Magnitogorsk Iron & Steel Works Open Joint Stock Company announces the acquisition of 10.75% shares in OAO Belon, a Russian producer of coal and coal concentrates.

The decision on participation of OAO MMK in the authorized capital of OAO Belon was taken by the Board of Directors of OAO MMK on September 13. The stock was acquired from Sapwood Investments Limited. Going forward OAO MMK will consider a further increase of its stake in OAO Belon.

OAO MMK’s participation in the authorized capital of OAO Belon, which has a strong growth potential, is in line with Magnitogorsk Iron & Steel Works strategic plans towards creation of its own raw materials base and allows OAO MMK to further secure the long-term supplies of coal of the required grades.

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The Magnitogorsk Iron & Steel Works OJSC (???) ranks 20^th among the world’s largest steel producers (Source: IISI) and is one of the leaders of Russia’s steel industry (Source: Chermet). The company is a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. ??? turns out a broad range of steel products with a predominant share of value added goods. In 2006 the Company produced 12.5 m tonnes of crude steel and 11.3 m tonnes of commercial products. In 2006 sales under US GAAP amounted to USD 6.4 bn, with net profit standing at USD 1.4 bn.

Belon Group is a dynamic producer of coal and coal concentrate and one of the leading steel traders in Russia. OAO Belon is the managing company of the Group, which comprises of  several mining, processing and service companies. The Group includes Chertinskaya-Koksovaya, Novaya-2, Listvyazhnaya and Kostromovskaya (under construction) coal mines, Novobachatskiy-1 and Novobachatskiy-2 open-cast mines (under construction), Belovskaya and Listvyazhnaya concentration plants. In 2006 coking coal production amounted to 1,724 million tons, coal concentrate production – to 4,389 million tons. The total volume of coking and thermal coals produced came to 3,381 million tons. According to Belon Group IAS accounts the Group's revenue for 2006 amounted to RUB 10 billion 430 million, net income for 2006 was RUB 1 billion 222 million.