Novolipetsk Steel Seek to Modify Joint Venture Arrangement

Novolipetsk Steel, the leading Russian steel producer, announced today that it has agreed to modify the terms of its agreement with Duferco Group (“Duferco”) established in December 2006 in connection with the acquisition of a 50% interest in Steel Invest & Finance S.A. (Luxembourg) (“SIF”), a holding company for the Joint Venture between NLMK and Duferco (“Original Transaction”).

The principal terms of the new agreement are as follows:

• NLMK has a perpetual option to acquire one share of SIF at the per share price of the Original Transaction and thus raise its participation in SIF to a controlling stake;
• Effective from 18 December 2010, NLMK will have a perpetual option to buy, and Duferco will have a perpetual option to sell, all of Duferco’s interest in SIF at a price based on the change in the consolidated shareholders equity of SIF between October 2006 and the exercise date.

The option agreement is in line with NLMK’s strategy to better control strategic assets in its portfolio. While NLMK has no current intention to increase its stake in the JV from the present 50%, the company will be reviewing its alternatives with regard to the exercise of the options as the Joint Venture matures and its synergies with the Russian production assets materialize.