February 19, 2020

PAO Severstal, one of the world’s leading vertically integrated steel and
steel-related mining companies, is reconstructing shaft furnace No. 1 in the
electrical steel smelting and processing production facility at Cherepovets
Steel Mill (part of Severstal’s Russian steel division). The total investment
will amount to about 3 billion rubles. The project is fully in line with the
Company’s fundamental strategic priority of achieving cost leadership, and will
be implemented within the framework of the announced investment plan for the
current year. The launch of the refurbished unit is scheduled for Q4 2020.

Alexander Shevelev, CEO of Severstal, commented:

“We invest in three main areas: maintaining high production capacity,
reducing final production costs and incorporating unique technical solutions.
Our new “flexible steelmaking unit” will be built on the site of the former
shaft furnace. It will work flexibly, combining the properties of a shaft
furnace with those of a small converter. This means that the upgraded unit will
be able to process the additional volumes of liquid pig iron, which will be
available after the launch of blast furnace No. 3. This will reduce the costs
of producing electrical steel products. In addition, it will enable us to
easily regulate the technical process behind our steel smelting, and adapt
flexibly to the commodity market.”

Italy’s Danieli will supply both the basic and complex engineering solutions
for the project, as well as its main processing equipment. The flexible
steelmaking unit will have an annual design capacity of 1.3 million tons of
steel. In addition to this, the unit will produce the same volume of steel as
the existing shaft furnace No. 2, using a combination of 85% liquid pig iron
and 15% scrap.