Update on the Severnaya mine

Update on the Severnaya mine

PAO Severstal announces that the Severnaya mine, one of the five coal mines of AO Vorkutaugol, where operations remain suspended following the accident in February 2016, will be sealed off to avoid the risk of airflow causing further underground fire and explosions in the mine. The decision was made by the Technical Commission comprising representatives of AO Vorkutaugol and Russian authorities.  

A study undertaken by several leading mining research institutes has concluded that underground fire in the mine remains a risk. Despite being flooded with water for several months, the temperature in some parts of the mine remains approximately 400-700 degrees centigrade. An inflow of oxygen could risk unpredictable fires and blasts.

Experts are now considering a safe method for sealing off the mine for the foreseeable future as well as the extraction of its resources through the adjacent Komsomolskaya mine, which is preliminary expected to start in 2020.

Vadim Shablakov, CEO of Vorkutaugol, said: "Health and safety is our key priority, therefore no further activity will take place in the Severnaya mine until we are fully confident that it is safe. In order to keep our employees in work, and to ensure that we maintain our required levels of coal production, we are considering safe methods to extract the remaining coal from the Severnaya mine via the infrastructure of the adjacent Komsomolskaya mine."

Vadim Larin, CEO of Severstal Management, said: "We are committed to providing the highest level of support to the Severnaya mine employees. The majority will be employed at the company's other facilities, whilst others will receive professional retraining."

In 2015, the Severnaya coal mine produced approximately 1.5 million tonnes of 2Zh grade coking coal concentrate, which is approximately 27% of Vorkutaugol's overall production of coking coal concentrate in 2015 (5.6 million tonnes).

For further information please contact:

Investor Relations

Evgeny Belov

T: +7 (495) 926-77-66

evgenii.belov@severstal.com

Public Relations

Anastasia Mishanina

T: +7 (495) 926-77-66

anastasia.mishanina@severstal.com