OMK is a dynamic modern company and one of the leaders in Russia's metallurgy industry

Vision

We strive to become the most efficient company in the Russian iron and steel industry manufacturing products for the pipe and metallurgical market. Our aim is to achieve a successfully balanced diversification and deep integration of our production and, thus, protect the Company from any declines in specific markets and process stages.

Mission

We contribute to the creation of environmentally safe global energy and transport communications and help our clients to provide high-quality passenger and cargo transportation services without any distance limitations.

Corporate Values

·        Ensuring maximum return on equity capital;

·        Respect for and trust in employees and partners;

·        Support for innovations and continuous improvement of product quality;

·        Observing a balance of interests of shareholders, top managers, and employees

Corporate Business Conduct Principles

•  Striving for leading positions in key markets;
• Concentrating production and investments on a limited number of the most promising production sites;
• Balanced diversification of production;
• Vertical integration of OMK’s entities and new production units, increasing the share of controlled costs;
• Introducing new technologies and equipment, continuous search for and implementation of more and more advanced process solutions;
• Personnel development;
• Enhancing transparency of the Company’s business;
• Through successful development of our business, we contribute to the development of the areas included in our business coverage;
• We are client-oriented and active in creating the demand for our products;
• We build our relations with clients and partners on a long-term basis;
• We make efforts to constantly enhance our operational efficiency

We pay special attention to the management of unit consumption and critical resources (labor, energy, and transport) in terms of their availability and costs.

Our decisions in terms of management of such resources are considered to be the measures toward enhancing competitiveness of the whole Group and its separate businesses. In this regard, we intend to lower risks and decrease the cost share in the next three years.

With regard to its personnel management, OMK will approve and consistently implement the principles for developing the internal policy for personnel selection, maintenance, and training. The Company’s objective is to double by 2012 its labor productivity in terms of profit per employee.

With regard to energy supply management, the Company is implementing the Program for Energy Saving and taking measures to satisfy its growing needs.

OMK is implementing the Program for Transport Risk Management and Logistical Optimization and creating the relevant infrastructure for a successful execution of the Company’s plan for increasing to increase the production in the Russian and foreign markets. For the implementation of the Company’s strategy, it is necessary to enhance the integration of the Group’s entities.

Main Stages of the Group Development Strategy

Stage 1

ОМК Business Today (as of 2007)

Stage 2

Completion of Vertical Integration for Medium-Diameter Pipes (2008)

Stage 3

Completion of Vertical Integration for Large-Diameter Pipes (2011)

Accordingly, the goal of the OMK long-term strategy is to achieve leading positions in the key markets and in terms of operational efficiency through maximizing the share of controlled costs, among other things.

OMK is the leader of the Russian large-diameter pipe (LDP) market, which leadership is maintained through the availability of two modern lines for production of large-diameter welded pipes and lines for pipe coating. This enables the Company to produce a wide range of pipes of 508 mm to 1,420 mm in diameter and wall thicknesses of up to 48 mm, while the flexibility in terms of distributing orders among various mills makes it possible to maximize the profit on production. The quality of OMK’s products is as high as that of foreign manufacturers, which is evidenced by the Company’s successful participation in the biddings for the Sakhalin projects. In May 2006, OMK completed the delivery of conductor pipes (diameter: 726 mm; wall thickness: 38.1 mm) for the offshore production platforms of the Lunskoye and Piltun fields under the Sakhalin 2 project. The pipes were designed for harsh ice conditions in areas with the seismic activity as high as magnitude 9. In the future, OMK plans to supply large-diameter pipes for offshore sections of the North European Gas Pipeline, Shtokman gas condensate deposit, and the Baydaratskaya Bay.

In September 2006, Vyksa Steel Works produced pilot batches of pipes (diameters: 914 mm, 1,067 mm, 1,420 mm; wall thicknesses: up to 40 mm) in accordance with the DNV standards. According to Norsk Hydro specialists, the pipes manufactured by VSW in accordance with the DNV meet the requirements for their quality.

OMK plans to retain its leading positions in the LDP market, while developing together with the market, satisfying the growing demand, and developing new target markets in non-FSU countries.

To this end, in 2006, a project related to the installation of the second molding press was launched. The press will enable the Company to increase in 2008 the capacity for production of 1,420-mm pipes up to 950,000 tonnes a year. As a result, OMK will become the world’s leading LDP-production company.

In 2006, one of the key events for the Company was the decision to construct of the Mill 5000 metallurgical facilities with a production capacity of 1.2 million tonnes of sheets a year. It is planned to place the steelmaking facilities at Chusovoy Metallurgical Works and the rolling facilities in Vyksa in close proximity to the pipe production. This project will enable OMK to complete the construction of a vertical integrated chain and gain control over production costs, steel quality, and reduce the timeframe of LDP order execution.

The implementation of this project will be an important milestone in the development of the Company’s Pipe-Rolling Division and Steel Works Division, as the project requires a comprehensive reconstruction of CMW and will involve the Company’s key businesses.

OMK’s wheel-rolling business also occupies the leading position in the Russian market (64% of the Russian market in 2006)

As for the Company’s plans to develop this business, OMK sees it as a high priority to increase its wheel exports to non-FSU countries.

In 2006, OMK completed the modernization of its VSW-based facilities for production of medium-diameter pipes (MDP), which will enable the Company to manufacture pipes with high operational characteristics (high-strength, cold-resistant, and corrosion-resistant pipes) designed for main pipelines. OMK’s main target in the medium-diameter pipe segment (pipes for oil/gas pipelines, casing pipes, and pipes for water/gas pipelines) is to increase production and exports, manufacture of pipes with additional application properties, and certification of OMK products by the largest oil and gas corporate groups.

In late 2007, OMK is supposed to complete the construction of the Vyksa Casting and Rolling Complex for the production of hot-rolled steel for MDP workshops.

In the automotive spring production, OMK steadily maintains its leader status in the Russian market. With regard to this business, it is planned to develop a small-sheet (for foreign car models, among other applications) production project and soon reach full capacity, and organize serial delivery of CMW-manufactured springs to the assembly facilities of foreign companies in the Russian Federation and non-FSU countries. The reconstruction of Mill 370 at Chusovoy Metallurgical Works will facilitate a significant improvement in the quality of springs and extend the range of rolled section steel.

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