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MICHIGAN ENERGY FORUM PRESENTATION

Introduction to Severstal North America

April 22, 2013

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OAO Severstal operates facilities in eight countries and employs a global workforce of 70,000, including:

• Severstal Russian Steel is among the top 10 low‐cost steel producers globally, focused on a growing share of high value‐added products and onincreasing sales to Russian and international markets.

• Severstal International/Severstal North America  is one of the largest steelmakers in the United States, Severstal North America specializes in producing a full range of high quality, light flat rolled products for a variety of steel‐consuming industries.

• Severstal Resources is one of Russia’s largest producers of iron ore and coking coal, providing Severstal with raw materials self‐sufficiency.

OVERVIEW OF SEVERSTAL

Severstal has global capabilities and the ability to supportsteel sourcing needs on multiple continents

Severstal has global capabilities and the ability to supportsteel sourcing needs on multiple continents

SEVERSTAL

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5.8 MILLION TONS 12.8 MILLION TONS

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SEVERSTAL NORTH AMERICA

Dearborn

Blast Furnace

Basic Oxygen Furnace

Continuous Caster

Hot Strip Mill

Cold Rolling Mill

Galvanizing Lines

New Pickle‐Tandem Cold Mill

New Galvanizing Line

“C” Blast Furnace Rebuild

Secondary Emission Control 

Conversion to Straight Mold

Reheat Furnace Modernization

Q4 2007

Q4 2007

Q1 2008

Q3 2011

Q4 2011

Total Investments:  $1.7 billion

Main Operations Projects

Columbus

Electric Arc Furnace

Compact Strip Production

Hot Strip Mill

Pickle Line

Galvanizing Lines

2nd Electric Arc Furnace

2nd Caster

2nd Reheat Furnace

2nd Galvanizing Line

New Push‐Pull Pickler

Q2 2011

Q2 2011

Q2 2011

Q3 2011

Q4 2011

Total Investments:  $1.6 billionPhase I: $0.9 billionPhase II: $0.7 billion

Main OperationsPhase IIProjects

Modernization and Expansion

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WHY WE LOVE MICHIGAN – WATER ACCESS AND NAFTA STAMPINGCAPACITY

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HOW’S BUSINESS?

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SEVERSTAL DEARBORN’S ELECTRICITY HISTORY

1931 1999 2002 2008 TodaySelf Generation CMS EnergyDTE DTE

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OHGA IL MI

7.6c/kWh

FLPA

₡ /

kWh

StateCANYNCTX

Henry Ford build the power house on the same site as Rouge Steel (now Severstal) and the Ford production facility

CMS Energy starts construction on a new generation facility

The Dearborn Industrial Generation facility opens

The facility reduced output amid high natural gas prices

Michigan’s rates are among the highest in the US

Industrial Rates, largest 10 States (₡/kWh)

Original Rouge complex power house CMS Energy’s Dearborn Industrial Generation (DIG) facility

Source: US Department of Energy

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Jul/10

Indiana

Jul/11

Ohio

Illinois

Jan/12

8

Apr/12Jul/09Apr/09

‐21%

Jan/09 Oct/12Oct/11Oct/09

+9%

Apr/11

₡ /

kWh

5

Michigan

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Apr/10 Jan/11Jan/10

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Jul/12Oct/10

Source: US Department of Energy

Regional Electricity Rate Comparison January 2009 – November 2012(₡/ kWh, Industrial Customers)

MICHIGAN’S HIGH ELECTRICITY RATES

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Michigan’s Growing Competitive Disadvantage(MM’s $/month, 100MW Industrial Customer – Michigan vs. Illinois)

Jan/2012Jan/2010

‐$1.5MM

$0.5MM

‐$0.5MM

‐$2.0MMJan/2009 Jan/2011

‐$1.0MM

$0.0MM

$7.9MM Disadvantage (Full Year)

$13.3MM Disadvantage(11 months)

$1.2MM Disadvantage (Full Year)

$2.3MM Disadvantage (Full Year)

Source: US Department of Energy

IMPACT OF HIGH ELECTRICITY RATES ON MICHIGAN’S MANUFACTURERS

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Enrollment into the Customer Choice program would reduce Severstal’s electricity bills by over 40%, increasing its overall competitiveness

$60MM

$50MM

$40MM

$30MM

$20MM

$10MM

$0MM

Disadvantage

OhioIllinoisIndianaMichigan

$60MM

$50MM

$40MM

$30MM

$20MM

$10MM

$0MM

Advantage   

OhioIllinoisIndianaMichigan

Without the Customer Choice Program…(100MW Industrial Customer, MM’s $ / year)

…With Customer Choice Expansion(MM’s $ / year)

MICHIGAN’S “CUSTOMER CHOICE” ELECTRICITY PROGRAM

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LOW ELECTRICITY PRICES ATTRACT INVESTMENT

Electric Arc Furnace or EAF Steelmaking Facilities by Rate & State

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0 1 2 3 4 5 6 7 8 9 10

Electricity

 Rate (cen

t/kW

h)

# of EAF Facilities

Ohio

Michigan

Indiana

Illinois

Michigan (7.6 c/kWh) 2 facilities

Neighboring states (6.17 c/kWh average) 23 facilities

Ohio beat out competing states for the project because of its proximity to primary markets for flat‐rolled steel, raw material supplies and lower electric and natural gas rates…

North Star Steel spokesperson regarding the construction of a $400MM mill, which created 300 jobs in Delta, Ohio (‘97)

Source: AIM Market Research, US Department of Energy, Conway Data Inc.

TVA average electricity rates are even lower at 5.0‐6.0 c/kWh

The Dearborn has an EAF but it last ran in 1991 due to high Michigan utility rates

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THANK YOU FOR LISTENING!