Investment programme for 2011

OAO Severstal  (“Severstal” or “the Company”) (LSE: SVST; RTS: CHMF), one of the world’s leading integrated steel and mining companies, announces a target US $2 billion capital investment programme for the current financial year. Severstal will continue to improve operating efficiency, modernize its operational facilities and ensure that the Company maintains industry leading standards of health and safety. 

In 2011 the total amount of investment at Severstal Russian Steel will be approximately US $ 940 mln, around a 73% increase on 2010 and will include the following key projects: the continued construction of a mini-mill in Balakovo in the Saratov Region, the renovation of the No 7 coke oven battery, the modernisation of the No 5 blast furnace and the construction of a second polymer coating line in Cherepovets and the large-scale IT projects.

In 2011 the total amount of investment at Severstal Resources will be approximately US $ 650 mln, around a 53% increase on 2010 and will include a project to modernise production equipment across the division’s  iron ore mills and coalmines, the completion of a thermoelectric power station burning coalmine methane in Vorkuta, an exploration of the Putu iron ore deposit in Liberia, the continued development of the division’s gold mining assets and a coalmine at PBS Coals.

In 2011 the total amount of investment at Severstal North America will be approximately US $ 465 mln, around a 69% increase over 2010, and will include the construction and commissioning and start-up of the 2nd Electric Arc Furnace, Continuous Caster, Tunnel Furnace, Pickle line and the 2nd Hot Dip Galvanizing line at Severstal Columbus, new Cold Rolling Complex and Hot Dip Galvanizing line at Severstal Dearborn.

Overall, the level of capex represents an approximately 48% increase over the level for 2010.

Alexei Kulichenko, CFO of Severstal commented: “In 2011 Severstal will continue to make investments across its businesses in order to enhance our position as a market leader in the production of high added value products, improve our operational efficiency and reduce costs. In Russia and CIS, steel use is estimated to increase by approximately 8%  in 2011.”