ChTPZ Group Signs Agreement with SMS MEER

Chelyabinsk Pipe Rolling Plant announced today an agreement with SMS MEER company (Germany) for €160 million in technological equipment for a pipe electric welding workshop specializing in the production of large diameter pipe. Preparation work for construction of the workshop was begun this year at the plant’s production site. Under the contract, deliveries of SMS MEER equipment to ChTPZ will begin in October 2008.Total investment into construction of the workshop is estimated at USD 500 million.

The decision to build a new workshop for the production of large diameter welded pipe (508-1420 mm diameter) with outer and inner covering which can satisfy any demand of the pipeline transportation market is in line with ChTPZ Group management’s strategies aimed at increased competitiveness and expanded market share. The new workshop is scheduled to be brought into operation in mid-2009. Production capacity of the new workshop will reach 700,000 tons per year.

The contract was signed during joint work of the Coordination Council with Magnitogorsk Metallurgical Plant (MMK). A cooperation contract with MMK until 2015 was signed earlier this year, in March. Mr. Alexander Fedorov, the Chairman of the Board of ChTPZ, pointed out that "the fact that the contract for the delivery of equipment for the workshop was signed in the presence of our Magnitogorsk colleagues is very symbolic. We have great joint plans, especially in the implementation of major projects on the MMK and ChTPZ sites – including construction of a “Stan-5000” steel production facility and large-diameter welded pipe workshop. It is expected that the main supplier of high-tension plate steel for our new workshop will be MMK."