NLMK to purchase 100% stake in Kaluga Electric Steelmaking Plant

On May 14, 2010 NLMK purchased a 100% stake in CJSC Kaluga Electric Steelmaking Plant (KNPEMZ) from LLC Metallurgical Holding (a Maxi-Group subsidiary) for a total consideration of RUR 604.5m. The value of the company’s stake was determined by an independent appraisal. The main objective behind the acquisition is to advance the development strategy of NLMK’s Long Products Division. The acquisition by Novolipetsk Steel, a company with high credit ratings, will create additional ways to attract investment into the project on favourable terms.

Since 2008, the construction project has been financed by NLMK. The amount of the Company’s funds invested into the project has already reached RUR7.3 billion. The total planned investment is around RUR37 billion including VAT.

This project will create a new-generation “mini-mill” steel plant based on ferrous scrap recycling, which is very important for the development of recycling and improvement of environmental conditions in Central Russia. State-of-the-art environmental protection technologies will also ensure a high degree of environmental safety and help achieve a reduction in specific emissions per tonne of steel of over 6-fold as compared to the average specific emissions volume at Russian integrated steel plants.

The main Kaluga steel plant facilities – the EAF Shop and Rolling Shop - are currently under construction. By the end of the year we plan to have finished the construction of the main shops’ building structures and to start installing the equipment.