NLMK continues construction of Pelletizing Plant at Stoilensky

Stoilensky (an NLMK affiliate) has signed a contract with the Siemens VAI/Outotec consortium for the design and supply of required equipment and technologies, as well as the rendering of other services related to the construction of a Pelletizing Plant at Stoilensky with a capacity of 6 mtpy of iron ore pellets. The project is part of the Group’s strategy targeted at strengthening vertical integration and is being executed as part of Stage 3 of NLMK’s Technical Upgrade Program.

The EUR280 million contract covers the supply of main process equipment. Construction is expected to be completed in 2014. The plant will be able to fully cover the Company’s pellet requirements as early as 2015, even considering the launch of the 3.4 mtpy Blast Furnace #7 at Novolipetsk.

Stoilensky is currently expanding its pit and growing ore processing and beneficiation capacities. Section IV of the Beneficiation Plant with 4 mtpy of concentrate became fully operational in May 2011 adding an incremental 2 mtpy iron ore capacity. As a result, Stoilensky’s iron ore concentrate capacity will total 14 mtpy of iron ore concentrate and 1.7 mtpy of sinter ore by this year’s end. Construction of the crushing facility and Section V of the Beneficiation Plant (of additional 4 mtpy of iron ore concentrate) will be completed by 2014. The newly launched capacities will ensure raw material supply to the Pelletizing Plant that is currently under construction.

Investments into Stoilensky expansion, including into the Pelletizing Plant construction, is estimated at RUR41 billion over 2011– 2015.

Expansion of iron ore production is in line with the Company’s strategy to ensure self-sufficiency in key raw materials. The project covers the construction of the Pelletizing Plant and the development of a number of infrastructure facilities ensuring raw material supply. The plant will produce high-quality pellets with Fe content c.65%. A 30% increase in ore output at the operating Stoilensky mine (from 2011) is planned to ensure the required raw material supply to the Pelletizing Plant. Starting from 2015, Stoilensky’s average annual output of saleable iron ore is planned to be as follows: sintering ore – 2.0 mln tonnes; iron ore concentrate – 11.0 mln tonnes; iron ore pellets – 6.0 mln tonnes, ensuring NLMK’s 100% self-sufficiency in iron ore raw materials. During the Stoilensky’s Pelletizing Plant construction period, supplies of iron ore pellets to Novolipetsk will be made under long-term contracts between NLMK and Metalloinvest Holding (Lebedinsky and Mikhailovski mining and processing plants).