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17 August 2006

Novolipetsk Steel (NLMK) agrees to sell KMA Ruda.

Novolipetsk Steel (LSE: NLMK), a leading Russian steel producer, today announced that it has agreed to sell its stake of 92.04% (236,605 ordinary shares) in OJSC “Kombinat KMA Ruda” for USD 300 million. According to the agreement, approximately 60% interest in KMA Ruda is sold to OJSC “KOKS” and around 30% interest is sold to Lesser Enterprises Limited Company for USD 195.5 and 104.5 million respectively. The parties are planning to close the transaction before the end of the year after seeking the necessary approvals from the state regulatory authorities.

This divestment is in line with the previously announced internal restructuring plan. One of key steps of the restructuring plan is optimizing the asset portfolio of NLMK. At the moment the Company’s strategy is oriented towards the development of its key iron ore asset, Stoilensky GOK (SGOK). Stoilensky GOK meets 100% of NLMK’s iron ore concentrate requirements. The Stoilensky GOK’s development program is closely correlated with NLMK’s development program to meet steel segments’ iron ore concentrate demand in the future.

Proceeds from the transaction will be directed to financing NLMK’s investment projects, including the Stoilensky GOK’s development program. As we stated earlier, the active management of our asset portfolio is an integral part of NLMK’s growth strategy and strengthening our market leadership.

KMA Ruda is a mining company located within 350 kilometers of NLMK’s production facilities in Lipetsk. KMA Ruda supplies iron ore concentrate, with the annual amount of production of 1.8 million tones.