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November 19, 2008

Victor Rashnikov: We'll cope!

Victor Rashnikov, Chairman of the OJSC MMK Board of Directors, spoke at a meeting with the company's management and union leaders about the results of the 10 months of 2008 and measures to combat the crisis.

MMK, like so many other steel producers both in Russia and abroad, is going through hard times. The crisis is taking a heavy toll not only of the banks and finances, but the production sectors as well. Russia, as an integral part of the world economy, is feeling the effects of the crisis, too. Those industries for which credits and loans is their lifeblood, such as housing and industrial construction, machine-building, infrastructure and other sectors, and which are the key consumers of steel, have been hardest hit.  This has resulted in the falling demand and prices for MMK's product, steel. To overcome the consequences of the crisis the company has devised a crisis management program aimed at introducing strict control over and saving in the use of all kinds of resources, such as raw and other input materials, spare parts, fuel and lubrication materials, reduced use of externally purchased electric power through maintaining captive power generation, increased use of the Company's own raw materials and recycling of wastes.

MMK has also revised the schedules and the scope of its modernization and expansion projects, putting most of them on hold, with the exception of the 5,000 mm Plate Mill Project.

One of the most sensitive issues in the current situation is maintaining jobs and providing workload to employees, the foremost task being the preservation of qualified personnel.

"In spite of the difficulties, we will do everything to preserve the body of the company's personnel", Mr.Rashnikov stressed.

He went on to say that the current situation is not an isolated problem of a specific company or sector, but the result of a systemic international crisis. Therefore, a systemic and comprehensive approach is needed to resolve the problem. Aware that solutions to many problems capable of turning the situation around, are out of steel-makers' control, MMK, together with other companies of the sector, has drafted and tabled proposals for the Russian Government to provide incentives to the steel making industry under the conditions of the global financial crisis.  "Magnitka has known harder times, and we can certainly handle this situation. We've got everything it takes, like the positive record of handling any critical situations, highly qualified personnel, state-of-the-art technology and equipment, strong market positions and the potential accumulated over the recent years. The steps we are taking, as well as the efforts of the Russian Government to support the country's financial and economic sectors will help to stabilize the situation in the near future", Mr. Rashnikov added.




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