MMK.L Regulatory News (MMK)

Open Joint Stock Company

Magnitogorsk Iron and Steel Works

August 26, 2011

OJSC Magnitogorsk Iron and Steel Works ("MMK")

H1/Q2 2011 FINANCIAL PERFORMANCE HIGHLIGHTS

Ø MMK Group H1 2011 sales amounted to USD 4,633 mln, 25% higher y-o-y.

Ø MMK Group Q2 2011 sales amounted to USD 2,417 mln, 9% higher q-o-q.

Ø Growth was driven by increased revenue from High Value Added (HVA) products sales (+33% in H1 2011, +12% in Q2 2011).

Ø The share of HVA products in MMK Group's sales was 38% in H1 2011 and 37% in Q2 2011.

Ø Operating profit in Q2 2011 rose 5% q-o-q, amounting to USD 163 mln.

Ø H1 2011 EBITDA totalled USD 783 mln, 3% lower y-o-y.

Ø Q2 2011 EBITDA totalled USD 380 mln, a q-o-q decline of 6%.

Ø Profit for Q2 2011 amounted to USD 13 mln, including one-offs (Q1 2011: USD 134 mln). Excluding one-offs, Q2 2011 profit amounted to USD 58 mln (Q1 2011: USD 60 mln).

Ø Q2 2011 financial highlights were primarily influenced by increased raw materials costs. Further raw materials cost increase is not expected for the remainder of the year.

Ø Steel production is expected to grow q-o-q in Q3 2011, mostly driven by an expected increase in activity on both domestic and export markets.

MMK group consolidated income statement highlights

Ø Sales growth was driven by increased revenue from HVA products, which grew at a faster pace and amounted to USD 974 mln in H1 2011 (33% higher y-o-y), revenue from HVA sales in Q2 2011 increased 12% q-o-q and equalled USD 515 mln.

Ø MMK's average steel price continued to increase in Q2 2011, up 6% q-o-q to USD 807.

Ø Growth in costs was mainly driven by higher prices for raw materials. Iron ore contract prices rose about 30% q-o-q. Coking coal prices grew 15%, scrap prices grew 5% q-o-q.

Ø Iron ore contract price has decreased by 2% in Q3 2011, while coking coal and scrap prices remained stable. Cost inflation due to raw materials costs is not expected for the remainder of 2011.

Ø An increase in MMK's average steel price contributed to an operating profit of USD 163 mln in Q2 2011, 5% higher q-o-q.

Ø Q2 2011 EBITDA amounted to USD 380 mln and MMK's EBITDA margin was 16%. Q2 2011 EBITDA was 6% lower q-o-q due to one-off factors. Excluding these factors, Q2 2011 EBITDA equalled USD 372 mln, which corresponds to the Q1 2011 result (USD 375 mln).

Ø Profit for Q2 2011 amounted to USD 13 mln. The q-o-q decrease was due to a positive fx contribution totalling USD 74 mln in Q1 2011, while in Q2 2011 the company witnessed a fx loss of USD 25 mln and impairment of fixed assets of USD 20 mln.

Balance Sheet HIGHLIGHTS

Ø Total assets as of June 30, 2011 were up 11% from Dec 31, 2010, and amounted to USD 18,561 mln.

Ø PP&E grew 11% during the 6-month period to USD 13,497 mln at the end of Q2 2011.

Ø The balance sheet remains characteristically stable: equity accounted for about 60% of total assets at the end of Q2 2011.

Ø Gross debt was USD 4,134 mln as of June 30, 2011. Debt at the beginning of 2011 was USD 3,548 mln.

Ø Overall USD 1,223 mln was raised in H1 2011, USD 871 mln was paid off.

Ø Cash and cash equivalents, including highly liquid assets, amounted to USD 1,611 mln. Thus, net totalled USD 2,523 mln.

Ø Raised funds are mainly used for the company's investment activities in property, plant and equipment and financing of share acquisition of MMK-Atakas.

Ø MMK invested USD 328 mln in property, plant and equipment during Q2 2011 (USD 381 mln in Q1 2011, USD 543 mln in Q4 2010). Total capex levels are planned to amount to USD 1.1 bln in 2011 (USD 2.2 bln in 2010).

Ø Along with investments in property, plant and equipment, MMK finances acquisition of 50 percent minus one share of MMK-Atakas from the Atakas Family for USD 485 mln. The first part in the amount of 50 percent was paid in Q1 2011, the other part in the amount of 50 percent is planned to be transferred by the end of Q3 2011.

Ø The primary investment projects due for completion are the MMK plant in Turkey and Mill 2000 in Magnitogorsk, which is designed to produce high-quality automotive cold-rolled steel. These projects are part of MMK's strategy to increase production of HVA products and substitute imports in the Russian and Turkish markets.

MMK Group Operational highlights

Ø Crude steel output in H1 2011 amounted to 5.9 mln tonnes (+3% y-o-y).

Ø Finished steel products output in H1 2011 equalled 5.3 mln tonnes (+4% y-o-y).

Ø MMK Group HVA steel products output was 2,050 thousand tonnes in H1 2011 (+10% y-o-y)

MMK steel operations in Russia

Ø Finished steel products output in H1 2011 reached 5,234 thousand tonnes, 3% higher y-o-y. This growth was driven by the recovery of global and Russian economies as well as the ramp-up of production of new products at MMK.

Ø MMK HVA steel products output in H1 2011 amounted to 1,713 thousand tonnes, 4% higher y-o-y.

Ø MMK H1 2011 domestic shipments amounted to 3,565 thousand tonnes of finished steel products, up 9% y-o-y. The domestic market accounts for 68% of MMK sales.

Ø In money terms, shipments to Russia and the CIS accounted for 74% of total steel products sales in Q2 2011.

Ø HVA steel products accounted for 43% of domestic shipments in Q2 2011.

Ø MMK's major domestic clients remain pipe-makers, machine building and car manufacturing companies, which together accounted for 54% of domestic shipments in H1 2011.

Ø MMK's domestic sales are focused in the Urals and Volga regions. Shipments to these regions accounted for 72% of domestic shipments and 48% of total shipments in Q2 2011. Demand for MMK steel in these key regions grew by 17% y-o-y in H1 2011.

Ø MMK export shipments totalled 1,669 thousand tonnes in H1 2011. The largest export markets for MMK remain the Middle East and Europe.

Ø Unlike domestic sales, 84% of export sales consisted of hot-rolled steel in H1 2011.

MMK production in Turkey

Ø Finished steel products at MMK-Atakas in Q2 2011 amounted to 84 thousand tonnes, representing a 3-fold q-o-q increase. The increase was due to the launch of the full production cycle.

Ø MMK-Atakas is expected to produce more than 700 thousand tonnes of steel products in 2011. Full production capacity (2.3 mtpa of finished steel products) should be reached by the end of 2011.

BELON COMPANY operational Highlights - ÌÌÊ group Coal segment

Ø Production of coking coal concentrate amounted to 1,486 thousand tonnes in H1 2011, and 720 thousand tonnes in Q2 2011.

Ø MMK Group coal segment sales equalled USD 317 mln in H1 2011. Q2 2011 sales equalled USD 159 mln.

Ø H1 2011 EBITDA amounted to USD 114 mln, taking the EBITDA margin to 36%. Q2 2011 EBITDA amounted to USD 44 mln, and the EBITDA margin was 28%.

Ø In Q1-Q2 and the beginning of Q3 2011 a large-scale change of walls was conducted. These works resulted in decreased volumes of mined coal and necessity to purchase more volumes of coking coal on the side to produce coking coal concentrate, which led to decreased marginality of operations. After completion of these works it is expected to recover production volumes of coking coal and coking coal concentrate.

discussion of the market environment

Overall Russian steel consumption is expected to grow by 10% in 2011, mostly driven by auto and machinery builders and construction sector.

We expect MMK Group steel output to increase 10-15% in Russia and Turkey in 2011.

MMK's production growth will primarily come from the ramp-up of operations in Turkey and increased capacity utilization in Russia. We intend to continue increasing HVA steel product output, thanks to the launch of production of high-quality cold-rolled automotive steel at Mill 2000, phase 1 of which was commissioned on 15 July, 2011.

The continuous hot-dip galvanizing unit at the MMK Istanbul site was commissioned on July 15, 2011; this marks completion of construction of the MMK metallurgy complex in Turkey. At the moment the metallurgy complex is being ramped up to full capacity, which is planned to be completed by the end of 2011.

MMK management will hold conference call on August 26, 2011 at 5.00 pm Moscow time, 2.00 pm London time, 9.00 am New York time.

Dial-in number: +7 3519 24 93 05. Password: 1234

Financial statements under IFRS is available at: http://eng.mmk.ru/for_investor/financial_statements/

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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 the company produced 11.4 mln tonnes of crude steel and 10.4 mln tonnes of commercial steel products. MMK Group revenue in 2010 stood at USD 7.719 bn, EBITDA at USD 1.606 bn, profit for the period - USD 232 mln.

Contacts:

Investor Relations Department:

Andrey Serov, Head of IRtel.: +7 (3519) 24-52-97E-mail: serov.ae@mmk.ru

MMK Communications Department