OREANDA-NEWS. February 17, 2010. Severstal, one of the world’s leading steel and mining companies, with key assets in Russia, the US and Europe, today announces a USD 1.4 billion capital investment programme for the current financial year.

Investment will be focused on key strategic projects across the Company’s operations to increase efficiency whilst further improving product quality, customer satisfaction and health and safety. In addition to the new investment projects we will continue to implement ongoing initiatives aimed at upgrading and improving our facilities.

In 2010 the total amount of investment at Severstal Russian Steel will be approximately USD 685mln and will include the following key projects: at Balakovo the greenfield construction of a mini-mill; at Sheksna the launch of the weld pipe mill and; at Kaluga and St. Petersburg the opening of new service centers; construction of a second colour coating line, the increase of electricity generation capacity and the reconstruction of the seventh coke battery at Cherepovets.

The implementation of other investment projects designed to increase production capacity, enhance the Company’s energy independence, and reduce the adverse impact of operations on the environment will continue at Severstal Russian Steel. The Division’s key facilities will be upgraded to include a continuous hot dip galvanising line, a seventh coke-oven battery and a by-product recovery plant at Cherepovets.

In 2010 the total amount of investment at Severstal Resources will be approximately USD 356mln and will include the following key projects: at Vorkutaugol the increasing of production volume and operational efficiency (coal dry cleaning and electricity generation); at Karelsky Okatysh the purchase of mining equipment; at Olcon the opening of new pits; and, within the Gold segment, initiatives to increase the efficiency of production including the development of new gold mines and modernization.

Within the Severstal Resources Division, a project for converting methane into heat and electricity at the Severnaya mine in Vorkutaugol. In addition the dry coal cleaning process at the Pechorskaya plant and Severnaya mine, also both in Vorkutaugol, will be implemented as a part of the process to upgrade and improve facilities.

The introduction of a complex Modular automation system aimed at increasing the efficiency of mining and transport equipment is ongoing at Karelsky Okatysh.

Severstal has spent a total of more than 1 billion rubles on R&D over the past three years and will continue this intensive investment. Severstal‘s innovation program is principally aimed toward developing new products for clients, primarily in the power, automobile and infrastructure industries. In 2010 plans are currently underway to launch R&D projects with a value of 1.2 billion rubles.

Alexei Kulichenko, CFO of OAO Severstal, commented:

“Our vertically integrated business model in Russia has allowed us to reduce costs and consequently continue to deliver a stable cash-flow in spite of the market’s sharp decline in demand during 2009. The Company will continue to prioritize the development of our vertically integrated business model in Russia’s growing market. The development of a product line for the most attractive markets, namely the power, infrastructure and construction industries, is one of our key operational objectives. The development of the mini-mill segment will be another area of investment. This will enable us to continue to enhance the Company’s efficiency, maintain our high product and service standards, and enhance our ability to exploit new and existing market opportunities.”