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August 30, 2007

Gazprom and Magnitogorsk Iron&Steel Works sign Cooperation Agreement

Alexander Ananenkov, Deputy Chairman of the Gazprom Management Committee and Victor Rashnikov, President of Magnitogorsk Iron&Steel Works (MMK) Managing Company have signed a Cooperation Agreement until 2015.

The Agreement provides for the parties to develop mutually beneficial cooperation aimed at supplying metal products demand of Gazprom and related industries manufacturing equipment and steel pipes for Gazprom.

According to the Agreement provisions, the parties will fulfill their scientific, performance, managerial, and intellectual potential, as well as engage specialized organizations and institutions for the implementation of the Scientific and Technical Cooperation Program agreed between Gazprom and MMK.

The Agreement makes a provision for the coordination of joint activities between Gazprom and MMK engaging the leading pipe manufacturers in order to ensure high-quality rolling. Gazprom will inform MMK on the demand of the related industries for the MMK manufactured products in case the Company possesses such information.

In turn, MMK will commission a continuous caster and a 5,000mm plate mill in 2009 in order to ensure large diameter pipe (LDP) manufacturing required for the implementation of Gazprom new projects.

As early as in 2007, MMK will reconstruct a 2,000mm plate mill and develop a respective technology to ensure pipe manufacturing from coiled stock with a diameter of 18.7 mm and up to X70 strength class in order to satisfy potential demand of Gazprom for such products.

The implementation of these projects will ensure high-quality rolling for the manufacturing of a wide range of pipe grades with new performance specifications and will enhance the presence of the Russian manufacturers in the LDP market as well.

In case of demand for MMK manufactured goods, Gazprom will inform the company on the amount of orders assumed.

MMK will ensure high-priority placement and execution of the orders made by Gazprom.

According to the Agreement there is a possibility of sealing individual contracts with MMK with due consideration of good competitive ability in terms of their quality and price.


MMK is the largest enterprise of the Russian iron-and-steel industry accounting for some 20 per cent of steel products sales in the domestic market. The company is a major fully integrated steel making complex incorporating a full production cycle ranging from iron ore raw materials preparation to high added value processing of steel. About half of the companyís output is exported worldwide.

In November 2006, MMK signed a contract for the supply of integrated 5,000mm plate mill package. The mill, once assembled, will allow production of high-margin steel plate up to 4,850 mm wide with X120 strength class for the oil and gas industry, as well as ship-, bridge-, and machine-building industries. The annual capacity of the plate mill will amount to 1.5 mln t. The commissioning of the mill is scheduled for mid-2009.




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