2. DISCLAIMER
This document is confidentialand has been prepared by NLMK (the “Company”) solely for use at the investor presentation of the Company and may not be
reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose.
This document does not constitute or form part of any advertisement of securities, any offer or invitationto sell or issue or any solicitationof any offer to purchase
or subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form the
basis of, or be relied on in connection with, any contract or investment decision.
No reliance may be placed for any purpose whatsoever on the informationcontained in this document or on assumptions made as to its completeness. No
representation or warranty, express or implied,is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the
accuracy of the informationor opinions or for any loss howsoever arising, directly or indirectly,from any use of this presentation or its contents.
The distribution of this document in other jurisdictionsmay be restricted by law and any person into whose possession this document comes should inform
themselves about, and observe, any such restrictions.
This document may include forward-lookingstatements. These forward-lookingstatements include matters that are not historical facts or statements regarding
the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financialcondition, liquidity,
prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-lookingstatements involve risks and uncertainties
because they relate to events and depend on circumstancesthat may or may not occur in the future. The Company cautions you that forward-lookingstatements
are not guarantees of future performanceand that the Company's actual results of operations, financial condition and liquidityand the development of the
industry in which the Company operates may differ materiallyfrom those made in or suggested by the forward-lookingstatements contained in this document. In
addition, even if the Company's results of operations, financial condition and liquidityand the development of the industry in which the Company operates are
consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in
future periods. The Company does not undertake any obligation to review or confirm analysts' expectations or estimates or to update any forward-looking
statements to reflect events that occur or circumstances that arise after the date of this presentation.
By attending this presentation you agree to be bound by the foregoing terms.
2
4. BUSINESS PROFILE
4
• World’s leading steel producer with 17,2 mln t capacity
o High quality steel producer with highest profitability
o Top 10 low cost steelmaker
o #1 in Russia with 20% of Russian steel output
o 70% growth in output during the last 5 years
• Balanced business model
o Low cost raw materials with over 80% sufficiency in iron ore*
and scrap, and 100% sufficiency in coke concentrated in Russia
o Low cost steelmaking operations concentrated close to raw
materials sources in Russia with BOF/EAF split of 80%/20%
o Downstream processing located close to end-users and
integrated with the Russian steel platform
o 80-90% of finished steel products sold locally (area of
production)
• Diversified product mix and sales structure
o Flat/long products 85/15 with 40% value added steel products
o Presence in high growth (Russian construction) and mature
markets (European and US manufacturing, automotive, etc.)
o International/Russian sales 68/32
• 2012 Operating highlights
o 14,9 mln t of steel production, up 25%
o Revenue USD12.16 billion, up 8%
o 16% EBITDA margin
o Net debt/EBITDA: 1.88 with over $1 bn of cash
o The only M&M major in Russia with investment grade credit
rating
* NLMK is 100% self-sufficient in iron ore concentrate and sinter. Pellets are currently purchased from 3rd parties.
23%
28%
19%
16%
8%
11%
9%
7%
0%
5%
10%
15%
20%
25%
30%
2009 2010 2011 2012
NLMK Global average
EBITDA MARGIN NLMK VS GLOBAL AVERAGE
Source: WSD, Company data
8,2 7,9 8,6 8,9 9,1 8,5 9,1 9,1
10,5 10,6 11,5 12,0
14,9
14%
20%
-2%
3%
8%
13%
18%
23%
0
2
4
6
8
10
12
14
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
NLMK crude steel production
NLMK share in Russian crude steel output
NLMK CRUDE STEEL PRODUCTION
m t
5. BALANCED AND FAVORABLY LOCATED ASSETS
Russian production platform enhanced with international assets
2012 Crude steel
production
2012 Steel products
sales
NLMK Group 14.9 m t 15.2 m t
Moscow
Novolipetsk
Sinter: 15 m tpa
Coke: 2.6 m tpa
Steel: 12.4 m tpa
Flats: 5.7 m tpa
VIZ-Stal
Transformer steel:
0.17 m tpa
Altai-Koks
Coke: 4.66 m tpa
NLMK Europe Plates
3 rolling mills
Thick plate about
2 m tpa
Belgium
France
Italy
Stoilensky
Iron ore concentrate:
14 m tpa
Sinter ore: 1.6 m tpa
Denmark
NLMK Europe Strip
HRC 2.4 m tpa incl.:
- Pickled 1.5 m tpa
- CRC 0.8 m tpa
- Galv. 0.7 m tpa
- Pre-painted 0.1 m tpa
NLMK USA Strip
1 mini-mill & 2 rolling mills
HRC 2.7 m tpa incl.:
- CRC 0.7 m tpa
- HDG 0.8 m tpa
RUSSIA
Czech Rep.
USA
NLMK Long products
Steel : 2.2 m tpa
Longs: 2 m tpa
5
Zhernovskoye
(Feasibilitystudy)
NLMK Kaluga
Steel (EAF): 1.5 m tpa
Longs: 0.9 m tpa
Usinsky-3
(Feasibilitystudy)
- NLMK Group production and
trading assets
- NLMK Europe and NLMK USA
(acquired Steel Invest and
Finance rolling facilities)
- Service centres
- Licenses to develop coal deposits
6. EFFICIENT VERTICAL INTEGRATION
~85%*
~115%*
~85%**
56%***
0%
20%
40%
60%
80%
100%
120%
Iron ore Coke Scrap Electricity
SELF-SUFFICIENCY
* NLMK currently is over 100% self-sufficient in iron ore concentrate, sinter ore, sinter
and coke. Pellets are purchased from 3rd parties. From 2016 Group to achieve 100% self-
sufficiency in pellets.
** at Russian operations. *** at Novolipetsk 6
• Iron ore: 85% self-sufficiency*
o The Group is over 100% self-sufficient in iron ore concentrate
with over 100 years of mine life
o One of the most efficient iron ore producer globally
• Coke: over 100% with modern facilities
• Scrap: largest collector in Russia
• Energy: 56% self-sufficiency ***
• Coal: portfolio of coal deposit rights give an option
to increase self-sufficiency
Self-sufficiency in 2012
COAL PRICE: DOMESTIC VS INTERNATIONAL
50
100
150
200
250
300
350
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Coking coal, Australia, FOB
Coking coal, Russia FCA
Source: Metal Bulletin, Metal Expert
200
250
300
350
400
450
500
550
600
650
3 123 236 342 454 546 632
NLMK
Novolipetsk
Cumulative BOF capacities, mt/y
$/t
NLMK SLAB PRODUCTION COSTS VS GLOBAL
Source: WSD. Estimation of slab cash cost for BOF producers w/o overheads
Slab Price
7. DIVERSIFIED SALES
• Wide product mix with strong value-added share
• Rational export/domestic market balance
• Slabs sales hedged by overseas rolling operations
• Market penetration through constantly improving
product mix and quality
• Niche product sales in focus of development
(transformer steel, specialty thick plates, etc.)
Q2 ‘13 SALES AND REVENUE BY REGIONS
DIVERSIFIED SALES STRUCTURE
84%
20%
35%
10%
70% 35%
6% 10%
30%
0%
20%
40%
60%
80%
100%
NLMK Russia NLMK Europe NLMK USA
Other
Machinery
Construction
7
40%
20%
11%
9%
9%
11%
37%
16%
12%
11%
12%
12% Russia
Europe
N.America
Middle East
Asia
Other regions
Sales – outer
circle
Revenue – inner
circle
Total sales 3.77 million tonnes
SALES BY PRODUCT Q2 ‘13
Total revenue $2.83 million
NLMK’s segment’s sales to consuming industries. w/o international trading. 2011 data
2%
2%
2%
4%
8%
13%
6%
26%
10%
25%
2%
Metalware
Dynamo steel
Transformer steel
Pre-painted steel
Galvanized steel
CRC
Plate
HRC
Long products
Slabs
Pig iron
37%
HVA
products
HVA
10. 0
10
20
30
40
50
60
70
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Manufacturing PMI (r.h.) US construction starts US auto sales
1,5
1,7
1,9
2,1
2,3
2,5
2,7
2,9
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
5-yearave.
-
100
200
300
400
500
100
300
500
700
900
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
HRC US domestic prices, EXW HRC Spread US vs China (RHS)
Spread US HRC vs scrap (RHS)
US MARKET
Source: US Census Bureau, Ward’s Automotive Group
US PRICE DYNAMICS
$/metric t
Source: Metal Bulletin
INVENTORY LEVEL
• Supply / Demand
o LT demand looks strong with construction, machinery and
energy sectors performing relatively well
o Supply-side provides support to prices on improved producers’
discipline and reduced imports
• Prices
o Steel prices have strengthened significantly since May
o Further price increases expected in September as buyers come
back to the market after holidays and supply remains tight
• Inventories
o Months of supply are below average at 2.3 in July
o Lead times for HRC and CRC increased to 4.7 and 6.3 weeks as
buying activity improves
US CONSTRUCTION INDUSTRIAL SECTOR INDICATORS
US inventory/sales ratio, months
10
index
Jan 2010=1
Source: Bloomberg
$/metric t
11. 500
700
900
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
HRC, Northern EU, EXW Plates, Northern EU, EXW
5%
-8%
-35%
22%
6%
-10%
-3%
2%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
0
50
100
150
200
250
2007
2008
2009
2010
2011
2012
2013E
2014E
ASU, mt ASU, y-o-y, rhs
m t
1,0
1,5
2,0
2,5
3,0
3,5
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
5yearav.
EUROPEAN MARKET
EU PRICE DYNAMICS
$/t
Source: Metal Bulletin
• Supply / Demand
o Run rates up slightly in early Q2 driven by restocking
o Subdued demand due to overall contraction in manufacturing
and construction activity
• Prices
o Steel prices supported by recent price hikes announcements
and improved sentiment on international markets although
strong recovery is not expected
• Inventories
o Inventory/sales ratio moved up slightly in Q2 after destocking at
the end of Q1
GERMANY: STEEL INVENTORY
Source: CRU. I/S ratio adjusted by CRU (three month moving average).
.
11
Inventory/salesratio, months
APPARENT STEEL CONSUMPTION IN EU
Source: Eurofer
12. 100
600
1 100
1 600
2 100
2 600
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Flats Longs
0
10
20
30
40
50
60
70
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
• Growth in steel consumption
o 2013 ASU to grow by 2.6% yoy to 43 m t (WSA forecast)
o 7M’13 finished steel consumption up by 3.4% yoy to 24.2 m t
due to increased longs consumption (+6.4% yoy)
o Construction and infrastructure sector – key contributors
o Long-term fundamentals for steel consumption growth remain
strong
• Pricing trends
o Ordinary grades replicate export market situation
o More stable pricing for value added grades
RUSSIAN MARKET
$/t
DOMESTIC STEEL PRICES, HRC / CRC (EXW)
Sources: Metal Bulletin, Metal Expert
m t
STEEL CONSUMPTION IN RUSSIA
Sources: McKinsey, World Steel Association
Delayed steel consumption is 170 mt
FINISHED STEEL CONSUMPTION
‘000 t
Sources: Metal Expert, NLMK 12
300
400
500
600
700
800
900
1 000
1 100
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Slab export, Russia FOB HRC Russia, EXW
CRC Russia, EXW HDG Russia, EXW
66%
7%
12%
15%
Столбец1
Pipes&tubes
industry
Machinery
Processing, incl.
white goods and
construction
Construction &
infrastructure
13. 0
10
20
30
40
50
60
70
80
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013E
RUSSIAN MARKET - Construction
‘000 t
STEEL CONSUMPTION IN CONSTRUCTION
Source: Metal Expert
HOUSE COMPLETIONS, RUSSIA
Source: Rosstat, NLMK estimates. Ministry of Economic Development
FLOOR SPACE PER CAPITA, M2
Source: Company estimates 13
• Market overview
o Construction (sq m completions) surpassed pre-crisis peak
levels in 2012
o Residential completions up by 6.2% yoy in 7M’13
o New house sales supported by robust consumer confidence
o 7M’13 steel consumption in construction and infrastructure
up by 9% yoy with rebar consumption increasing by 14% yoy
• NLMK strategy
o Quality and service improvement
o Greenfield expansion of long steel by 70% in 2013
o New long steel products (angles, channels) including niche
one – high strength rebar (A1000)
67
48
37
23
0
10
20
30
40
50
60
70
80
US EU Eastern
Europe
Russia
50
%
50
%
Столбец1
Normal
Obsolete
m square
meters
0
500
1 000
1 500
2 000
2 500
3 000
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
Nov-10
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
Jul-13
Flat steel Long steel
14. -
20
40
60
80
100
120
140
160
180
200
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Oct-10
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Flat steel Long steel
• Market fundamentals
o 3.3 times growth in cars production since 2009
o 50% of car fleet is over 10 years old
• Recent developments
o 7M’13 steel consumption in automotive sector down by 18% yoy
as auto production remains soft
o Auto sales in 7M’13 down by 6.2% yoy
• NLMK strategy
o New steel grades (upgrade of BOF) – IF, etc. steels
o Downstream development to grow market share
o Technology and experience transfer and synergy with its European
division
RUSSIAN MARKET – Automotive
‘000 t
STEEL CONSUMPTION IN AUTOMOTIVE
Source: Metal Expert
Source: Avtostat 14
AGE OF CAR FLEET IN RUSSIA
13%
15%
21%
17%
11%
23% < 3 years
3-5 years
5-10 years
10-15 years
15-20 years
>20 years
50/50
RUSSIA: PRODUCTION OF CARS AND CAR FLEET
14
1,0 1,0
1,1 1,1
1,2
1,3
1,5
0,6
1,2
1,7
2,0
0
5
10
15
20
25
30
35
40
0,0
0,5
1,0
1,5
2,0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Passenger cars production, l.h. Car fleet , r.h.
m units
Source: Rosstat
m units
15. RAW MATERIALS MARKET
• Prices and demand in international markets
o Correlation between raw material and steel price trends
o In Q2 global prices for iron ore, coking coal and scrap
declined by 15%, 6% and 7%, respectively
o Raw materials prices are improving since July on the
back of supply constraints and steel prices recovery
o Raw materials demand remains solid as steel output expands
o Chinese imports of iron ore were up by 7.7% yoy in
7M’13
o Iron ore inventories at Chinese ports hit bottom in
March’13 and started to recover
• Russian coking coal market remains oversupplied
o 7M’13 exports increased by 33% while domestic shipments went
down by 3.7%
40
50
60
70
80
90
100
110
Jan-11
Mar-11
May-11
Jul-11
Sep-11
Nov-11
Jan-12
Mar-12
May-12
Jul-12
Sep-12
Nov-12
Jan-13
Mar-13
May-13
GLOBAL RAW MATERIAL PRICES
Sources: Metal Bulletin
0,4
0,5
0,6
0,7
0,8
0,9
1,0
1,1
1,2
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Iron ore fines (Fe 62%) import China, CFR
Coking coal, export Australia, FOB
Scrap export Europe, FOB
HRC China export, FOB
CHINA: IRON ORE IMPORT AND INVENTORIES
m t
Sources: Bloomberg
Jul-13
+5%
in Q2
425
458
100
150
200
250
300
350
400
450
500
Импорт ЖРС
7М '12 7М '13
+7.7%
IRON ORE
IMPORT
IRON ORE INVENTORIESAT CHINA
PORTS m t
Jan 2012 index 1.0
15
RUSSIA: COKING COAL MARKET BALANCE
Sources: Metal Expert, NLMK estimates
-14,2 -17,5 -18,6
40,9 40,6 39,0
2,5 2,0 2,0
-20
-10
0
10
20
30
40
50
2011 2012 2013E
Export Sales to domestic market Import
m t
16. Global average
0%
20%
40%
60%
80%
100%
120%
Q1
'08
Q2
'08
Q3
'08
Q4
'08
Q1
'09
Q2
'09
Q3
'09
Q4
'09
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Lipetsk plant capacity
utilization
OPERATING RESULTS
• > 95% - capacity utilization rate in 2012
• +25% - crude steel production in 2012 to 14.9 m t
o Novolipetsk: 12.2 milliont, +25% yoy
o NLMK Long Products: 1.8 milliont, +23% yoy
o Foreign Rolled Products: 0.9 million t, +27% yoy
• Q2 ‘13: 3.785 m t, +2.5% qoq
• Q3 ‘13 is expected to grow by 4-5% qoq to 3.9 m t
16
STEELMAKING CAPACITY UTILISATION:
NOVOLIPETSK AND GLOBAL AVERAGE
NLMK CRUDE STEEL PRODUCTION
88%
83%
97%
94%
87%
90%
96%
94%
70%
80%
90%
100%
NLMK USA NLMK Long
products
Novolipetsk NLMK Group
Q1 '13 Q2 '13
NLMK: STEELMAKING CAPACITY UTILIZATION
3,0 3,1 3,1 3,0 3,0 3,1
0,4
0,5 0,5 0,4 0,5 0,5
0,3
0,2 0,2 0,2 0,2 0,2
3,6
3,8 3,8 3,7 3,7 3,8
0
1
2
3
4
Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13
Steel segment Long products segment Foreign rolled products segment
m t
17. 3,26
3,00
2,80 2,86 2,83
18%
16%
14%
11%
14%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2,0
2,2
2,4
2,6
2,8
3,0
3,2
3,4
Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13
Revenue EBITDA margin
595
483
390
318
400
453
347
296
154
221
0
100
200
300
400
500
600
700
Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13
EBITDA Capex
17
• 12М ’12 financial results
o Revenue $12,157 m (+4% yoy)
o EBITDA $1,900 m (-16% yoy)
o EBITDA margin 16% (-3,6 p.p.)
o Operating cash flow : $1,825 m (+1%)
o Capex: $1,453 m (-29%)
o Net debt/EBITDA: 1.88
• Q2 ’13 financial results
o Revenue $2,83 m (-1% qoq)
o EBITDA $400 (+26% qoq)
o EBITDA margin 14% (+3 p.p.)
o Capex: $221 m (-51% yoy)
• Cash flow generation
o Growth in cash generation coupled with continuous
deceleration in Investments
FINANCIAL HIGHLIGHTS
$ m
$ bn
FINANCIAL PERFORMANCE, QUARTERLY
EBITDA AND CAPEX
18. $1,5 $1,4
Cash and equivalents
$1,5
$1,0
$3,5
$3,8
$-
$1,0
$2,0
$3,0
$4,0
$5,0
as at 31 Mar 2013 as at 30 Jun 2013
ST debt LT debt
3,0
2,5
2,7
3,1
3,3 3,4
2,0
2,2
2,4
2,6
2,8
3,0
3,2
3,4
3,6
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
18
• Debt position as at Q2’13
o Net debt: $3.42 bn (-1% qoq)
o Gross debt: $4.79 bn (-3%)
o Net debt / 12M EBITDA: 2.15
• Debt portfolio optimization
o Short term debt reduced to $0.99 bn (-33%)
o Average debt maturity increased to 3.4
• Ratings
o Investment grade rating from Moody’s & Fitch
DEBT POSITION
MATURITY AND NET DEBT/EBITDA
Weighted average
maturity
Years to
maturity
Net debt/L12M EBITDA
LT AND ST DEBT
27%
40%
37%
40%
36%
20%
0%
20%
40%
60%
80%
100%
Debt Revenue*
RUR USD Euro
Q2’13 CURRENCY OF THE DEBT AND REVENUE
$ bn
* Based on management accounts data including estimates
1,69
1,90 1,84 1,88 1,93 2,15
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
19. DEBT MATURITY
• Maturity schedule
o Substantial liquidity cushion incl. $1.36 bn of cash and
equivalents and $2.33 bn of committed credit lines
o ST debt: $0.99 bn (-33% qoq)
o ECA financing
o Credit lines for working capital financing
o LT debt: $3.79 bn (+10% qoq)
o Eurobonds and ruble bonds
o Long term part of ECA
o European operations’ long term debt
• Financing costs as a % of EBITDA are low
19
LIQUID ASSETS AND ST DEBT MATURITY*
* The ST maturity payments include interests accrued and bond coupon payments. ** Maturity payments do not include interest. *** Including interest capitalized as PPE
432
596
483
390
318
400
67 62 65 68 64 62
$0
$100
$200
$300
$400
$500
$600
$700
Q1 '12 Q2 '12 Q3 '12 Q4 '12 Q1 '13 Q2 '13
EBITDA Interest expense
$ m
EBITDA AND INTEREST EXPENSE***
790 724
1044
2180
$0
$500
$1 000
$1 500
$2 000
$2 500
2013 2014 2015 2016 and beyond
RUB bonds ECA EBRD NLMK Europe Others Europbonds (USD)
TOTAL DEBT MATURITY**
$ m
1 362
994
2 331
385
443
132 34
$0
$500
$1 000
$1 500
$2 000
$2 500
$3 000
$3 500
$4 000
Liquid assets Q3 '13 Q4 '13 Q1 '14 Q2 '14
$ m Undrawn committed
credit lines
Cash and equivalents
20. 20
• Market overview
o Globally run rates remain high aggravating the supply/demand imbalance while the market continues to be soft
o End user demand continues to be anemic due to lower activity in a number of regions. In Russia we expect stable demand from the
construction sector
o Pricing environment for steel products and raw materials remains volatile
• Steel production
o NLMK steel output in Q3 is expected to exceed Q2 ’13 level with 3.9 m t (+4%) driven by the NLMK Kaluga ramp-up
• Financial results
o Q3 ‘13 revenue is expected to remain sequentially flat
o Profitability will be driven by steel / raw material price spreads that continue to be volatile
o The Company will continue to optimize its cost base through the entire value chain to offset the weaker pricing environment and cost
inflation
OUTLOOK
22. 22
GLOBAL MARKET TRENDS
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
mtpa
Excess capacity Crude steel production
Capacity utilization rate (RHS)
1980-2007 average run rate – 86%
2010-2012 average run rate – 77%
GLOBAL OVERCAPACITY
81% 78%
61%
35%
26%
11%
7%
22%
22%
28%
8% 15% 17%
44% 46%
0%
25%
50%
75%
100%
1995 2000 2005 2010 2011
Steelmaking Coking coal Iron ore
PROFITABILITY SHIFT TO UPSTREAM
Source: McKinsey Research. EBITDA split for HRC
Source: World Steel Association
STEEL DEMAND BY REGION
28%
12%
20%
4%
18%
9%
6%
46%
12%
5%
5%
15%
10% 9%
1980 2012
Other regions
Asia other
Japan
China
North America
CIS
Europe
Source: World Steel Association
• Demand shift in favor of emerging markets (EMs)
o Over 50% of demand & growth comes from EMs
o Developed markets (DMs) retained sizable demand, but still
below historic peak consumption levels
• Global overcapacity
o Over 0.5 bn t of steelmaking overcapacity
o Capacity growth in EMs and capacity retention in DMs
• Profitability has slipped from steelmaking to mining
• Further margin shift is unlikely but prices will be
supported
o Significant new capacities on stream vs.
o Capital cost growth & operational cost inflation
23. 23
Maximising upstream
integration into
key resources
1
Maintaining efficient and
sustainable growth
2
Improving efficiency
of operations
3
Developing niche
segments
4
Operating in a safe, socially
and environmentally
responsible manner
5
STRATEGIC OBJECTIVES OF NLMK GROUP
24. 0
6
0
2
4
6
8
10
2012 2016
12
14
>18
0
2
4
6
8
10
12
14
16
18
20
2010 2012 2016
MAXIMISING UPSTREAM INTEGRATION IN KEY RESOURCES
• Iron ore
o Growth in iron ore concentrate production
o Pelletizing plant of 6 m t - 2016
• Coal
o Use of alternative technology to improve coke quality and
decrease coal consumption
o PCI technology installation to reduce by 20/30% coke and by
70% natural gas consumption per 1 t of steel
• Scrap
o Target self-sufficiency of Russian operations at 80-85%
• Energy
o Efficiency gains and use of in-house generated energy (from by
product gases)
EXPANSION OF IRON ORE CONCENTRATE AND
PELLETS CAPACITY
24
m t
+ over 6 m t
24
+ 6 m t
Iron ore concentrate Pellets
m t
0
1
2
3
4
5
6
7
8
2010 2011 2013-14 2014-15
New BF#7
COAL CONSUMPTION DYNAMICS (LIPETSK)
m t
PCI effect
Sources: Bloomberg industries
Source: Bloomberg
0
20
40
60
80
100
120
140
160
180
0% 25% 50% 69% 90%
GLOBAL IRON ORE PRODUCTION COSTS
NLMK (Stoilensky)
$/t
2012 Cumulative capacities:1.4 bn t
25. 12.3
3.4
1.5
17,2
0
4
8
12
16
2010 BF#7 EAF (Kaluga) 2014
Existing BF#7 EAF (Kaluga)
mtpa
BF: 3.4 m tpa
from mid 2011
EAF: 1.5 m tpa
from 2013
MAINTAINING EFFICIENT AND SUSTAINABLE GROWTH
• Capacity growth is complete
o BF/BOF steelmaking (Russia) : 3.4 m tpa
Brownfield project of ~$500/t* investments
o EAF steelmaking (Russia): 1.5 m tpa
Greenfield project of ~$750/t* investments
• Improved steel grades portfolio
o Allows for further improvement in downstream products
portfolio and entering new markets
• Expanded diversity of products
o New gauges of semis added – e.g. 2.5 m tpa of wide slabs
• Low cost position supplemented by quality
improvements
o Entering new markets
o Improving position in the existing markets
o Allowing for the full capacity load through the cycle
CRUDE STEEL CAPACITY GROWTH: +40%
25
Crude steel capacity growth for the Russian operations
* - total investments per annual capacity of the facility
30%
5%
58%
48%
12%
47%
0%
20%
40%
60%
80%
100%
Jan-11 Jan-12
Finished (Intl)
Finished (Russia)
Semis
INCREMENTAL STEEL SUPPLY HEDGED THROUGH
CAPTIVE ROLLING
%
26. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0,0
0,5
1,0
1,5
2,0
2,5
Q1'08
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
Q1'10
Q2'10
Q3'10
Q4'10
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
Q2'12
Q3'12
Q4'12
Q1'13
Q2'13
Russian production Import Import share, rhs
MAINTAINING EFFICIENT AND SUSTAINABLE GROWTH (2)
NLMK Kaluga project
• Russian rebar market
o Consumption growth in Russia: x1.9 against 1H‘10
o Import growth in 1H’13: +60% yoy, x3 vs. 1H’10
o Regional demand/supply imbalance
• Modern 1.5 m tpa EAF capacities
o Product mix in demand from construction: rebar and sections
o Favorable location: 90 km from Moscow – consumption cluster
(Central district)
o Total investments c. $1.2 billion (90% by 2013)
o Cost advantage (logistics, modern production, scrap collection
network)
26
RUSSIAN REBAR CONSUMPTION
250
950 1 000
0
200
400
600
800
1000
1200
2013Е 2014Е 2015Е
NLMK KALUGA: PRODUCTOIN PLANBALANCE OF PRODUCTION AND CONSUMPTION AT REGIONS
Sources: Metal Expert. Data for 2012
46%
21%
8% 9% 8% 6%
1% 0%
17%
12%
31%
18%
11%
7%
2% 1%
0%
10%
20%
30%
40%
50%
Urals
Siberia
Central
Privolzh
sky
North-
West
South
FarEast
North
Caucasi
an
Share in long products production
Share in long products consumption
long products deficit –
app. 3,8 million t/y
000’t
Source: Metal Expert
million t
Record level of 2008
Import, share is over 20%
27. IMPROVING EFFICIENCY OF OPERATIONS
• Cost optimization programs
o Novolipetsk
o Altai-Koks
• Optimization of coke making, sintering, BOF
operations
o Maximum use of equipment potential
o Minimizing raw material, fuel, material and energy
consumption
o Optimizing fuel and raw material balance structure
o Reducing environmental footprint, including waste
management
• Significant economic potential
o Costs cut by over $60 m in 2013 alone, target sustained
savings of over $100 m since 2014*
27
COST OPTIMIZATION AT LIPETSK SITE
REDUCED RAW MATERIAL CONSUMPTION
FOLLOWING OPTIMIZATION MEASURES
100% 100% 100%
96,5%
97,6%
93,0%
80%
85%
90%
95%
100%
105%
Coal Pellets Scrap*
Before optimization After
Lower specificraw material consumption,100% - Dec’12 level
* Reduced consumption of purchased scrap
Note: projected average annual savings
36 36
60
24
40
0
20
40
60
80
100
120
H1
2013
2013 target 2014 and onward
$ million >$100 m
compared to
2012
>$60 m
compared to
2012
- H2 2013 - 12M
2013
* Estimation of an effect comparing to 2012 level of utilization rates and prices (for Novolipetsk and Altai-Koks)
28. AIR EMISSIONS AND WASTE WATER DISCHARGE
DEVELOPING NICHE SEGMENTS
DOWNSTREAM CAPACITY ADDITIONS
28
• Portfolio of niche strategies based on quality
improvement...
o Steelmaking assets upgrade at Novolipetsk to offer new high-quality
products for the automotive, construction, white goods and
electrical engineering industries
o Production of new types of wide / thick slabs at Novolipetsk
o Launched a transformer steel production
• ...and capacity additions in attractive segments
o Downstream capacity additions at Novolipetsk (HRC/CRC)
o Q&T line at NLMK Clabecq
o New thick plates line at NLMK Dansteel
o New rebar capacity at Kaluga site to supply growing construction in
Central region
• Building sustainable business
o In 2012, the Group invested $77 m in environmental projects
o Commissioning of New Recovery Cogeneration Plant led to a
15 fold gross emissions reduction
o First steelmaking company to achieve zero waste water
emissions (at Novolipetsk)
‘000 t
1 500*
400
350
250
Long
(NLMK Kaluga
mini-mill)
HRC
(Lipetsk site)
CRC
(Lipetsk site)
Q&T
(EU Plate)
* Current capacity is 900 kt with potential for an additional 600 kt
RESPONSIBLE OPERATIONS
43 43
41
39
36
41
38
36
31 30 29 28
23
0
0,5
1
1,5
2
0
10
20
30
40
50
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Specific air emissions (kg/t), lhs
Specific waste water discharge (kg/t), rhs
29. 31%
69%
Столбец1Development
Maintenance capex
2013 INVESTMENTS
• Capex programme
o Lower capital intensity
o Focus on efficiency enhancement and niche products
o Balanced approach to assessing new projects
o Flexibility under various market scenarios
• Long products division development
o NLMK Kaluga launch (EAF+ rolling mill)
o Development of scrap collecting facilities
• Strengthening vertical integration
o Pelletizing plant construction projects launched at Stoilensky
o Coke making projects (PCI, etc.) to reduce energy costs
• Quality improvement and niche products
o Mastering the revamped rolling mill at NLMK Dansteel
o Niche product development at NLMK Clabecq
o Continued GO steel development programmed at
Novolipetsk and at VIZ-Steel
29
1936
1115
1462
2020
1453
1000
0
500
1000
1500
2000
2008 2009 2010 2011 2012 2013Е
CAPEX DYNAMICS
$ m
45
24
17
30
24 20
0
10
20
30
40
50
2008 2009 2010 2011 2012 2013E
MAINTENANCE CAPEX PER TONNE OF STEEL
$/t
30. 30
APPENDIX
Q2 ’13 CONSOLIDATED CASH COST OF SLABS
(AT LIPETSK SITE), $/T
Q2’13 Q1’13
Coke and coking coal $91 $99
Iron ore $64 $73
Scrap $37 $34
Other materials $31 $34
Electricity $21 $21
Natural gas $18 $21
Personnel $33 $31
Other expenses $53 $51
Total $348 $364
CASH COST OF SLABS
(AT LIPETSK SITE), 2012-2013, $/T
Q1'12 $395
Q2'12 $411
Q3'12 $383
Q4'12 $361
Q1'13 $364
Q2'13 $348
