MMK CORPORATE PRESENTATION APRIL 2016 MMK THE VALUE STORY 9 MMK - PowerPoint PPT Presentation

MMK CORPORATE PRESENTATION APRIL 2016

MMK – THE VALUE STORY 9 MMK – Fully Renewed …Should Change in Future due …But Still Undervalued … Story… to Long Term Sustainability One of TOP-30 global steel players Still history-driven discount to peers Sustainable margin advantage    in terms of EV/EBITDA multiple, compared to global peers High EBITDA margin  possible reasons: Anticipated steel demand growth  Late CAPEX cycle, since major  Market perception legacy prospects (rebound after 2015-2016  modernization in 2007-2011 (“heavy CAPEX / low decline) in Russia Sustainable generation of high FCF  dividends”) #1 local market share  Moderate liquidity of shares Significantly improved balance   Low cost producer  (ADTV) sheet - Net Debt / EBITDA ratio of Low vertical integration only x0.67  High HVA products share  High domestic market  Well positioned in terms of local  dependence consolidation Hidden value – MMK Metalurji  No need for large CAPEX in 2016-2025  (Turkey) 28,6% EV/EBITDA, Mln USD 2012 2013 2014 2015 30,0% 29,4% 25,8% Company as of 31/12/2015 20,2% Revenue 9,328 8,190 7,925 5,839 20,8% 20,9% 3.0 20,0% 22,5% EBITDA 1,363 1,223 1,607 1,668 14,9% 14,4% 20,9% EBITDA 14,6% 5.0 14.6% 14.9% 20.2% 28.6% 12,9% 14,7% margin 10,0% 12,6% 12,3% 11,5% 10,6% 10,0% CAPEX 674 622 497 348 6.0 0,0% FCF 519 310 759 1 008 2007 2008 2009 2010 2011 2012 2013 2014 2015 4.8 Net Debt 3 518 3 026 2 038 1 124 MMK EBITDA margin Average margin for Top30 Steel Names 2 Source : ММК , Alfa Bank

ММК POSITION IN GLOBAL METALS&MINING UNIVERSE 3 Source : ММК , World Steel, Alfa Bank

TIMELINE: FROM LARGE-SCALE INVESTMENT TO EFFICIENCY AND ENVIRONMENT Major environmental MMK receives controlling project - sludge stake in Belon decantation complex Commissioning of EAF Reconstruction of of oxygen-converter with annual capacity of rolled steel plant MMK acquires 100% of ZAO 2.3 mln tonnes of steel production (mills 170, Profit, Russia’s largest scrap in Turkey; increase of 370, 450) collector share in the Turkish Commissioning of two major project to 100% environmental facilities: coke Commissioning of thick-plate gas chilling plant and sulphur Launch of the first stage of Transition to continuous Mill 5000 capture unit cold-rolling mill 2000 casting, substitution of open- Listing of MMK‘s hearth furnaces with EAFs shares on London Decrease in Debt Stock Exchange Debt/EBITDA ratio to 0.6x MMK forms a JV Historical record in pig iron with Atakas production – 10.3 mln (Turkey) to tonnes per year construct a plant with capacity of Launch of new labour 2.3 mln tonnes of Launch of the second efficiency and cost Launch of reversing steel stage of cold-rolling optimisation programmes cold-rolling mill and Launch of pressed mill 2000 continuous hot-dip components mill and galvanizing unit service metal centre in St. Petersburg Mln USD 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenue 1,713 1,733 2,065 3,047 4,829 5,380 6,424 8,197 10,550 5,081 7,719 9,306 9,328 8,190 7,925 5,839 EBITDA 444 286 418 1,015 1,735 1,511 2,005 2,407 2,204 1,309 1,606 1,336 1,363 1,223 1,607 1,668 EBITDA 25.9% 16.5% 20.2% 33.3% 35.9% 28.1% 31.2% 29.4% 20.1% 25.8% 20.8% 14.4% 14.6% 14.9% 20.2% 28.6% margin CAPEX 236 287 204 202 395 562 697 1,216 2,112 1,613 2,209 1,154 674 622 497 348 FCF -15 -106 -2 383 615 693 380 -717 -501 -764 -1,236 -698 519 310 759 1 008 Net Debt - 199 101 -272 -649 -499 666 1 210 620 1 953 3 033 3 992 3 518 3 026 2 038 1 124 Dividends 0 -2 -2 -5 -14 -947 -1 077 -547 -313 -16 -198 -121 0 -96 -117 -103 Source: ММК 4

THE MMK BD EXPERTISE IS GUARANTIED BY PROFESSIONAL AND WELL-RECOGNISED DIRECTORS Name Education Experience Victor Rashnikov, 67 Magnitogorsk Institute of Mining and Metallurgy Chairman of the MMK BD Zumrud Rustamova, 45 Moscow Economic and Statistics Institute Deputy General Director of Polymetal Non-executive Valeriy Martsinovich, 42 Gdańsk University (Poland) CEO at Hay Group Eastern Europe Morgan Ralph Tavakolian, 47 Partner at Baring Vostok Capital Partners Ruben Aganbegyan, 44 Moscow State Law Academy President of Otkritie Holding Kirill Liovin, 47 Moscow Aviation Institute named after Ordzhonikidze Deputy Chairman of the Management Board of Rosselkhozbank Olga Rashnikova, 39 MMK Head of Treasury Executive Pavel Shilyaev, 45 Chelyabinsk State Technological University, Stockholm School of MMK Chief Executive Officer (CEO) Economics in Russia (St. Petersburg) Sergey Sulimov, 38 MMK Chief Financial Officer (CFO) Nikolai Lyadov, 59 Magnitogorsk Institute of Mining and Metallurgy 5 MMK Chief Sales Officer (CSO)

MMK COMPARISON TO GLOBAL STEEL PEERS (BASED ON FY15 RESULTS) Sales, mln tonnes 11.8 10.8 15.9 84.6 21.5 35.3 42.3 19.86 6,4 17.0 Revenue, mln USD 5,839 6,396 8,008 63,578 25,727 48,780 42,540 16,439 9,436 13,280 EBITDA, mln USD 1,668 2,096 1,948 5,231 2,559 4,976 4,591 1,822 477 1,345 EBITDA margin,% 28.6% 32.8% 24.3% 8.2% 10.0% 10.2% 10.8% 11.1% 5% 10.1% Net profit, mln USD 421 562 968 (7,946) 374 160 1,767 358 (50) (245) Net debt/EBITDA 0.67 0.38 0.56 3.00 2.94 2.5 3.65 1.50 0 4.43 FCF, mln USD 1,008 1,441 1,056 (1,394) (917) 4,457 1,836 1,783 32 1,474 FCF yield, % 35.2% 20.7% 20.7% - - 36.2% 9.6% 13.9% 2% 107% CAPEX, mln USD 348 412 595 2,707 3,838 212 2,495 374 368 708 CAPEX / Revenue, % 6.0% 6.9% 7.4% 4.0% 14.9% 0.4% 5.9% 2.3% 4% 5.3% Slab Cash Cost, USD/t 191 203* 190 - - - - - - - Steel Capacities 85% 92% 90% - 83% 91% 98% 80% 90% 81% Utilization rate, % Iron ore integration 18% 90% 70% 45% 0% 40% 25% 0% 0% 40% EBITDA/tonne, USD** 141 194 123 51 150 141 108 92 71 79 Market Capitalization, as 2,891 6,953 5,100 7,016 14,161 12,323 19,028 12,820 1,672 1,375 of 31/12/2015, mln USD Div. yield, % 3% 9% 12% 6% 3% 6% 2% 4% 1% 8% ATV 6M, mln USD 6.9 16.7 7.5 117.2 57.6 61.9 98.9 105.3 12.3 7.8 EV/EBITDA (FY16) 3.0 5.0 6.0 6.3 9.3 6.2 8.9 9.3 3.5 5.8 Source : ММК, Companies’ data, Alfa Research, Bloomberg 6 * - non-integrated basis ** - average EBITDA/t for TOP30 Global Steel Makers amounted to 77 USD/t

MMK METALURJI - $ 1 BN+ OF HIDDEN VALUE Production structure of MMK Metalurji, 2015 Iskenderun Full-cycle steel making plant (2.3 mtpa) & rolling facilities • Metal service centre • Hotrolled steel Sea port facility • 10% Total: 795 ths tonnes Istanbul Metal service centre • HVA Main operations of the company products, Steelmaking/Casting • Color-coated 90% Acid pickling/Cold rolling • rolled products 34% Galvanizing/Color coating • Primary processing (cutting and slitting) of coils • Steel re-sale/Sale of scrap (from cutting operations) • Service of cargo • Galvanized flat products 56% Key sales markets HRC/Scrap spread recovers in early 2016, USD/t 1200 521 Europe 1000 Istanbul 272 800 211 358 160 600 200 Iskenderun Middle East 400 Priority markets 200 Important export markets Africa 0 2005 2007 2009 2011 2013 2015 Apr. 2016 HRC (SBB) Scrap 7 Source: MMK

MMK MARGINS SUSTAINABILITY Arguments in Favour of Long-term EBITDA Margin Sustainability Historical MMK EBITDA Dynamics, mln$ For instance: in 2015 MMK EBITDA/t was $141, while Top30 Global steel makers 4 000 30,0% 28,6% 29,4% had only $77 of EBITDA/t Even in adverse market conditions MMK’s MMK has structural advantage in all stages of business 25,8% EBITDA margin never process: went below 14% 25,0% Structural surplus of key raw materials on  Materials the local market 22,5% 3 000 Raw +40-50 $/t  Proximity to suppliers and net-back pricing 20,2% 20,9% 20,8% 20,9% 20,0%  Low prices for energy resources 14,9% 14,4% 14,7% 2 000 15,0%  Economy on scale Production 12,9% 12,3% 14,6% Process  High capacity utilization rates 12,6% -20 $/t 10,0% 10,6% Low energy efficiency (i.e. coking coal) 11,5% 10,0% Low productivity 1 000 2 407 2 204 1 668 1 607 5,0%  High HVA products share 1 223 Marketing 1 606 1 309 1 336 Sales & 1 363  Proximity to end markets +20-30 $/t Natural hedge due to net-back pricing for  - 0,0% local sales 2007 2008 2009 2010 2011 2012 2013 2014 2015 EBITDA EBITDA margin Average for Top30 Steel Names Net effect – +40-60 $/t 8 Source : ММК , Bloomberg

BENEFITS COMING FROM DOMESTIC MARKET 9 Structural surplus of main raw materials in Russia, mln tonnes 120,0 80,0 97,6 97,5 55,2 53,9 MMK’s focus on Russian market and 86,2 84,6 39,4 proximity to end customers in the middle of 39,1 80,0 40,0 Russia result in higher average realized price (due to netback pricing mechanism). 40,0 0,0 2014 2015 2014 2015 Iron Ore Supply Iron Ore Demand Coking Coal Supply Coking Coal Demand Total effect on EBITDA $360 mln Due to surplus of main raw materials on local market and netback pricing mechanism MMK has price advantage to main peers from China and EU. Compared to Chinese steel makers MMK‘s cost advantage amounts to: • $8 per tonne of iron ore concentrate; • $20 per tonne of pelets; • $10 per tonne of coking coal • $10 per tonne of scrap Total effect on EBITDA $300 mln 9 Source : ММК