18 February 2008

NLMK to modify terms of agreement with Duferco

Novolipetsk Steel (LSE: NLMK), the leading Russian steel producer, announced today that it has agreed to modify the terms of its agreement with Duferco Group (“Duferco”) established in December 2006 in connection with the acquisition of a 50% interest in Steel Invest & Finance S.A. (Luxembourg) (“SIF”), a holding company for the Joint Venture between NLMK and Duferco (“Original Transaction”).

The principal terms of the new agreement are as follows:

• NLMK has a perpetual option to acquire one share of SIF at the per share price of the Original Transaction and thus raise its participation in SIF to a controlling stake;

• Effective fr om 18 December 2010, NLMK will have a perpetual option to buy, and Duferco will have a perpetual option to sell, all of Duferco’s interest in SIF at a price based on the change in the consolidated shareholders equity of SIF between October 2006 and the exercise date.

The option agreement is in line with NLMK’s strategy to better control strategic assets in its portfolio. While NLMK has no current intention to increase its stake in the JV from the present 50%, the company will be reviewing its alternatives with regard to the exercise of the options as the Joint Venture matures and its synergies with the Russian production assets materialize.

About Novolipetsk Steel (NLMK)
Novolipetsk Steel (NLMK) is one of the world’s leading steel companies and one of the three largest flat steel producers in Russia, producing over 9 million tonnes of crude steel annually. NLMK’s production facilities are among the most technologically advanced in Russia, producing flat steel products in a variety of grades and sizes. NLMK is one of the world’s most profitable steel companies with EBITDA margin over 40%.
The traditional strengths of the Company are: vertical integration into raw materials, world class assets with a competitive cost of production, proximity to mature and developing markets wh ere the company has strong positions, sound financial performance, professional and experienced management team.
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About Duferco Group
Duferco Group is an international steel production, processing and trading group with headquarters in Lugano, Switzerland. Duferco had revenues in excess of USD 7 billion in 2005, and is one of the world’s largest companies engaged in the worldwide production, distribution and trade of all types of steel products, including raw materials used in steel making processes. Duferco has trading and production activities in more then 40 countries. It operates steel making and processing plants in Western and Eastern Europe, USA, South Africa and Central America.
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About Steel Invest & Finance S.A
NLMK and Duferco Group formed a joint venture through Steel Invest & Finance S.A. (Luxembourg), a limited liability company (société anonyme) established under the laws of Luxembourg in which they each hold a 50% interest. The joint venture holds 100% or majority interests in 23 companies including one steel making plant and five steel rolling facilities with total finished steel output of 4.5 million tonnes in 2006 as well as a network of steel service centers.