel products 19% Thick plate 10% Coated & Downstream products 20% C/r steel 12% 2,1 9,6 3,7 2,1 2 4 6 8 10 1996 2000 2004 2008 2012

Domestic market (Russia + CIS) Export

MMK Domestic and Export Sales, mln tonnes

Source MMK

MMK Domestic Sales by Region, 2014

Source MMK

MAXIMISING SHARE OF DOMESTIC SALES

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

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

MMK Domestic Sales Structure, 2014

Source MMK

MMK Domestic Sales by Sector, 2014

HVA Products, 42%

Total: 9,588 kt Total: 9,588 kt

Source MMK

17

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 and to 95% in September 2013
• Increase of in-house production of iron ore (mining and tailings processing)
• Generation of c. 69% of electricity supplies in 2014

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 2014 Self-sufficiency Level, %

Source MMK

4

10% 85% 90% 100% 100% 15% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased 18% 37% 100% 69% 82% 63% 31% 0% 25% 50% 75% 100% Iron Ore Coal Scrap Electricity Own Purchased

18

697 1 216 2 112 1 613 2 209 1 154 674 622 500 1 000 1 500 2 000 2 500 2006 2007 2008 2009 2010 2011 2012 2013

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, mln USD

Source MMK annual and semi-annual reports

Adequate liquidity, mln USD

Source MMK

CAPEX has dropped by more than 3 times from its peak, mln USD

Source MMK

3 992 3 518 3 026 2,99 2,59 2,47 2,00 3,00 1 000 2 000 3 000 4 000 31.12.2011 31.12.2012 31.12.2013 Net Debt Net Debt / EBITDA (RHS) 154 1 010 1 813 801 1 000 2 000 3 000 Available Liquidity Short-term Debt Cash Credit Lines FMG Stake

• 1. MMK at a Glance

3

• 2. Business Overview 8
• 3. Strategic overview

12

• 4. Financial overview

20

• 5. Appendices 24

TABLE OF CONTENTS

20

FINANCIAL HIGHLIGHTS

Demonstrating relative financial strength

Summary of key results MMK Group Financials, USD mln

Source MMK

Revenue growth continued into 2013, USD mln

Source MMK

2013 2012 2011 2010 Crude steel output, kt 11,941 13,037 12,195 11,419 Finished steel, kt 11,060 11,937 11,158 10,409 Revenues, $ mln 8,190 9,328 9,306 7,719 EBITDA, $ mln 1,223 1,356 1,336 1,606 EBITDA margin, % 14.9% 14.5% 14.4% 20.8% Net profit, $ mln

• 2,429
• 94
• 125

232 Net margin, %

• 29.7%
• 1.0%
• 1.3%

3.0% Assets, $ mln 14,406 16,292 16,295 16,738 Debt, $ mln 3,180 3,880 4,416 3,548 short-term 1,010 1,631 1,334 1,087 long-term 2,170 2,249 3,082 2,461 Shareholder capital, $ mln 6,828 9,665 9,289 10,257 Cash, $ mln 154 362 424 515 Net debt, $ mln 3,026 3 518 3 992 3 033 Net Debt / EBITDA (x) 2,47 2,86 3,31 2,21

5 081 7 719 9 306 9 328 8 190 1 309 1 606 1 336 1 356 1 223

• 500

1 500 3 500 5 500 7 500 9 500 11 500 2009 2010 2011 2012 2013 Revenues EBITDA 2 283 2 161 1 877 1 869 1879 2211 2135 381 297 233 312 294 399 522

16,7% 13,7% 12,4% 16,7% 15,6% 18,0% 24,4%

0% 4% 8% 12% 16% 20% 24% 28% 500 1 000 1 500 2 000 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Revenues EBITDA EBITDA margin (RHS)

21

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 USD154m at the end of 2013 Available bank lines amount to USD1.8bn as of 2013YE 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, worth close to USD800m as of the end of 2013 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

22

925 879 519 833 347 1 154

• 576

314 674 99 622 310

• 800
• 600
• 400
• 200

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

MMK FREE OPERATING CASH FLOW GENERATION

Sound Free Operating Cash Flow Generation to support deleveraging

Free Operating Cash Flow Generation Bridge 2011 – 2013, USD mln

• Despite the difficult economic conditions and unlike in prior years, MMK generated strong FCF in 2012 and 2013
• MMK expects to continue generating sound level of free cash flow that will support the deleveraging objectives of the

Company

FY 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

3

• 2. Business Overview 8
• 3. Strategic overview

12

• 4. Financial overview

20

• 5. Appendices 24

TABLE OF CONTENTS

24

HISTORICAL EBITDA PERFORMANCE

Source: ММК

EBITDA Performance by Years, m USD

• EBITDA performance shows that the bottom of the cycle has been passed.
• Q3 2014 EBITDA is the highest for the last several years.
• The process of adding new steel making capacities globally is slowing down which should result in recovery of the steel industry

due to higher capacity utilization rates. EBITDA Performance by Quarters, m USD

25

Key production indicators, ths tonnes Growth in MMK Group steel, th tonnes

HIGH LEVEL OF CAPACITY UTILISATION

Source: ММК

• MMK Group finished steel products output in 9M 2014 was

up 11.4% y-o-y. This growth was driven by import substitution on the Russian market.

• MMK Group High Value Added (HVA) steel products
• utput in 9M 2014 was up 3% y-o-y. However, the share
• f HVA products in total output volume decreased to

44.6% due to significant growth in sales of HRC to export markets.

• MMK Group total capacity utilization rate stood at 90%.

Main underutilized capacities were EAFs and not many remaining not modernized HRC and CRC rolling mills.

Main Capacities Utilization Rates, %

Q3 '14 Q2 '14 % 9M '14 9M '13 % Cast iron 2 629 2 571 2% 7 804 7 223 8% Crude steel incl. 3 381 3 390

• 0,3%

9 959 9 027 10% MMK 3 381 3 390

• 0,3%

9 959 9 027 10,3% MMK Metalurji

• Finished products

3 131 3 227

• 3%

9 277 8 329 11% MMK 2 996 3 056

• 2,0%

8 874 8 069 10,0% MMK-Metiz* 142 145

• 2%

406 419

• 3%

ММК Metalurji* 184 185

• 0,5%

518 490 6% HVA products 1 420 1 433

• 0,9%

4 134 4 017 3% Belon coking coal concentrate 672 672 0% 2 572 2 757

• 7%

* - incl. made from MMK’s steel 100% 91% 99% 97% 74% 96% 100% 90% 60% 80% 100% Blast Furnace Steel Long Steel HRC CRC

• Galv. products

MMK Metalurji Total capacity utilization

828 914 829 783 772 744 712 700 699 672 637 637 589 633 668 601 614 601 558 517 528 486 473 483 498 481 482 474 473 493

200 400 600 800 1 000

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Russia and CIS market Export

MMK’s average price, USD/tonne

26

OJSC MMK AVERAGE PRICES BY MARKETS

Source: ММК

• Due to the high share of more expensive HVA products in MMK’s domestic sales, the difference between average domestic price

and average export price in Q3 2014 recovered to 175 USD per tonne, but is still below 2011-2012 levels.

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 227 300 228 225 255 216 226 227 216 174 156 155 115 160 175

Δ between average domestic and export price

322 308

• 10
• 3
• 1

100 150 200 250 300 350 Slab cash-cost Q2 2014 Raw materials price Raw materials structure Other factors* Slab cash-cost Q3 2014 27

Q2 2014 free cash flow, million USD Slab cash-cost trends, USD/tonne

40

ANALYSIS OF KEY FINANCIAL HIGHLIGHTS

Source: ММК

* - fuel and power, services, payroll, etc.

• 4.3%
• Net profit for Q3 2014 amounted to USD 26 million, resulting in a profit

for 9M 2014 of USD 106 million.

• During 2014, net profit was mainly affected by non-cash FX effect.

Excluding this factor, net profit was USD 222 million in Q3 2014, and USD 334 mln in 9M 2014.

• Cash cost of slab in Q3 2014 decreased by 4.3% q-o-q due to lower

prices for key raw materials and cost optimisation.

• Efficient working-capital management and moderate capex allow MMK

Group to generate a significant free cash flow.

Net profit/loss y-o-y, million USD

1 215 858 465

• 79
• 278
• 393

200 400 600 800 1 000 1 200 EBITDA WoC Net financial cost, tax, etc. FFO PPE FCF 9m '14

28

ММК GROUP DEBT PROFILE, MLN USD

Source: ММК

• Net debt at the end of 9M 2014 was USD 673 million lower compared to the end of 2013.
• Net debt/EBITDA ratio as of the end of 9M 2014 decreased to 1.54x, which is already lower than the level considered to be comfortable

for the company.

4 416 3 880 3 180 3 199 2 735 3 992 3 518 3 026 2 702 2 353 3,0 2,6 2,5 2,2 1,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 1 000 2 000 3 000 4 000 31.12.2011 31.12.2012 31.12.2013 30.06.2014 30.09.2014 Total Debt Net Debt Net Debt/EBITDA (RHS)

Debt repayment, million USD Liquidity profile, million USD

29

MMK GROUP DEBT PROFILE

Source: ММК 2,165

Reduced debt burden, million USD

973

• Dollar-denominated debt prevails in the debt structure with a 53%

share.

• Volume of liquid funds in the MMK Group’s balance sheet exceeds the

short-term debt.

• Debt maturity schedule does not presume any significant one-time

payments. USD 53% EUR 20% RUB 27%

Debt C&CE

2 735 m USD 382 m USD

929 552

1 216 2 112 1 613 2 209 1 154 674 622 500 1 000 1 500 2 000 2 500 2007 2008 2009 2010 2011 2012 2013 2014F

ММК Group 2014 CAPEX reduction, million USD

30

ММК Group CAPEX, million USD

MMK GROUP CAPEX

Source: ММК

Depreciation reduction, million USD

Maintenance

≈550-600

• In Q3 2014, MMK Group’s capex amounted to USD 112 million, down

25.3% q-o-q.

• Depreciation for 9M 2014 amounted to USD 594 million, down more

than 18% y-o-y.

130 91 130 270 131 150 112 100 200 300 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14

393 m USD 246 242 237 244 184 202 208 50 100 150 200 250 300 Q1 '13 Q2 '13 Q3 '13 Q4 '13 Q1 '14 Q2 '14 Q3 '14 Depreciation Average level for 2013