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Russia's leading steel producer Magnitogorsk Iron and Steel Works to acquire MMK-Atakas

Russia's leading steel producer, Magnitogorsk Iron and Steel Works or MMK announced it had signed a share purchase agreement to acquire 50 per cent minus one share of MMK-Atakas from the Atakas Family. Under the agreement, Magnitogorsk Iron will pay an estimated US$ 485 million. Thus, MMK will be able to consolidate 100% shares in the Company. The transaction is expected to be completed by November 01, 2011. The completion is subject to obtaining necessary permissions and approvals.

MMK Chairman of the Board, Victor Rashnikov, said consolidation of the 100% control in MMK-Atakas by MMK is part of the MMK strategy aimed at establishing the MMK Group presence on the key and rapidly growing markets in Russia and Middle East, primarily in Turkey. Consolidation will ensure more efficient management of the Company and help capitalize on the promising Turkish market of flat rolled products, he said.

The construction of the plant began in March 2008. The project’s two sites, located in Iskenderun and Istanbul, will have the full capacity of 2.3 million tons per year of rolled flats. The total investments are estimated at approximately $2.1 billion.

At the moment, the complex operates an electric arc furnace facility, a cold-rolling facility, a hot-dip galvanizing unit and a color coating line located in Iskenderun plus two service centers in Iskenderun and Istanbul. It also includes a sea port capable of catering ships of up to 100,000 dwt which significantly expands the plants export capacity and facilitates supplies of raw materials for steel production.

OJSC 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 2010, the MMK Group produced 11.4 million tons of crude steel and 10.4 million tons of commercial steel products.

The Group's revenue in 2009 stood at USD 5.081 billion, with Earnings Before Interest, Tax, Depreciation and Amortization at US$1.285 billion and net profit at US$219 million.   The share of value-added products of the MMK Group of companies in 2010 was 38% (compared to 31% in 2009), rising to 42% in the 4th Quarter of 2010, an all-time high for the Company.

14th March 2011

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