2. DISCLAIMER
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representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the
accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents.
The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform
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This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding
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prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements
are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the
industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In
addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are
consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in
future periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-looking
statements to reflect events that occur or circumstances that arise after the date of this presentation.
By attending this presentation you agree to be bound by the foregoing terms.
2
3. NLMK Group’s Russian production assets
NLMK Kaluga
Licences for deposit development
NLMK GROUP RUSSIAN ASSETS
Moscow
Novolipetsk
Sinter: 15 m t
Coke: 2.6 m t
Steel: 12.4 m t
Flat products: 5.7 m t
VIZ-Steel
Transformer steel:
0.2 m t
Altai-Koks
Coke: 4.7 m t
Stoilensky
Iron ore concentrate:
14 m t
Sinter ore: 1.8 m t
RUSSIA
США
NLMK Russia Long
Crude steel: 2.2 m t
Long steel: 1.9 m t
Metalware: 0.5 m t
3
NLMK Kaluga
Crude steel: Stage 1 – 1.5 m t
Long steel: Stage 2 – 0.9 m t
Stage 3 (estimate) – 0.6 m t
Moscow
Kaluga
NLMK Kaluga
4. NLMK RUSSIA LONG DIVISION
4
• Part of NLMK Group since December 2007
• Capacities:
o Steel (EAF) – 3.7 million t
o Long products – 2.9 million t
o Scrap – 3.5 million t
• Long product market share in Russia: c. 20% *
• Sales regions: over 95% of sales to the Russian market
(Ural, Southern, Central Federal Districts)
CRUDE STEEL AND FINISHED PRODUCT OUTPUT
1,7
1,5
1,8
2,2
1,4
1,5
1,7
2,2
0,0
0,5
1,0
1,5
2,0
2,5
2010 2011 2012 2013
Crude steel Long products and metalware
million t
NLMK RUSSIA LONG FINANCIAL PERFORMANCE
1377
1794
1645 1716
46 34 170 95
0
500
1000
1500
2000
2010 2011 2012 2013
Revenue EBITDA
$ million
NLMK Kaluga
NSMMZ
UZPS
Moscow Yekaterinburg
NLMK Russia Long production sites
* The NLMK Russia Long Division average share in the domestic markets: rebar, wire rod and metalware in 2013
5. • Strategic priorities
o Develop scrap-collecting facilities to maximize cost-
efficient sufficiency in scrap
o Expand market presence
o A flexible sales strategy and improved customer
service
o Expand the range of long products and metalware
o Ensuring high efficiency at all stages of the process
• Market goals after NLMK Kaluga launch
o Increase rebar market share from 17% in 2012 to 22-
23% in 2015
o Enter the sections market
o Around 1/3 of long steel for construction in
the Central region of Russia
STRATEGIC GOALS
5
NLMK RUSSIA LONG MARKET SHARE IN 2015
22-23%
12%
33%
0%
5%
10%
15%
20%
25%
30%
35%
Rebar market Sections market Long products for the
construction market in
the Central region
LONG PRODUCT CONSUMPTION GROWTH RATES
IN RUSSIA, 2010-2013
19%
6%
10%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Rebar Sections Long products in the
Central region
Average growth rate in 2010-2013
6. 336
~ 950
0
100
200
300
400
500
600
700
800
900
1000
2013 2014E
‘000 t/y
FINISHED STEEL PRODUCTION PLAN AT NLMK KALUGA
6
CRUDE STEEL AND ROLLED STEEL PRODUCTION
CAPACITIES AT NLMK KALUGA
NLMK KALUGA: COMPANY OVERVIEW
• Location: Kaluga region, Borovsky district, Vorsino
Industrial Park, c.~70 km away from Moscow
• Production site area: 202 ha
• Capacity: 1.5 m t/y of steel,
from 0.9 to 1.5 m t/y* of long steel
• Products: billets and long steel for construction –
rebar, channels, angles
• Capex: RUB 38 billion
• Logistics: option to deliver products by rail from the
plant’s own station – Vorsino – and by trucks
• Beginning of construction: 2008
• Start of operation: H2 2013
• In 2014: ~ 900,000 tonnes of steel products will be
produced
1,5 1,5
0,9
1,5
0
0,2
0,4
0,6
0,8
1
1,2
1,4
1,6
Stage 1 and 2 Stage 3 (under consideration)
Steel Rolled products
m t/y
* Potential to expand rolling capacity by 600,000 t/y
7. NLMK KALUGA COMPETITIVE ADVANTAGES
7
The market
Efficiency
Products
o A developed construction sector
o High level of long steel consumption
o Shortage of long steel in the region
o Surplus of scrap collection in the region
o Low transportation costs
o Developed scrap collection network
o Energy- and resource-saving production
o An extensive mix of long products in high demand
8. CONSTRUCTION SECTOR IN CENTRAL RUSSIA
• The Central region of Russia has the highest
density of population
o 59.7 people/km2, 7 times higher than the Russian
average
• The most developed construction sector across all
Russian regions
o Share in construction activity: 24% in 2013
o Share in residential completions: 28% in 2013
o Moscow and the Moscow region account for
a significant share
• The construction sector continues to grow
o In 2013 residential completions in the Central
region grew by 8.2% y-o-y
o In Q1’14 residential completions in the Central
region increased by 28% y-o-y
REGIONAL SPLIT OF
THE RUSSIAN CONSTRUCTION SECTOR, 2013
30,2
3,7
18,3
22,6
14,7
3,6
1,5
0,3
0
5
10
15
20
25
30
35
Central North
Western
Southern North
Caucasian
Volga Ural Siberian Far
Eastern
sq m of residential
completions per 1 sq km of
region area
16%
8%
76%
Moscow and the Moscow
region
Central Region w/o Moscow
and the Moscow region
The rest of Russia
AMOUNT OF CONSTRUCTION ACTIVITIES IN 2013
Source: Rosstat
8
Source: Rosstat
Note: shares in total volume of
construction works given in
rubles
9. LONG PRODUCTS MARKET
• Growth of long products consumption
o 2013 long steel consumption grew by 3% yoy
o Driver – increased construction activity
o 2013 residential completions up by 5.5% yoy to the record of 69.4 sq. m
o Cement consumption up by 7% yoy and by 15% since 2008
o Consumption of long products for construction is expected to
grow by 2-3% in 2014
• Import substitution potential
o 2013 long steel imports grew by 12% yoy and by 71% compared
to the pre-crisis level, to 3.25 m t
o Share of imports in consumption increased up to 18%
o Q1’14 imports went down by 47% yoy due to rouble
devaluation, share of imports in consumption – to 11%
• Regional demand/supply imbalance
o ~3.7 m t/y shortage of long products in the Central region
o In 2013, long products consumption in the Central region +2%
LONG STEEL PRODUCTION/CONSUMPTION BALANCE BY REGION
45%
21%
9%
8% 8% 7%
1% 0%
17%
12%
29%
18%
11% 10%
3%
1%
0%
10%
20%
30%
40%
50%
Ural
Siberian
Central
Volga
North
Western
Southern
Far
Eastern
North
Caucasian
Share in long steel production
Share in long steel consumption
long steel shortage –
3.7 m t/y
0%
5%
10%
15%
20%
25%
30%
0,0
0,5
1,0
1,5
2,0
2,5
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Import
Rebar produced by Russian companies
Import share, rhs Source: Metal Expert
REBAR MARKET, CONSUMPTION IN RUSSIA
m t
record 2008 level
NEW LONG STEEL CAPACITIES
9Source: Metal Expert. Data for 2013.Source: Metal Expert, NLMK research
0,9
2,4
0
1
2
3
4
5
6
Other announced capacities (2013-
2014)
NLMK Kaluga
m t
2,4
2,0
1,25
Other imports
Imports from Ukraine
Capacities with low utilization rate
10. 4,7
2,0
1,2
1,5
0
1
2
3
4
5
6
7
8
Scrap
generation
Consumption
in the region
Sales to
other regions
of Russia
Export
23,3
18,2
0
5
10
15
20
25
2013
Scrap collection
(obsolete+prompt scrap)
Scrap consumption
SCRAP MARKET
• Significant export substitution potential in Russia
o Export accounted for ~28% (or 5.1 m t/y) of annual
scrap processing volumes in 2013*
• Regional demand/supply imbalance
o Scrap surplus in the Central Federal District is
~ 2.7 m t/y
• Pricing trends
o High competition at the international scrap market
10
SCRAP PRICES
0,9
1,2
1,4
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Average prices in Russia
SCRAP MARKET BALANCE IN RUSSIA AND THE CENTRAL REGION
m t/y
January 2010 = 1.0
SCRAP MARKET BALANCE IN RUSSIA
0
0,5
1
1,5
2
2,5
3
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
Sales to the Russian market Export
m t/month
In 2013, the share of export in
total scrap processing was ~28%*
4,7
5,8 5,8
5,1
2010 2011 2012 2013
Scrap exports, m t
Source: Metal Expert, Russian Railways, NLMK estimatesSource: Metal Expert, Metal Bulletin
~5 m t is
exported
m t/y
Russia Central region
~2.7 m t -
surplus
~30%
exported
from the
Central
Region
Source: Metal Expert, Russian
Railways, NLMK estimates
* Obsolete scrap
11. COST ADVANTAGES
• Low transportation costs for the delivery of raw
materials and finished steel
o Developed captive scrap collection network
“Vtorchermet NLMK” in the region
o In 2013, a new shredder was launched in
Podolsk (Moscow region)
o Located close to key customers
• Efficient resource use
o Processing of by-products generated at the
main operations
o Use of pig iron and waste metal generated at
Novolipetsk as feedstock
o Advanced technologies and equipment
11
100% 100% 100%
90%
82%
104%
80%
85%
90%
95%
100%
105%
Specific energy
consumption
Specific natural gas
consumption
Efficiency of raw material
use
Average for Russian producers NLMK Kaluga
NLMK KALUGA VS. RUSSIAN PEERS
0 1000 2000 3000 4000
ZSMK
Mechel
MMK
NSMMZ
Abinsky EMZ
Rostovsky EMZ
Severstal - Balakovo
Severstal - Vologda
Revyakinskiy MZ
NLMK Kaluga 70 km from Moscow
DISTANCE FROM LONG STEEL PRODUCERS TO THE MOSCOW REGION
km
12. EQUIPMENT AND PRODUCTS
• Equipment suppliers
o Steelmaking - Siemens VAI
o Long product rolling - SMS Meer
• Universal high performance continuous rolling
mill
o Ability to roll rebar at high speed and produce
small and medium sections at a single line
• In 2013-2014, NLMK Kaluga is planning to master
over 30 product types:
o Billet 100х100, 125х125, 150х150, 160х160
o Rebar #10-40
o Angle #25-100
o Channel #5-12
Rebar Sections
А240 bars
А500S bars in
compliance with
GOST 52544
Angles Channels
#10 #10 L25 SH5
#12 #12 L32 SH6,5
#14 #14 L35 SH8
#16 #16 L40 SH10
#18 L45 SH12
#20 L50
#22 L63
#25 L70
L75
L80
L90
L100
- to be mastered in 2014
12
- already mastered
13. CORPORATE RESPONSIBILITY
• Air protection
o Modern dust and gas cleaning systems with efficiency of at least 99%
o Emissions less than 1kg per tonne of steel (almost 7 times lower than for
its Russian peers)
• Water protection
o Closed water supply system
o Low level of natural water consumption due to cleaning
• Waste processing
• New jobs
o 1,250 at the plant and 600 at the service companies
• Investments into personnel development
o About RUB 55 million into personnel training
o Additional study programmes to train qualified professionals at regional
learning establishments
• Regional development
o Construction of new apartment buildings for employees
13
16. NLMK KALUGA
• EAF steelmaking capacities
1.5 m t/y
• Long product capacities
0.9 – 1.5 m t/y
NLMK RUSSIA LONG DIVISION
16
NLMK RUSSIA LONG OPERATING CAPACITIES
• Captive scrap processing
3.5 m t/y
• EAF steelmaking
2.2 m t/y
• Long products (Nizhniye Sergi)
1.1 m t/y
• Long products (Berezovsky)
0.8 m t/y
• Metalware (Berezovsky)
0.5 m t/y
