OREANDA-NEWS. July 2, 2008. OAO Severstal (“Severstal”) began preparatory works at a future construction site for the Balakovo Long Product Plant in Balakovo (Saratov Oblast) by creating a circular greenbelt around the site. When complete, the US\\$85.3m environmental project will provide for waste treatment facilities and nature protection measures, including a modern gas treatment system and the creation of a closed-circuit water circulation system.

Construction of the Plant will begin upon completion of environmental audits undertaken by the Government and independent experts, and will create 800 new jobs for inhabitants of the district.

Anatoly Kruchinin, Head of Severstal Russian Steel said: “Environmental and social aspects are very important to Severstal. We look forward to the results of the two environmental audits and beginning work on this project in earnest.”

Severstal – Balakovo Long Product Plant CJSC is 100%-owned by Severstal. In July 2007, the Government of the Saratov Oblast and Severstal signed an agreement on the implementation of the investment project. In November 2007, OAO Severstal and the administration of Balakovo Municipal District signed an agreement on lease of the land lot for the construction of the Plant which would manufacture long products for use in the construction industry. The Lot covers 857.5 acres and is located in the Bykovo-Otrogsky Municipality. The Permit for the preparatory works was issued in April 2008. Projected capacity of the Plant is 1 million tonnes of rolled products a year. Investments in the project will exceed US\\$600m, and 800 new jobs will be created. The Plant is planned to be put into operation in 2010.

Severstal Russian Steel is one of Russia’s largest steel producers. It operates a full cycle integrated iron and steel mill and a large diameter pipe plant for products sold in the Russian and international markets. It also has a number of plants in Russia, Ukraine and the UK which take long products from both SeverStal and external suppliers and turn them into higher value added products for sale in international markets. In 2007, 11.9m tonnes of steel were produced and 10.9m tonnes of products were sold. Net profit was US\\$1,648m, EBIDTA rose 26.8% to US\\$2,530m. The Programme for development of Severstal Russian Steel division for the period up to 2011 provides for investments in the amount of US\\$6bn.