The Government of Murmansk Region, in Russia, has today approved a new proposal from the management of SUAL Holding for the development of its Kandalaksha aluminium smelter.

Vladimir Skornyakov, Senior Vice President of SUAL Holding, presented plans for the construction of Kandalaksha 2 to the Government of Murmansk Region. The construction envisages a new production facility with a potential annual capacity of some 230,000 tonnes of primary aluminium and alloys.

This project will harness spare energy generation capacity and labour resources in the region and will lead to an improved local transport infrastructure. As expected, the construction of this new phase in the development of the facility will significantly increase industrial production in the region and secure beneficial export and tax revenues, as well as creating approximately 2000 new jobs.

Commenting on the decision to approve the project, Mr Selin, first Deputy Governor of Murmansk Region, said: «The completion of Kandalaksha 2 is a key priority in terms of developing the region's economy as well as that of the Russian Federation.»

Speaking on behalf of SUAL, Mr Skornyakov added: «The expansion of electrolytic production in Murmansk Region is consistent with the Group's strategy to build up production capacity. The facility will incorporate aluminium production technology such as pre-baked anodes and a modern gas scrubbing system.»

In 2004 SUAL will undertake a technical — economic feasibility study for the construction of Kandalaksha 2. After the study has been completed, further details will be released regarding the proposed construction of the facility, future production capacity and the exact investment expenditure required to complete the project.

Notes to Editors:

The existing Kandalaksha Aluminium Smelter is situated within the Arctic Circle and is the world's most northerly aluminium smelter. The plant was commissioned in 1951 and since then has undergone a series of modifications and expansions to meet its present production capacity.

The plant began a programme of investment and refurbishment that includes the conversion of its production to the use of pre-baked anodes. It has also commissioned dry scrubber operations for its potlines, resulting in a significant reduction in emissions. In 2003 the smelter produced more than 70,000 tonnes of primary aluminium.