MMK Cost-Cutting Programme

Magnitogorsk, "02" April 2015 News Release

MMK saves $254 mln in 2014 thanks to its Cost-Cutting Programme

OJSC Magnitogorsk Iron and Steel Works ("MMK" or "Company") reports that it saved $254 mln in 2014 as a result of coordinated efforts across the Company's production and functional departments.

The result was achieved due to improved work management during major repairs and equipment modernisation ($75 mln); the optimisation of material flows and raw materials structure, as well as technical measures enacted ($57 mln); the reorganisation of fixed asset technical maintenance and the use of innovative materials ($114 mln). Management cost optimisation delivered another $8 mln in savings.

MMK achieved such significant savings in costs and resources thanks to the implementation of its Cost-Cutting Programme. In line with previous years, MMK put considerable effort into reducing its consumption of materials, energy and other resources. The Company focused on improving resources expenditure control and monitoring systems.

MMK CEO Pavel Shilyaev noted:

"We will continue looking for ways to unlock further potential for enhancing efficiency in 2015. We plan to pay particular attention to innovations, and improving our innovation-adoption system by encouraging as many as possible employees to express their technical creativity."

About MMK

MMK is among the world's largest steel producers and is one of the leaders of Russia's steel industry. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of higher value added products. In 2014 MMK Group produced 13 mln tons of crude steel and 12.2 mln tons of commercial steel products. The MMK Group's revenue in 2014 totalled USD 7.952 bln, with EBITDA at USD 1.607 bln.

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