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June 23, 2021

MMK discusses strategic development at major steel conference

Olga Shemshur, Head of Strategic Planning at Magnitogorsk Iron and Steel Works (MMK), spoke at the international conference Steel, Metals and Mining Week (SMM Week), where she spoke about global trends in the steel industry and how MMK is responding to today's challenges.

Two interrelated megatrends are now having the strongest impact on economic processes around the world, Olga Shemshuremphasized. The first one is climate change, which is challenging steelmakers to be as eco-friendly as possible, and to provide customers with those products which support them in satisfying all the new environmental requirements. The second trend is technological progress: mass implementation of green technologies and the automation and digitalisation of production processes.

Meanwhile, the steel industry has all the conditions to meet the requirements of the modern world, promoting zero waste and ensuring reuse of resources and recycling. "Steel is the worlds most recyclable material," stressed Olga Shemshur, "The production process is becoming more and more eco-friendly." MMK is adapting to global challenges by focusing on the quality of its steel products and steadily expanding its presence in niche market sectors where premium products are in high demand.

Analysing the development of steelmaking in Russia and globally, Olga Shemshur noted that due to the growing demand for premium steel products which are lighter, but maintain their strength properties steel producers need to develop innovative, unique and high-quality products. MMK has a strong position in this market segment, the Company produces a wide range of premium steel products and is constantly working to improve its portfolio. " has the widest product mix in Russia," Olga Shemshur said.

As for the Russian market, the construction sector is believed to remain the main growth driver for steel consumption until 2030. There is great potential for growth and development here the extent of steel construction in Russia is much lower as compared to developed countries (at only about 17%). Implementation of state-sponsored National Projects that focus on the development of infrastructure (building of roads, bridges and airports), as well as an increase in the Annual Housing Delivery Program of up to 120 million m2 will help realise that potential. MMK's market position means the Company is well-placed to benefit fr om the potential upside of the implementation of national construction projects.

In the energy sector, demand for steel is currently modest, but there is potential for growth. The Russian government is implementing programmes supporting the development of renewable energy sources, and MMK's products can be part of the climate change solution for example, thick plates from MMKs Hot-Rolling Mill 5000 are used in the construction of the base and supports of wind-driven generators. There are also opportunities for growth in demand for steel products in the machine building industry (with the development of the Russian railway network and implementation of import substitution programmes), as well as in the automotive industry (with the ongoing localisation of production of foreign brands in Russia and increased output of automotive vehicles).

In 2020, MMK Group updated its 2025 portfolio of strategic initiatives. "I would like to underline that we place increased emphasis on sustainability," Olga Shemshur noted, "In addition, we also maximise the development and adoption of digital technologies across all production and support processes a group-wide effort."

MMK Group's updated development strategy consists of three strategic pillars and seven strategic objectives. By 2025, the implementation of the strategy will generate an additional USD 1 billion in EBITDA. The Company plans to bring in USD 410 million through the expansion of its product portfolio with a focus on premium products, continuous improvement of customer services and developing sales using a network of trading houses and digital channels. A further USD 630 million will come from a reduction in production costs and continuous improvements in production and supply chain efficiency. Another important goal of the strategy is to achieve the goal of zero injuries by driving safety across operations processes. In addition, improving the corporate culture of opportunity will help MMK to increase employee engagement and inspire employees to find ways to improve existing technical solutions and create innovations. Environmental goals are also key to the strategy the Company is committed to drastically reducing CO₂ emissions per tonne of crude steel by 2025. And MMK will also continue to contribute to the development of the region wh ere it operates to this end, the Company has launched MMK Industrial Park in Magnitogorsk to develop small and medium-sized businesses, and is also developing industrial tourism at MMK.

"MMK is focused on sustainable development and strives to be a responsible business that meets all the requirements of new trends," concluded Olga Shemshur.

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