February 4, 2021

Severstal announces 2021 capital investment programme

PAO Severstal ("Severstal"; "the Company"), one of the world’s leading vertically integrated steel and steel-related mining companies, today announces its capital investment programme for 2021.

Severstal plans to invest approximately $1.35 billion in 2021, focusing on a number of major projects in its Russian Steel and Resources divisions, as well as on key focus areas of the Company's strategy, namely, excellent customer experience, cost leadership and new opportunities.

In 2021, Severstal will invest $453 million in the maintenance of its existing facilities and $42 mln in industrial safety system improvements, labour protection and environmental projects.

$124 million will be allocated towards investments in IT and digital projects, including the ongoing transition of the Company's divisions to a new generation of the SAP ERP system - the SAP S/4 HANA solution, developing e-commerce, the automation of production, supply chain management and the implementation of digital tools.

Russian Steel division

Investments in Severstal’s Russian Steel division in 2021 will amount to approximately $785 million, of which $469 million will be directed to development projects. The division’s largest projects are the second stage of the construction of coke oven battery No. 11 (first commissioned at the end of 2020, with the full capacity expected to be completed in 2022), bringing blast furnace No. 3 to design capacity, and also investment in the long-range mill and the heating furnaces.

Resources division

Investments in the Company's resources enterprises in 2021 will amount to approximately $524 million, $267 million of which will be used to develop production. One of the most important investment areas for the Company this year will be the main phase of construction of the Cycle-flow technology complex at Karelsky Okatysh. CPT is a modern technology used for transporting rock mass by dump truck, which significantly reduces emissions from the operation of quarry equipment. Severstal will continue its programme to increase production at the Yakovlevsky mine, which will increase the Company's iron ore production to 5 million tons by 2023. Other investment priorities for Severstal’s resources assets include increasing production volumes at Vorkutaugol and the development of the Pechegubsky field via the Olkon mine.

Alexey Kulichenko, CFO of Severstal, commented:

“Severstal continues to implement its large-scale transformation programme, which has enabled us to maintain our global efficiency leadership despite the crisis in 2020. As usual, in 2021 the majority of investment will be focused on development projects that will help us to achieve a significant, long-term advantage over our peers in the cost of basic products, to provide customers with unique solutions and products of guaranteed high quality, and to increase our steel production volumes and strengthen Severstal’s vertical integration. Blast furnace No. 3 and coke oven No. 11 will have a significant impact on reducing the cost of steel production starting this year, and this will help to create additional value for shareholders. Total investments in 2021 will be comparable to investments in 2020.”

All of these amounts are subject to adjustments dependent on FX changes. The majority of the Company’s expenditure in 2021 will be in rubles.