EVRAZ –Yesterday and Today

Evraz Group S.A. is one of the largest vertically-integrated steel-making, mining and vanadium businesses in the world. Its steel facilities are located in Russia, Ukraine, Europe, the United States, Canada and South Africa. In 2007, Evraz produced 16.4 million tonnes of crude steel, 12.6 million tonnes of pig iron and 15.2 million tonnes of rolled products.


Vladimir Bruev Vice President Mining

ORY of Evraz dates back to 1992, when a small metal trade company Evrazmetal was founded by a group of Russian scientists and engineers. The original company specialized in marketing metal products and supplying raw materials and equipment. In 1995, Evrazmetal and its affiliates expanded their operations into trading on international markets in partnership with Duferco S.A.

In 1999, the original EAM Group assumed control over two large Russian steel plants, namely, Zapsib (ZSMK) and Novokuznetsk Iron and Steel Works (NKMK) also taking on the liabilities for a significant part of those facilities' debts.

The increased global competition called for the new approaches to the corporate structure. Starting from 1999, EvrazHolding was established to act as the main executive body of NTMK, ZSMK and NKMK, as well as Vysokogorsky and Kachkanarsky Ore-Mining and Processing Works, Evrazruda Company and Nakhodka Sea Port.

Evraz continued to acquire steel and mining assets and, at the end of 2002, Evraz's management initiated a multistage reorganisation in order to improve the legal and financial transparency and to enhance access to international financing. Evraz Group S.A. was formed as Evraz's parent company at the end of 2004, when the current structure was finalized. In June 2005, the Company entered a new stage of its development, when Evraz Group S.A. became a public company. Currently, 31.1% of its issued share capital in the form of global depositary receipts (GDRs) is traded on the Official List of the London Stock Exchange under the stock symbol EVR.

Kachkanarsky GOK

Since 2004, the Company bought the Mine 12, Yuzhkuzbassugol coal company and a 40% interest in Raspadskaya coal company, thus moving closer to complete coal self-sufficiency, as coal is a crucial input for steel production. Other acquisitions - such as Palini & Bertoli, a rolling mill in Italy, and Vitkovice Steel, the largest platemaker in the Czech Republic

- further diversified the Company's product mix into value added areas, and provided access to the markets of the European Union.

In 2006, Evraz acquired a 72.8% share in Strategic Minerals Corporation (Stratcor), one of the world's leading vanadium and titanium alloy and chemicals producer headquartered in the USA, and bought a 24.9% stake in Highveld Steel and Vanadium Corporation, increasing it to 80.9% by September 2007.

Thanks to the acquisition of Oregon Steel Mills in January 2007, Evraz has secured its significant presence in the promising plate market and in the expanding pipe business in North America, and became a leading rail producer globally. Following combination of Oregon Steel with recently acquired Claymont Steel and Ipsco's Canadian Tubular business, the Company formed Evraz Inc. NA, its North American subsidiary.

Late December 2007, Evraz Group S.A. made several acquisitions in the Ukraine, namely, Dnepropetrovsk Iron and Steel Works, three coking plants in Dnepropetrovsk and Dneprodzerzhinsk, as well as an iron ore mining and processing complex Sukha Balka.

In February 2008, Evraz Group S.A. entered into a share purchase agreement to acquire up to 51% of a Chinese steel manufacturer Delong Holdings, marking the Company's first investment in the Asia Pacific region. In July 2008, Evraz Group announced the signing of the Cooperation Agreement with China Metallurgical Group Corporation («MCC») for the joint development of Cape Lambert iron-ore deposit located on the northern coast in the Pilbara area of Western Australia. Its magnetite iron-ore reserves are estimated at 1.56 billion tonnes, and the expected annual output is estimated at 15 million tonnes of high-grade magnetite. Evraz will have 75% and MCC - 25% in the Project Management Joint Venture Company.

Vysokogorsky dressing shop

Due to the nature of Evraz's operations, there are several business units in the Company: steel-making, ore mining, coal mining and vanadium. OOO EvrazHolding is a centralized management company supervising Evraz Group's assets in Russia. The ore mining business unit (OMBU) manages ore mining Russian assets such as Evrazruda, Kachkanarsky (KGOK) and Vysokogorsky (VGOK) ore mining and processing complexes, as well as Sukha Balka in Ukraine.

In 2007, the Company's mining operations covered nearly 87% of iron ore and almost 100% of coking coal internal consumption. In 2007, the iron ore business unit of Evraz provided 76 million tonnes of iron ore and 19 million tonnes of saleable products, including 3.5 million tonnes of high-grade iron ore concentrate, 7.8 million tonnes of sintered iron ore and over 6 million tonnes of iron-ore pellets produced by the Company's iron-ore facilities in Russia. Coking coal and steam coal output in 2007 increased to 7.5 million tonnes and 5.1 million tonnes accordingly, while high-grade coal concentrate volume reached 4.3 million tonnes (operational results of Yuzhkuzbassugol were consolidated since June 2007; the numbers exclude coal output of Raspadskaya).

Ore Mining Business Unit-2007 Highlights:

- Iron ore production grew by 10.6% versus 2006.

- A program on outsourcing the non-core functions was implemented.

- The structure of the ore assets was optimized following the closing of the uneconomic assets and ore mines with depleted reserves.

- A license was acquired for the development of the Sobstvenno-Kachkanarskoye magnetite and titanium deposit that provides an opportunity to enhance the annual raw iron-ore output of OAO KGOK from the current 56 million tonnes to 63 million tonnes.

The following projects were undertaken for the technological refurbishing and enhancement of the production efficiency of ore mines:

- Modernization of the dry magnetic separation process at the Company's facilities;

- Application of high-performance crushing equipment;

- Application of high-efficiency hydrosiz-ing and fine screening at ore-dressing facilities of the Company;

- Approval and implementation of the energy-saving programme for 2006-2010 by all ore mining and processing facilities of the Business Unit;

- The backfill system for the Tashtagolsky branch of Evrazruda (construction at the well-advanced stage);

- High-efficiency system of drilling and blasting operations currently in place at KGOK.

The Ore Mining Business Unit presented a draft Programme of the ore mining 2008-2014 development to the Board of Directors. This programme envisages a comprehensive reconstruction of ore mines, concentration and pelletizing facilities to meet 100% of Evraz's iron ore demand by 2015.

Kachkanarsky Ore Mining and Processing Enterprise

Vladimir Bobrov
Managing Director, KGOK

KACHKANARSKY Ore Mining and Processing Enterprise (Open Joint Stock Company "Vanadium") is one of the largest ore-mining companies in Russia and the largest one in the Urals. It is located in Sverdlovsk region, 130 km to the north of Nizhny Tagil city on the eastern slope of the Urals mountains. KGOK develops low-grade titanium and magnetite ore deposit Gusevogorskoye with total commercial reserves over 5 billion tonnes. The first references to Kachkanar mountain were made in 1770 by the academician P.S. Pallas in his book "Travelling around the Russia». Further on, the greatest contribution to the geological exploration of this region was made by A. P. Karpinsky (1869), A. A. Krasnopolsky (1890) and especially by N.K. Vysotsky (1913) who published a famous study "The platinum deposits of Isovsky and Nizhny Tagil regions of the Urals".

As the low-grade iron ores of Kachkanar were not commercially attractive, the exploration of Kachkanar ore deposits started only in 1931 when a small-scale survey was carried out along with a research on testing and processing Kachkanar ores and sintering of iron and vanadium concentrate. This research as well as testing demonstrated a good technical prospect for mining and processing of low-grade ores. However, such project was absolutely new to the country and faced strong disagreement. Still, the decision was made to move forward, also in order to support iron ore self-sufficiency of the Urals region.

The development of titanium and magnetite ores deposit and the construction of processing plants started in 1957. In September 1963, the first branch was put into operation, with a mining and processing capacity of 8.25 mln. tonnes and final iron and vanadium concentrate production of 1.4 mln. tonnes. This year KGOK will celebrate its 45th birthday.

The mine was designed by the specialists from Uralgiproruda Institute. The deposit is developed with three open pits: Principal - from 1959, Western - from 1967 and Northern - from 1971. The pits were named after the key reserves.

The current mining facilities follow a recent design developed by OJSC Uralgiproruda for 2001-2010. The development of the deposit applies transport and external dumping with the cutting depth of 15 metres. Typically, railway transportation is used. The development of the pit is combined meaning the levels are initially prepared by the vehicles with intra-pit transfer storages. The high banks are developed via individual railway inclines; and bottom levels through intra-pit spiral and blind railway inclines.

The mining starts with drilling and blasting. The ores and enclosing rocks are of considerable hardness, viscosity, modularity and are hard for blasting. The drilling is carried out by drilling rigs SBSh-250MN, one drilling rig SBSh-270IZ and high-productive drilling rigs with diesel drive SKS, D75KS and ROC-L8.

The mined rock and the overburden on dumps are loaded by excavators EKG-8I and EKG-10. The overburden is laid on three external multilevel dumps. The ore

Quarrying of "Zapadny" Open Pit Mine

and overburden are removed from the pits by means of dump cars 2VS-105 and diesel-contact machines EL-10, EL-20, OPE-1A. In 2000, KGOK started to finance the development of the local traction unit and in 2003 Novocherkassk electroloco-motive construction plant provided KGOK with the first Russian traction unit NP-1. Today nine of the traction units are used. In order to prevent gas contamination, all bottom hole and dump blind ends are equipped with overhead wiring.

Dressing and Agglomeration Plants

As for technological vehicles, there are dump trucks BELAZ-7555 with capacity 55 tonnes each. They are used in the areas of opening upland part of the pits and when mining and preparing bottom levels of the pits with ore transferring to railway through transfer points - intra-pit storages of the mined bulk.

Coarse crushing is implemented in three shops equipped with crushers KKD 1500/300À with aftercrushing units KRD 700/100À. The third shop includes crusher KKD 1500/ 180À without after-crushing. Eleven shops of medium and fine crushing are equipped with crushers KSD 2200 and KMD 2200 operating in open circuit with screens GIT-51N, three additional shops are equipped with crushers Sandvik.

Iron content in Kachkanar ores is 2-2.5 times lower than in ores from other mines and therefore KGOK carries additional processing costs. The operations are organized in the way for the production to be cost-effective and profitable.

Panoramic View of "Zapadny" Open Pit

For the processing, KGOK uses grizzly screens for finely crushed ore of size10 mm. The coarse fraction is separated to magnetic and non-magnetic products with separators 2PBS 90/250, then the non-magnetic product is directed to crushed rock sorting shop where screens GIST-72 are applied to separate three sizes of rock. The magnetic product together with undersize material from grizzly screens is grinded in bar mills MSTs 3600×4500 in open circuit and then undergoes processing with the first stage of wet magnetic separation with separators PBM 90/250P and PBM 150/200P with 65% of tailings separated. The middling product is grinded in ball mills MSTs 3600×4500 and MSTs 3600×5000 operating in closed circuit with hydrocy-clones Gts-71. The grinded product is additionally processed in four stages with separators PBM 90/250PP and PBM 150/200PP.

The advantage of such technology compared to conventional one is the flexible connection of the required number of additional mills depending on ore quality

factors and required amount of concentrate. Through the multiple-stage magnetic processing low-grade titanium and magnetite ores are converted into high quality iron and vanadium concentrates for sintering and pelletizing with Fe weight fraction of 60 and 63% accordingly.

A complex material composition of ores and high standards of steelmakers to bulk products (pellets and sintered ore) require permanent development and perfection of the ore preparation process. Joint work of KGOK specialists, scientific researchers and design institutes resulted in the process blueprint which is just right for Kachkanar titanium and magnetite ores.

KGOK supplies high-quality iron ore products to steelmakers, with the main consumer being Nizhny Tagil Iron and Steel Plant.

In 2008, KGOK prepared a plan for the strategic investment development 2009-2015. This plan is focused at increasing the iron ore production through gradual development of all process stages. The estimated production capacity will be 63 mln. tonnes per year of mined and processed titanium and magnetite ores.

The resource base of Kachkanarsky Ore Mining and Processing Enterprise provide for high-effective operations during dozens of years to come. With KGOK being part of Evraz Group, the improved technical level of operations presents more development opportunities for the employees, while the market conditions support business growth. »

Vysokogorsky Ore Mining and Processing Enterprise

Sergey Napolskikh
Managing Director, VGOK

VYSOKOGORSKY Ore Mining and Processing Enterprise (VGOK), the oldest ore-mining enterprise in Russia, was founded in 1721.

Tagil-Kuvshino iron ore deposits play a key role in the Russian ferrous metallurgy. The significant magnetite reserves in Nizhny Tagil have been developed from as early as 1721, in Kushva- from 1735. The mined ores were supplied to the local iron works: Nizhnetagilsky, Suksunsky, Alapaevsky, Neviansky, Verkhisetsky and Revdinsky. The steel melted of Tagil iron ore and graded with the Old Sable is famous for the high quality standards all around the world.

For one and a half hundred years the ore was mined in small works with annual capacity up to 14 thousand tones, usually using manual labour. Thus, VGOK entered the 20th century without any major mechanical equipment at its production facilities.

Only in 1928 the rope hoists, steam excavator and test washing plant appeared in the pits. The technical renovation helped to increase the ore mining capacity to 200 thousand tons per year. In the 1930s, along with construction of a giant steel-making plant in the area, the mine was given a chance for the profound upgrading.

During World War II, the mining capacity increased 2.3 times while the crushing, dressing and sintering plants were constructed.

In 1957, Vysokogorskoye and Goroblagodatskoye mining administrations (today VGOK and Goroblagodatsky mine) became a part of Nizhny Tagil Iron and Steel plant. Goroblagodatskoye mining administration was a pioneer in using large-scale self-moving units in the underground works. Yuzhnaya and Valuevskaya mines also used the self-moving units in discharging and delivering ore. In March of 1958, Lebyazhinskaya sintering plant was put into operation. In the 1960s the annual production of the

sintered ore reached 2.95 mln. tonnes, in the 70s the total output increased to 3.3 mln. tonnes per year. The demand for a higher quality of the blast furnace feed as well as the rapid increase of the steel production at NTMK created a challenge for the personnel of the sintering shop.

In 1985 a contemporary wet magnetic separation plant No.2 was started at VGOK. The flotation plant and a Joint Venture with Ekont resolved the issue of the integrated processing of sulphide ores of Vysokogorskoye deposit and old copper bearing tailings to produce copper concentrate.

In the 1990s, ore mining industry was in crisis but VGOK managed to increase the production, reduce the costs and gain new customers. In the late 1990s, with the Russian market recovery, VGOK saw a growing demand for its products. In 2003, Goroblagodatsky rudnik (Goroblagodatskoye mining administration) became part of Vysokogorsky Ore Mining and Processing Enterprise.

Estyuninskaya Underground Mine

Vysokogorskoye iron ore deposit had been developed by means of the main pit for 269 years until 1990. In 1946 the underground development was started along with the open pit mining. For the purpose of underground development, Magnetitovaya mine was opened with the capacity of 1.5 mln. tonnes per year. In 2005, the construction of the crushing and conveyors-handling unit on horizon -530 m as well as the phase 3 on horizon -610 m were completed, currently opening of Vostochno-Revdinskaya bank on horizon - 530 is in progress.

Estyuninskaya underground mine as the youngest and the most promising develops Estyuninskoye deposit from 1977. The capacity of the mine is 1.2 mln. tons of ore per year. Currently works are in progress on three underground levels. In 2005 capital mining operation was resumed on the 2nd phase of horizon -240 m.

Goroblagodatskoye deposit is developed by means of Yuzhnaya underground mine and central pit. In April 2004 crushing and skiping unit on horizon - 320 m

was put into operation inYuzhnaya underground mine and the mining on horizon - 240 was started. Currently the southern and northern sides of Goroblagodatskoye deposit are developed on three horizons. The capacity of the underground mine is 1.6 mln. tonnes.

Judging by reserves and quality of ore, the Yuzhnaya underground mine has a great production potential. This underground mine is located in Kushva town.

Ekspluatatsionnaya underground mine was started in 1953 with the development of Lebyazhinskoye iron ore deposit by means of underground mines. Currently the preparation to wet suspension of underground mine is in progress.

After mining, the ore is delivered to processing shops. The crushing, dry and wet magnetic separation transform ore into the concentrate with Fe content over 64%.

The gangue obtained after the iron ore processing is sorted and sold as a separate product in the form of broken stone and mixture of sand and broken stone. The crushing and sorting shop of Vysokogorsky processing unit also deals with limestone from Galiansky open pit.

The sintered ore for the steel mill's blast furnaces is produced in Lebyazhinsky sintering shop. The main final products leaving the shop are: the fluxed magnesian sintered iron ore and manganese sintered ore. Today four sintering machines MAK-75 are operating in the shop.

What Akinfy Demidov, the founder of the iron and steel industry in Russia, dreamt of in the 18th century, became true today.

Now Vysokogorsky Mining and Processing Enterprise is part of Evraz Group S.A. and develops Vysokogorskoye, Goroblagodatskoye, Medorudyanskoye, Estyuninskoye, Lebyazhskoye iron ore deposits and Galianskoye limestone deposit. »


Nikolay Baiborodov Managing Director, Evrazruda

EVRAZRUDA (Open Joint-Stock Company) was set up in late 2004 to comply with the common standards of operational, investment and business policies for all ore mining facilities, which form the basis of the vertically integrated ore mining and steel-making Evraz Group S.A.

Evrazruda incorporates a number of ore mining and processing facilities as its subsidiaries or business units. These are: Tashtagolsky, Kazsky, Gurievsky, Gorno-Shorsky (Sheregeshsky) ore mines, as well as Abagurskaya ore-dressing and sinter plant and Mundybashskaya ore concentration plant in the Kemerovo Oblast; Abakansky and Teisky ore mines in the Republic of Khakassia, and the Irbinsky ore mine in the Krasnoyarsk Territory.

Evrazruda, with high-grade iron ore and sinter as the core products, is the main supplier of the raw materials to West Siberian and Novokuznetsk Iron and Steel Plants, the leading iron and steel producers of the region.

The management body of Evrazruda was established in 2004, and later the same year the Irbinsky, Abagursky, Mundybashsky, Gorno-Shorsky, Tashtagolsky, Kazsky, Teisky, Gurievsky and Abakansky subsidiaries were formed.

Though Evrazruda as an organization is quite young, the history of its incorporated business units covers several decades. Before Evrazruda, its Siberian ore mines and concentration facilities had been operating within a single entity. In the 1930-1970's they were incorporated by the Ore Mining Division of the Kuznetsk Iron

and SteelWorks (GRU KMK), and later on (1979-1994) -by SibrudaProduction Association.

After the restructuring of the NPO Sibruda, the ore mines operated as independent joint-stock companies. Following the Russian economic crisis of the 1990's and downside to the iron ore industry, the production declined and mine construction was terminated. By early 2000, Sheregeshskoe, Teiskoe, Irbinskoe and Krasnokamenskoe ore mining companies have turned out to be bankrupt. Mines of the South Kuznetsk basin went through the insolvency procedures together with Zapsib and NKMK.

When Evrazruda ore mining complex became part of Evraz Group, the Company laid the groundwork for the common operational, investment and social policies for ore mines and concentration plants.

In 2004-2007 some technological refurbishment projects were carried out to facilitate the stability of operations, to meet the production targets and to plan for the output expansion. Thus, the new horizons of the Tashtagolsky (at -350 m) and Kazsky (at -230 m) mines were launched (then, it was the first case of reserves development for the previous 16 years), a drying section was built and a saleable ore loading section was commissioned at Abagurskaya ore sinter and concentration facility. The sinter machine No.7 at the Abagurskaya facility was reconstructed to enhance the machine's capacity from 80 to 110 tonnes of sinter per hour and to improve the material equipment resources.

Other major changes recently include the replacement of the skips of the large skip winder that significantly enhanced the capacity of the hoist at the Sheregeshsky mine, as well as the reconstruction of Evrazruda's ore crushing and dressing facilities carried out within the framework of the Company's investment programme. Furthermore, the Company started the development of the Burlukskoe deposit (Bolshaya Irba, Krasnoyarsk Territory) with the balance (mineable) iron ore reserves exceeding 30 million tonnes and Izykholskoe deposit (Vershina Teya, Republic of Khakassia) with the reserves of 12 million tonnes.

In 2008, the Board of Directors of Evraz Group approved the Programme of the development of Evrazruda for 2008-2015. As part of this programme, Evrazruda has started the reconstruction projects for Tashtagolsky, Kazsky, Sheregeshsky and Abakansky mines, as well as Mundybashskaya ore dressing facility and Abagurskaya sinter and concentration plant. A crushing and sizing system is now being constructed for the Gurievsky subsidiary. After the system is commissioned, the worn and outdated limestone processing facilities will be dismantled.

The commissioning of the new production capacities and application of advanced technologies will ensure the maintaining and enhancement of Evrazruda's operational results, as well as a significant improvement of the product quality and cost reduction.

Gorno-Shorsky (Sheregeshsky) Ore Mine

Annually, Evrazruda develops the action plans aimed at the maintenance of the end-of-pipe technology. For instance, in 2007, mine water treatment facilities of the Tashtagolsky subsidiary were commissioned, and the water discharge was reduced by 104 thousand cubic meters. A drainage water station was built for the tailing pond of the Mundybasky subsidiary to effectively stop the waste water discharge. For the Irbinsky subsidiary, the construction is under way of the waste water ponds of the Vostochny surface mine, which will substantially improve the waste water quality.

Recently, Evrazruda has approved the Programme of the key environmental projects for 2008-2012. It includes, among others, the arrangement of the sanitary protection zones in Tashtagolsky, Gorno-Shorsky, Kazsky, Mundybashsky and Abagursky subsidiaries, restoration of the soil in Tashtagolsky, Gorno-Shorsky, Kazsky and Mundybashsky subsidiaries, reconstruction of mine water treatment facilities in Tashtagolsky, Gorno-Shorsky and Kazsky subsidiaries, reconstruction of waste water treatment facilities in Abagursky subsidiary.

Abakansky Ore Mine

Evrazruda's common investment programme covers a comprehensive reconstruction for some of its facilities. For instance, the Tashtagolsky subsidiary will commission a backfilling system. Kazsky subsidiary plans to continue the development of the main underground workings at horizons of-160 m and -230 m and the main shaft sinking. For the Gorno-Shorsky subsidiary, the work will continue on the commissioning of+115 m horizon, while for the Abakansky subsidiary it is planned to commission a new skip shaft. This reconstruction work will provide for the expansion of the annual production capacity of the Gorno-Shorsky and Abakansky subsidiaries by 4 million tonnes of run-of-mine ore each.

To meet its production targets, Evazruda is planning the development of some new deposits, such as, Kurskoe and Izykhskoe (Bolshaya Irba, Krasnoyarsk Territory), as well as Abagasskoe (Vershina Teya, Republic of Khakassia).

It is estimated that the construction of the new production facilities and application of the advanced technologies at Evrazruda will provide for a 25% increase of the iron ore output and ensure a significant improvement of the product quality.