Arcelor and Severstal Inaugurate Severgal, Their Joint Galvanising Line for the Russian Automotive Market

This joint venture produces high-end coated steel for the dynamicRussian automotive market. Severstal Group holds a 75% stake andArcelor a 25% stake in Severgal, which, after ramp-up, will have anannual production capacity of more than 400,000 tons of galvanisedsteel.

At the ceremony, Arcelor was represented by Christophe Cornier,deputy Senior Executive Vice President of Arcelor responsible for theFlat Products activities in Europe and Automotive World wide, andSeverstal by Aleksey Mordashov, Head of the Severstal Group holding,and his deputy Vadim Makhov, Chairman of the Board of Directors of theSevergal joint venture. Authorities were represented by His RoyalHighness the Prince Guillaume of Luxembourg, the Governor of theVologda region Vyacheslav Pozgalev, as well as representatives of thegovernments of the Russian Federation and Luxembourg.

During the ceremony, Aleksey Mordashov expressed his satisfactionat the cooperation between Severstal and Arcelor, pointing out that"thanks to our partner, Severgal received zinc coating technologiesthat are unique for the Russian market, as well as an access to theEuropean steel products distribution network". "However, he added, Iconsider that the most valuable Arcelor contribution to our jointproject is experience, knowledge and responsibility, as well ashighest management and production standards that were shown to us byour European colleagues".

Christophe Cornier also praised the Arcelor-Severstal partnership,saying: "By entering this venture to jointly produce state of the artgalvanised steel, within a highly competitive configuration and on avery promising market, the two outstanding steelmakers have created awin-win situation. Severgal is one of the lines designed to producesteel for the outside body panels of cars built around the world, asArcelor does in Brazil, Canada, China or Turkey, thus strengtheningour worldwide automotive leadership".

Severgal, which is located next to Severstal's facilities, willproduce Extragal(TM), an Arcelor proprietary technology. It willemploy 300 staff. It represents an investment of 210 million U.S.dollars. Eventually, Severgal will also produce Galvalia iron and zinccoating. In the future, Severgal plans to become one of the keysuppliers of hot-dip galvanised sheet to the automotive industrypresent in the Russian Federation.

Open joint-stock company (OAO) Severstal is the parent enterpriseof multi-business holding Severstal Group and of its metallurgicaldivision. The Joint Stock Company "Severstal" is the successor toCherepovets Iron & Steel Works, the history of which started in 1955,when the first blast furnace was blown in. In 2005, the Companycelebrated its semi-centennial jubilee. The number of Severstalpersonnel working at Cherepovets site is about 36,500. According toInternational Iron & Steel Institute (IISI), JSC Severstal is one ofthe biggest steelmakers in Russia, and as per performance figures in2005, its rank is 13th among the 30 biggest steelmaking companies inthe world.

Arcelor is the number one steel company in the world with aturnover of 32.6 billion euros in 2005. The company is the worldleader for the automotive sector and holds leadership positions in itsmain markets: construction, household appliances and packaging as wellas general industry. The company - number one steel producer in Europeand Latin America - ambitions to further expand internationally inorder to capture the growth potential of developing economies andoffer technologically advanced steel solutions to its globalcustomers. In 2006, Arcelor employs 110,000 associates in over 60countries. The company places its commitment to sustainabledevelopment at the heart of its strategy and ambitions to be abenchmark for economic performance, labour relations and socialresponsibility.