Arcelor and Severstal Inaugurate Severgal, Their Joint Galvanising Line for the Russian Automotive Market.

LUXEMBOURG & CHEREPOVETS, Russia -- Representatives of Arcelor (Pink Sheets:ARLOF) (BOURSE:LOR) and Severstal have inaugurated their joint galvanising line, Severgal, located at Cherepovets, 400 km north of Moscow, during a ceremony held on 13 April 2006.

This joint venture produces high-end coated steel for the dynamic Russian automotive market. Severstal Group holds a 75% stake and Arcelor a 25% stake in Severgal, which, after ramp-up, will have an annual production capacity of more than 400,000 tons of galvanised steel.

At the ceremony, Arcelor was represented by Christophe Cornier, deputy Senior Executive Vice President of Arcelor responsible for the Flat Products activities in Europe and Automotive World wide, and Severstal by Aleksey Mordashov, Head of the Severstal Group holding, and his deputy Vadim Makhov, Chairman of the Board of Directors of the Severgal joint venture. Authorities were represented by His Royal Highness the Prince Guillaume of Luxembourg, the Governor of the Vologda region Vyacheslav Pozgalev, as well as representatives of the governments of the Russian Federation and Luxembourg.

During the ceremony, Aleksey Mordashov expressed his satisfaction at the cooperation between Severstal and Arcelor, pointing out that "thanks to our partner, Severgal received zinc coating technologies that are unique for the Russian market, as well as an access to the European steel products distribution network". "However, he added, I consider that the most valuable Arcelor contribution to our joint project is experience, knowledge and responsibility, as well as highest management and production standards that were shown to us by our European colleagues".

Christophe Cornier also praised the Arcelor-Severstal partnership, saying: "By entering this venture to jointly produce state of the art galvanised steel, within a highly competitive configuration and on a very promising market, the two outstanding steelmakers have created a win-win situation. Severgal is one of the lines designed to produce steel for the outside body panels of cars built around the world, as Arcelor does in Brazil, Canada, China or Turkey, thus strengthening our worldwide automotive leadership".

Severgal, which is located next to Severstal's facilities, will produce Extragal(TM), an Arcelor proprietary technology. It will employ 300 staff. It represents an investment of 210 million U.S. dollars. Eventually, Severgal will also produce Galvalia iron and zinc coating. In the future, Severgal plans to become one of the key suppliers of hot-dip galvanised sheet to the automotive industry present in the Russian Federation.

Open joint-stock company (OAO) Severstal is the parent enterprise of multi-business holding Severstal Group and of its metallurgical division. The Joint Stock Company "Severstal" is the successor to Cherepovets Iron & Steel Works, the history of which started in 1955, when the first blast furnace was blown in. In 2005, the Company celebrated its semi-centennial jubilee. The number of Severstal personnel working at Cherepovets site is about 36,500. According to International Iron & Steel Institute (IISI), JSC Severstal is one of the biggest steelmakers in Russia, and as per performance figures in 2005, its rank is 13th among the 30 biggest steelmaking companies in the world.

Arcelor is the number one steel company in the world with a turnover of 32.6 billion euros in 2005. The company is the world leader for the automotive sector and holds leadership positions in its main markets: construction, household appliances and packaging as well as general industry. The company - number one steel producer in Europe and Latin America - ambitions to further expand internationally in order to capture the growth potential of developing economies and offer technologically advanced steel solutions to its global customers. In 2006, Arcelor employs 110,000 associates in over 60 countries. The company places its commitment to sustainable development at the heart of its strategy and ambitions to be a benchmark for economic performance, labour relations and social responsibility.