The document summarizes discussions from a Russia Forum on the metals and mining industry in the Commonwealth of Independent States amid volatility. Key points discussed included: 1) Liquidity management and low debt levels were important for companies to weather the crisis well and take advantage of opportunities. 2) Supply constraints will be important in determining future prices for metals like copper and zinc which have tight supply. 3) Russian aluminum producer Rusal used the crisis to optimize costs and continue growth projects, remaining optimistic on aluminum prices if the economy remains stable. 4) Vertical integration and flexibility helped Russian fertilizer producer PhosAgro remain stable, and infrastructure issues need addressing for growth plans.

1. RUSSIA
FEBRUARY 2 3, 2012
Russia Forum Buzz
Metals and Mining in the CIS:
Development Prospects Amid
Great Volatility
█ While discussing the lessons learned from the crisis, the speakers agreed that
liquidity management was key to helping companies successfully weather the
crisis and create value. The speakers also shared a positive view of the world
economy and the prospects for both base and precious metals. For Russia,
resolving infrastructure bottlenecks was key to realizing the value of its
mineral endowment.
█ Ivan Glasenberg said that the level of debt was crucial during the crisis.
Companies that had massive amounts of debt not only had their positions
threatened, but they also missed the opportunity to create value via M&A in
an environment of depressed valuations. Glencore had a relatively good
balance sheet but not a perfect one for deal making. So, going forward, stress
testing of balance sheets should be key for companies. Also, regarding the
prospects for metals, the head of world’s biggest metals trader noted that he
was not worried about demand, but rather about supply. He is confident that
demand will be fueled by China, which will continue to grow, albeit at a
slower pace, while the discipline of supply and constraints will be crucial for
determining prices. He likes copper and zinc as metals with tight supply.
█ Vladislav Soloviev said that UC RUSAL used the crisis as an opportunity. The
company optimized costs and while facing difficult issues with funding, it
continued its growth projects. He was optimistic on the prospects for
aluminum given that prices are close to cash costs, and if the economy is
stable he sees meaningful price upside. At the same time, Mr Soloviev noted
that the electricity market is still evolving in Russia and reforms are not yet
finalized. He hopes that the Russian electricity market will stabilize and
visibility will improve with regard to pricing, which is crucial for UC RUSAL’s
competitiveness.
█ Maxim Volkov of PhosAgro said that vertical integration and flexibility were
key to the stability of his business during the crisis – flexibility not only in
production, but also in producing a product the market demands. As
highlighted by PhosAgro’s recent actions, in light of weak demand for DAP,
the company switched to producing NPK fertilizers. Regarding growth
options, the company favors organic growth over M&A, and Mr Volkov noted
that addressing infrastructure issues, such as railroad congestion and the
availability of rail wagons, was key to realizing the company’s plans.
www.TheRussiaForum.com

2. FEBRUARY 2 3, 2012 RUSSIA FORUM BUZZ – METALS AND MINING IN THE CIS: DEVELOPMENT PROSPECTS AMID GREAT VOLATILITY
█ Eduard Potapov said that Metalloinvest successfully weathered the crisis thanks to its low debt
level and cost base. But he noted that companies should worry about these factors not only during
a crisis, but also throughout the business cycle. On Udokan, one of the world’s biggest
undeveloped copper projects, he said that the project could churn out some 500 kt of output, but
access to infrastructure was key for implementation of the project, as it requires construction of a
railroad and power generator.
█ Nikolay Zelenski of Nordgold remains positive on gold given its safe haven status during times of
turbulence. The company was built in a process of targeted M&A during the crisis, and he said
that focusing on execution and proper strategy was key to creating value. Nordgold was not
hesitant to acquire assets in other countries, since the key to its success is the quality of its assets,
and with its operational expertise, the company is confident it can improve asset performance.
Panel
Ruben Vardanian Chairman of the Board of Directors, CEO, Troika Dialog
Ivan Glasenberg Chief Executive Officer, Glencore
Eduard Potapov CEO, Management Company METALLOINVEST
Vladislav Soloviev First Deputy CEO, UC RUSAL
Maxim Volkov CEO, OJSC PhosAgro
2 TROIKA DIALOG

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