Moody's affirms MMK Ba3 rating

Open Joint Stock Company

Magnitogorsk Iron and Steel Works

Press-release

December 28, 2011

Moody's affirms MMK Ba3 rating

On December 22, 2011 rating agency Moody's Investors Service affirmed company's ratings, including its Ba3 corporate family rating (CFR) and Ba3 probability of default rating. The rating outlook was changed to stable from positive.

In its press-release Moody's explains that a number of developments make an upgrade of MMK's ratings unlikely over the next six to 12 months so a stable rating outlook is more appropriate. These developments include pressure on steel prices and demand and declining capacity utilization just as some of MMK's new projects in Russia and Turkey are completed.

Despite the change in outlook, Moody's notes that: "MMK has a number of strengths that should enable it to weather a downturn reasonably well so Moody's affirmed its Ba3 CFR for the company. MMK is an efficient and low-cost steelmaker and is therefore resilient to a downturn as demonstrated by its performance in the 2008-2009 financial crisis. Its strong Russian market share for high-end steel products such as galvanized and coated flat-rolled steel enhances revenues. Its new Mill 5000 will strengthen its position in thick plate and large diameter pipe, products that diversify MMK's customer base. In addition, it has completed its expansion in Turkey, which should give it a strong platform from which to serve the Turkish and Middle East markets".

The stable rating outlook reflects the MMK's efficient operations, anticipated near-term boost to output and sales due to recently-completed projects, and attractive mix of products and end markets served.

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 2010 MMK Group produced 11.4 mln tons of crude steel and 10.4 mln tons of commercial steel products. The MMK Group's revenue in 2010 totalled USD 7.719 bln, with EBITDA at USD 1.606 bln, and the profit for the period at USD 232 mln.

Investor Relations Department:

Andrey Serov, Head of IR

tel.: +7 (3519) 24-52-97

E-mail: [email protected]

MMK Communications Department