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January 31, 2004

Severstal North America, Inc. Completes Asset Purchase of Rouge Industries, Inc.

Dearborn, Michigan - January 30, 2004 - OAO Severstal and its U.S. based affiliate, Severstal North America, Inc., announced today that it has completed the acquisition of substantially all the assets of Rouge Industries, Inc. and its primary operating subsidiary Rouge Steel Company. 

The Asset Purchase Agreement was subject to the ratification of the tentative UAW-Severstal North America labor agreement that was reached on December 17, 2003.  Rouge Steel's UAW-represented production and maintenance employees ratified the agreement on Thursday, January 29. 

Rouge Steel, the fifth largest integrated steel producer in the United States, is the first foreign acquisition made by OAO Severstal.  Alexey Mordashov, the CEO of Severstal Group Holding, referred to the deal as an important milestone of the global consolidation of the steel industry. According to Mr. Mordashov, the acquisition provides an opportunity to combine the very best qualities of our respective companies and to strengthen the economic effectiveness and market positioning of both companies.  "We believe that the performance of the former Rouge Steel Company operations can be substantially improved with reasonably limited investments," Mr. Mordashov said.

During the preceding month, Severstal and United States Steel Corporation reached an agreement in principle with respect to Severstal North America's acquisition of Rouge Steel's 50% ownership interest in Double Eagle Steel Coating Company.  Double Eagle is the world's largest electrogalvanizing line that produces premium quality galvanized sheet steel for the automotive industry.  Mr. Mordashov expressed his appreciation for the management of U. S. Steel for their cooperative position in resolving the Double Eagle issue. "We are looking forward a mutually beneficial and effective partnership in the Double Eagle joint venture."

Severstal North America also has acquired Rouge's 48% interest in Spartan Steel Coating, a hot dip galvanizing joint venture with Worthington Steel of Michigan. 

Within a short time, the company's Russian and American colleagues intend to finalize a plan for the financial improvement of the former Rouge Steel assets.  "We are interested in a stable and long running development of our American enterprise, as well as positioning Severstal North America as a reliable and competitive supplier of high quality, steel sheets for the automotive industry," Mr. Mordashov said.

Mr. Mordashov announced that Mr. Vadim Makhov, Severstal Group's deputy general director, has been appointed as chairman of the board and will manage Severstal North America, Inc.

Citigroup has acted as a financial advisor to OAO Severstal in connection with this transaction.

For reference: On October 23, 2003, Rouge Industries Inc., and its subsidiaries, Rouge Steel Company and Q S Steel Inc., filed for Chapter 11 protection with the U. S. Bankruptcy Court in Wilmington, Delaware.  Concurrently, Rouge Industries announced that it had signed a letter of intent with OAO Severstal to sell substantially all of its principal steelmaking assets.  On November 24, Severstal was named as the "stalking horse" in the competitive bid process for the assets of Rouge Industries.  The U.S. Bankruptcy Court-sanctioned auction was held on December 19, 2003 in New York City and Severstal's bid of $285.5 million USD was determined to be the highest and best offer.  On December 22, 2003, the U. S. Bankruptcy Court in Wilmington, Delaware confirmed the results of the auction.

31 January 2004





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