Social responsibility of Severstal: 2006 overview

Personnel care as a key element of the Company’s social policy

Success of any company is based on its employees. Financial and production results depend on their professionalism, motivation, and responsibility. Today, Severstal, being an international company, works to implement comprehensive programs for health protection and labor safety, personnel training and retraining, housing, and sports and culture promotion in the areas of Company’s operation .

Health Protection

Personnel health protection is a major focus of Severstal’s social policy.

The Company puts a strong emphasis on prevention and early diagnostics of diseases. For this purpose, in 2006 Severstal purchased modern diagnostic equipment. Annually, over 7,000 employees have medical examinations, allowing early diagnosis of illnesses and providing their timely treatment.. Due to complex approach towards prophylactic measures, timely diagnosis and medical care, in 2006 the incidence rate of first-time disability was reduced by 5.5% in 2006 compared to the similar period of the previous year, while the death rate among the company workers decreased by 25.2%.

It is customary for Russian companies to maintain an extensive social infrastructure to preserve staff health standards. This includes various medical institutions, health resorts offering a wide range of services for treatment of different conditions, holiday centers, and sport facilities.

Severstal is actively developing the Maternity and Childhood Protection program. The Company considers birth of a healthy child to be valuable for society as a whole. The Cherepovetsky Steel Mill maintains a unique diagnostic and treatment center, in which about 1,500 children are born every year.

Housing Program

In 2006, the first residential building was constructed in Cherepovets within the framework of Cherepovetsky Steel Mill Corporate Housing Program. The program was developed by Severstal to provide housing for its best employees using soft bank lending and mortgage programs. This three-year project was designed for construction of 24 residential buildings with over 2,000 apartments. The main qualification for employee participation in the program will be their individual performance.

Education

Investing into personnel training and education is a key element of Severstal’s staff policy. The Company works with over 10 training programs developed for specialists of all levels, from workers to top managers.

The Corporate University, which was established by Severstal to ensure effective management of the company employees’ skills and to form an integrated culture of business administration, plays a significant role in development and implementation of educational programs. The University allows the employees to create and implement personal career plans, as well as develop their skills. The following programs were successfully implemented in the University:

Talent Pool – aimed at revealing high-potential employees and preparing them for strategic project managed. In 2006 13 employees graduated according to this program.

Top 100 – aimed at increasing managerial competence of the Company’s managers. In 2006 employees of 20 plants took part in the program; 63 persons successfully presented their resulting projects aimed to solve certain problems at Severstal plants.

Perspective – aimed at helping the plants to adapt and keep their young employees. In 2006 16 persons presented the project ideas aimed to increase Severstal operational efficiency.

The Corporate University successfully implements an electronic remote study system, which contains over 120 courses on various management topics in Russian and English languages. In 2006 the program involved over 4.5 thousand employees of the Company.

Besides own development programs for managers, the University administers MBA training in the business school of the Northumbria University (Great Britain). In 2006 28 Severstal managers have received their MBA diplomas, 94 continue their studies. Overall, 86 people had graduated according to this program.

The Company’s managers and specialists also increase their professional skills in Russian and foreign business schools and institutes. These programs are aimed at personnel re-training, as well as training in additional fields required during production. Cherepovetsky Steel Mill has its own training center, where 20% employees train in various management and technological fields.

SNA continues to implement human resource “best practices” in the areas of training, succession planning, leader development and motivation systems. The company launched a new SNA-UAW Joint Apprenticeship training program in 2006. This comprehensive program will serve as SNA’s primary source for future skilled trades and maintenance personnel. College recruiting and internship programs were expanded in 2006 with positive results

Sports Promotion

Severstal is committed to active and healthy lifestyles and promotes them among the company’s workers, providing free opportunity to practice sports activities at over 20 facilities. Each year Severstal finances maintenance of sports stadiums, ice palaces, warmed football fields, tennis courts, volleyball and basketball playgrounds, athletic centers. There are approximately 150 health groups functioning at the sport facilities, in which over 6,000 employees are involved. In 2006, over 14,000 people took part in various sport competitions.

Severstal - Overview of Social projects of the Company for 2006 (download in PPT-format)