Severstal Acquires 25% in Brazilian Iron Ore Exploration Company

OAO Severstal, one of the world’s leading vertically integrated steel and mining companies, announces that it has acquired a 25% stake in the Brazilian company SPG Mineração (“SPG”) owns highly-prospectiveiron ore exploration licences in the northern state of Amapa, Brazil.

The total consideration of the deal is $ 49 mln payablein performance-relatedinstallments, with part of the amount to be directed to finance the first stage of geologic exploration, whichaims to re-confirmthe attractive geologic potential of the target’s properties. Severstal has also entered into a call option agreement to purchase an additional 50% stake in this company, exercisable upon completion of certain conditions.

Severstal believes that the Amapa project has high potential with an estimated resources potential of 0.5 — 1.5 billion tonnes with an approximately 40−45 % Fe grade. Production potential is estimated at around 10−20 million tonnes of iron ore concentrate. The project is located near to a railway and a port, however, the company intends to consider developing its own logistics solution, with a few options are currently considered.

Investing in primarysteel-relatedraw materials is one of Severstal’s strategic priorities, allowing the company to develop a global portfolio of projects to diversify raw material supply and secure the future growth of the steel operations. Severstal focuses on attractive emerging markets with significantlong-termgrowth potential and favourable export logistics.

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