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Severstal wins exploration and extraction rights for the N1 coal field at the Usinskoe deposit

15.12.2011

OAO Severstal (‘Severstal’ or the ‘Company’), one of the world’s leading vertically integrated steel and steel related mining companies, announces that its coal production unit, OAO Vorkutaugol, has today won exploration end extraction rights for the N1 coal field at the Usinskoe deposit in the Komi region, Russia. The estimated resources of the coal field is 620 million tonnes of coking coal.

The company’s winning bid was more than 1.3 billion roubles. OAO Vorkutaugol will receive the license agreement and start to develop the coal field at the beginning of 2012. According to the license agreement construction must be started no later than January 2017. Commissioning is scheduled for 2020, with operating capacity to be achieved by 2023.

The coal field will be developed as an underground mining project; and will involve the construction of an underground mine and a coal-preparation plant. The planned production volume is over 4 million tonnes of coal per annum.

The total capex for the construction of the mine, the coal-preparation plant and support infrastructure is estimated at 29 billion roubles. The project will create an additional 2,800 jobs in the Komi Region.

Further information regarding the N1 field of the Usinskoe coal deposit:

The N1 coal field is located in the centre of the Usinskoe deposit in Russia’s Komi region, and is located close to key transport and infrastructure links. The rail-road Kotlas-Vorkuta is 5 km from the Southern board of the coal field, and the rail-road station Khanovei is located 30km from it.

The coal field has estimated resources of 620 million tonnes of coking coal, most of which is high-rank (Russian classification – 2Zh) and is similar in quality to the resources of the Vorkuta deposit, which is also being developed by Vorkutaugol. The resources of the field include KZh and 1Zh coal (Russian classification).

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ОАО Severstal is one of the world’s leading vertically integrated steel and steel related mining companies, with assets in Russia, the USA, the Ukraine, Latvia, Poland, Italy, Liberia and Brazil. Severstal’s gold business, Nordgold, was established in 2007 and comprises mines and exploration projects in Russia, Kazakhstan, Burkina Faso and Guinea. Severstal is listed on RTS and MICEX and the company’s GDRs are traded on the LSE. Severstal reported revenue of $13,573 million and EBITDA of $3,263 million in 2010. Severstal’s crude steel production in 2010 was 14.7 million tonnes. www.severstal.com

OAO Vorkutaugol is a part of Severstal Resources – the mining division of OAO Severstal, and is one of the largest coal producers in Russia. In 2010 Vorkutaugol produced 8.1 million tonnes of commercial products, the majority of which is coking coal concentrate. Currently Severstal Resources includes four production complexes, which produce more than 14 million tonnes of iron ore concentrate and pellets and 11.5 million tonnes of coking and steam coal concentrates per year.

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