Magnitogorsk Iron and Steel Works (‘MMK’), a leading integrated Russian steel producer, announces its consolidated financial results according to IFRS for the nine months ending September 30, 2008.

Financial Highlights (in US$ million)

* based on the Company’s calculations

Key 9 months 2008 Financial Highlights

· Revenue up by 49% to US$ 9.182bn year-on-year

· EBITDA for the period up by 41% to US$ 2.673bn year-on-year

· 9 months EBITDA margin at 29.1%

· Net income up by 42% to US$ 1.483bn year-on-year

· Total debt at US$ 1.478bn, net debt at US$ 372m

Operational Background

· Strong demand for MMK products continued into Q3 2008 and provided support for steel prices

· Crude steel production for 9 months 2008 rose by 3.8% to 10.309m tons in comparison to 9 months 2007

· Commercial steel products output rose by 3% to 9.369m tons in comparison to 9 months 2007

· MMK hot-rolled coil price grew by 53% in 9 months 2008 in comparison to 9 months 2007

Given the recent weakening of the steel market, MMK adjusted its production levels for Q4 2008 in order to support prices and meet decreased demand. The management views recent production cuts at MMK as a sensible and prudent response to the current conditions.

Financial Position

MMK’s financial position remains sound and its cash flow generation is strong. Total debt equals to US$ 1.478bn. Short-term debt, including current portion of long-term debt amounted to US$ 1.220bn. Short-term debt includes revolving credit facilities in the amount of US$ 434m arranged to finance trading companies – members of MMK Group.

The company’s cash position equals to US$ 985m as of 30 September 2008 that is US$ 179m or 22% higher comparing to the H1 08 figure. Total cash position and equivalents amounts to US$ 1.106bn as of 30 September 2008. Net debt equals to US$ 372m.

Commenting on the results, Victor Rashnikov, the Chairman of MMK Board of Directors said:
“The last two months have witnessed some of the most difficult trading conditions in the steel sector in many years.
However, I would like to emphasize that MMK remains financially strong. Our modernized asset base, diversified steel making technologies, strong balance sheet, broad product mix and high level of internally generated electricity provide us with sufficient flexibility in current conditions.
Record steel prices and generally favourable market environment of the first nine months of 2008 provided support for our margins in this period and it leads us to expect good full year results. I am confident that the business is well positioned to emerge as the market leader once the market recovers.”