Magnitogorsk, 14 September 2007 – OJSC "Magnitogorsk Iron and Steel Works", the largest one-site steel producer in Russia, and a consortium of international banks consisting of ABN AMRO, Deutsche Bank AG, and ING Wholesale Banking today signed a loan agreement amounting to EUR 365 million. This loan agreement enjoys insurance cover provided by EULER HERMES Kreditversicherungs-AG, Hamburg, acting on behalf and for the account of the Federal Republic of Germany.

This 10-year financing will be utilised to finance supplies and services from SMS Demag AG, Germany, for the construction of a 5,000 mm plate mill and a continuous slab caster. EULER HERMES will provide cover for 85% of these supplies and services.

Within the consortium, ABN AMRO acts as Documentation Agent, Deutsche Bank AG as the EULER HERMES Agent,  ING Wholesale Banking as the Facility Agent. Furthermore, Deutsche Bank Ltd., Moscow assumes the role of the Account Bank.

This financing is the largest EULER HERMES covered corporate risk facility for a Russian company since 1998.

Commenting on the signing of the Loan Agreement, Mr.Rashnikov, Chairman of OJSC MMK's Board of Directors, said, "This is the largest loan in the history of our Company, extended by international banks. The Magnitogorsk Iron and Steel Works has an extensive and positive history of borrowings. The signing of this Agreement reconfirms MMK's reputation as a reliable borrower and is testimony of the growing trust in our Company on the part of the international financial community.

Furthermore, this Agreement represents an important milestone in the implementation of OJSC MMK's largest investment project, namely, the construction of the 5,000 mm Plate Mill Complex. This loan will be used to finance supplies and services of SMS Demag as part of the project's implementation bringing us closer to the moment when the mill will start turning out products so unique for Russia."

Additional information:

The construction of the 5,000 mm plate mill is OJSC MMK's largest project of the last decade. When implemented, this project will allow to produce highly lucrative steel plate up to 4,850 mm wide and with a strength class up to X100-X120 primarily for the oil and gas sector, and also for building ships, bridges and heavy machines.

The quality of the plate will be guaranteed by the reputation of the world-renowned SMS Demag, Germany, which won the contract amid tough competition with other global equipment manufacturers. The contract was signed in November of 2006. With the plate mill's first stage (Rolling Shop ? 9)  scheduled to go on stream in the summer of 2009. The total cost of the 1.5 Mtpy plate mill will be in excess of USD 1 bn.

The mill will comprise the full set of in-line mechanisms and units, from charging devices of the reheating furnaces to handling units at the finished products storage. The heart of the mill will be a unique rolling stand capable of developing a rolling force of about 12,000 tons. The implementation of the project will enable OJSC MMK to produce premium quality hot rolled plate using state-of-the-art rolling technology.