MARKET SURVEY. June 2010 RUSSIA S COAL INDUSTRY IN TABLE OF CONTENTS CORPORATE NEWS AGENCY

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1 Interfax - CNA 2 Pervaya Tverskaya- Yamskaya Moscow, , Russia Tel. (7-095) cna@interfax.ru RUSSIA S COAL INDUSTRY IN June 2010 MARKET SURVEY TABLE OF CONTENTS RUSSIA S COAL INDUSTRY...4 Russian Coal Industry: Reserves... 4 Russian Coal Industry: Major Trends... 6 Growth Trends... 6 Regional Production... 8 Russia's Coal Consumption Major Coal Projects Russian Coal Industry: Transportation Issues Railroad Transportation Seaport Facilities Prices for Coal: Trends in Domestic and World Markets Russian Coal Industry: Foreign Trade Performance Russian Coal Industry: Top Companies, Groups, Holdings RUSSIA S COAL INDUSTRY: FINANCIAL POSITIONS AND DEBT BURDEN...27 Financial results Profitability Liquidity and debt burden TOP RUSSIAN COAL PRODUCERS...29 Siberian Coal Energy Company (SUEK) SUEK: Overview SUEK in SUEK: Key financials Kuzbassrazrezugol Kuzbassrazrezugol: Overview Kuzbassrazrezugol in Kuzbassrazrezugol: Key financials Mechel (Yuzhny Kuzbass, Yakutugol) Mechel Coal Division: Overview Mechel Coal Division in Mechel Coal Division: Financials of key companies Yuzhny Kuzbass Yakutugol Evraz Group (Raspadskaya,Yuzhkuzbassugol) Evraz Group Coal Division: Overview Evraz Group Coal Division in Evraz Group Coal Division: Financials of key companies Yuzhkuzbassugol... 47

2 Russia s Coal Industry in Raspadskaya SDS-Coal SDS-Coal: Overview SDS-Coal in SDS-Coal: Financials of key companies Sibuglemet Sibuglemet: Overview Sibuglemet in Sibuglemet: Financials of key companies Mezhdurechye Polosukhinskaya Mine Severstal (Vorkutaugol, Vorgashorskaya) Severstal Coal Division: Overview Severstal Coal Division in Severstal Coal Division: Financials of key company Vorkutaugol Russian Coal Russian Coal: Overview Russian Coal in Russian Coal: Key financials Kuzbass Fuel Company Kuzbass Fuel Company: Overview Kuzbass Fuel Company in Kuzbass Fuel Company: Key financials Belon Belon: Overview Belon in Belon: Key financials LIST OF TABLES Table 1 Russian Coal Production by Main Types in Q2010, million tonnes...8 Table 2 Breakdown of Russia's Coal Production by Federal Districts in Q2010, '000 tonnes...9 Table 3 Breakdown of Russia's Coal Production by Regions in Q2010, '000 tonnes...9 Table 4 Russia's Annual Tariff Growth by Means of Transport in , Y-to-Y...16 Table 5 Average Domestic Prices for Coal In Russia in 2003-March 2010, RUB per tonne...19 Table 6 Russia's Exports of Bitumen Coal in Jan.-Feb. 2010, '000 tonnes...21 Table 7 Breakdown of Russia's Bituminous Coal Exports by Countries in Table 8 Russia's Imports of Bitumen Coal in Jan.-Feb. 2010, '000 tonnes...22 Table 9 Top Russian Top Coal Producers, mln tonnes...23 Table 10 Major Coal Holdings and Groups in Russian Coal Industry...24 Table 11 Major Russian Producers of Coal in 2008, '000 tonnes...25 Table 12 Major Russian Producers of Coking Coal in 2008, '000 tonnes...26 Table 13 Growth of Russia's Coal Industry Sales, Operating Income and Net Income in 2008-January- September Table 14 Russia's Coal Industry Debt Burden and Liquidity in 2007-January-September Table 15 Breakdown of SUEK Coal Production by Regions...30 Table 16 Mechel Coal Production , 000 tones...38 Table 17 Evraz Group Coal Production , 000 tones...43 Table 18 JORC Reserves at Vorkutaugol...56 Table 19 Severstal Coal Output for Sale in , tones

3 Russia s Coal Industry in LIST OF GRAPHS Graph 1 Breakdown of the World Proved Coal Reserves by Countries...5 Graph 2 Russia's Coal Industry Via GDP in , year-to-year...6 Graph 3 Russia's Coal Production in , million tonnes...7 Graph 4 Breakdown of Russia's Coal Production by Types of Coal in Graph 5 Coal Sales in Local Market in , million tonnes...10 Graph 6 Breakdown of Russian Coal Consumption by Major Users in Graph 7 Commissioning of New Capacity in Coal Production in Russia in , 000 tonnes...12 Graph 8 Transportation of Coal by Railways in , million tonnes...14 Graph 9 Breakdown of Domestic and Export Transportation of Coal by Coal Basins...15 Graph 10 Russia's Transport Tariff Growth in , 2000= Graph 11 Handling of Bitumen Coal by Russian Seaports in , million tones...17 Graph 12 Average Export Prices for Russian Coal in 2003-Feb. 2010, US$ per tonne...18 Graph 13 Average Domestic Prices for Coal Via Price for Oil In Russia in Q2010, per cent...19 Graph 14 Breakdown of Russian Coal Production By Top Producers in Graph 15 Russia's Coal Industry Operating Margin and ROS in 2007-January-September Graph 16 Net debt/ Operating Income Ratio of Russia's Coal Industry in 2007-January-September Graph 17 SUEK Coal Production in , million tonnes...30 Graph 18 Kuzbassrazrezugol Coal Production in , million tonnes...34 Graph 19 Mechel Coal Production in , million tonnes...37 Graph 20 Evraz Group Coal Production in , million tonnes...41 Graph 21 Breakdown of Evraz Group Coal Production by Companies and Types of Coal...43 Graph 22 SDS- Coal Production in , million tonnes...49 Graph 23 Breakdown of SDS-Coal Combine Coal Production by Companies...50 Graph 24 Sibuglemet Coal Production in , million tonnes...52 Graph 25 Breakdown of Sibuglemet Coal Production by Companies...53 Graph 26 Severstal Russian Coal Production in , million tonnes...56 Graph 27 Breadown of Severstal Coal Output for Sale by Types in Graph 28 Russian Coal Consolidated Coal Production in , million tonnes...59 Graph 29 Breakdown of Russian Coal Consolidated Production by Key Companies...61 Graph 30 Kuzbass Fuel Company Coal Production in , million tonnes...62 Graph 31 Belon Coal Production in , million tonnes...65 Graph 32 Breakdown of Belon Coal Production by Companies

4 INTERFAX - CORPORATE NEWS AGENCY Phone: Fax: cna@interfax.ru Publications Available Hard Copy or A Comprehensive Insight in Russia s Construction Sector in April 2010 The survey provides information and analysis of key drivers of Russia s construction activity, key market segments (nonresidential, residential), fixedcapital and foreign investments, financials, major construction projects, top regional construction companies as well as trends in the industry of construction materials. The survey also studies regional attractiveness of residential construction in Russia. Russia s Gold Industry in April 2010 The survey provides information on major trends in Russia s gold industry in (demand, gold reserves, mine, incidental, secondary gold production, output by regions and companies as well as performance of top gold producers in (Polyus Gold, Kinross Gold, Petropavlovsk, Polymetal, Highland Gold Mining, High River Gold Mines, Yuzhuralzoloto, Vysochaishy, Susumanzoloto). The survey also studies financial positions and debt burden of major gold producers. Russia s Non-Ferrous Metals Sector in March 2010 The survey provides information on major trends in Russia s non-ferrous metals industry in , reserve base, production, exports, industry's holding structure, performance of key industries (aluminum, nickel, copper, zinc, lead, titanium, magnesium) as well as operation summary on key holdings and top companies (United Company RusAl, GMK Norilsk Nickel, Ural Mining and Metallurgical Company, Russian Copper Company, Chelyabinsk Zinc Works, Electrozinc, VSMPO-AVISMA, Ufaleynickel, Yuzhuralnickel, Solikamsk Magnesium Plant). The survey also studies financial positions of major nonferrous enterprises. Russia s Ferrous Metals Sector in March 2010 The survey provides information on major trends in Russia s ferrous metals

5 industry in (production and exports of iron ore, pig iron, steel, rolled stock, steel pipes, metalware, financials), holdings structure as well as performance of top steel and pipe producers in (Severstal, Evrazholding, Magnitogorsk Iron & Steel Works, Novolipetsk Steel, Mechel Steel Group, Metalloinvest, TMK, United Metallurgical Company, ChTPZ Group). Russia s Oil Sector in March 2010 The survey provides information on major trends in Russia s oil industry in 2009 (oil reserves, drilling, wells fund, new wells, oil and gas production, refining, exports of oil and oil products, transportation issues, regulation, stock market). The survey covers performance of 9 Russian oil companies in (Rosneft, Lukoil, Surgutneftegaz, TNK-BP, Gazprom Neft, Tatneft, Russneft, Slavneft, AFK Sistema) as well as structure of oil holdings, strategy, key financials. Russia s Retail Market in 2009: Growth Ahead? January 2010 The survey provides information on key trends and challenges of Russia's retail market, structure of retail trade by products and regions, price trends, drivers of consumer demand, expansion of retail chains as well as key market segments (foodstuffs, alcohol beverages and beer, clothes and footwear, white goods and consumer electronics). The survey covers regional retail markets' potential, including market volume, incomes and spending of population. Russia s Oil Refining Sector in November 2009 The survey provides information on major trends in Russia s oil refining in 2009 (primary refining, output of gasoline, jet kerosene, diesel fuel, fuel oil, lubricants by companies, regional markets for petroleum products, price trends, exports of oil products by volume and destinations) as well as financial performance and debt burden of the sector. The survey covers performance downstream units of 7 Russian oil companies in 2009 (Rosneft, Lukoil, Surgutneftegaz, TNK-BP, Gazprom Neft, Russneft, Slavneft) and refining sector of AFK Sistema. Russia's Top Holdings at a Glance: Business Priorities and Key Companies. October 2009 The survey provides an insight in business models of 17 top holdings (Gazprom, Lukoil, Alfa Group, Rosneft, Renova, Surgutneftegaz, Severstal, Norilsk Nickel, Evraz Group, AFK Sistema, Russian Technologies, Magnitogorsk Iron & Steel Works, Novolipetsk Steel, Mechel Steel Group, Gazmetal, Tatneft, Basic Element). The survey reveals distribution of major assets by industries as well as key drivers of holdings growth.

6 Russia's Top Regional Companies: Key Financials, Debt Burden, Bankruptcy Risk. September 2009 The survey provides ranking of 200 top non-financial companies in each of seven Russian federal districts by sales revenue, as well as key financials of each company (sales revenue, operating and net income, ROS, ROA, net assets, net debt, net working capital). The survey also contains estimates of debt burden (net debt via owners capital and operating income) and key liquidity ratios. The report studies companies bankruptcy risk measured by Altman s Z-Score and Formula of Saifullin-Kadykov. Russia s Key Exporting Sectors in 1H2009. August 2009 The survey provides an insight in performance of 8 key sectors, providing most of Russian export revenue (oil, gas, ferrous and non-ferrous metals, gold, mineral fertilizers, coal, timber, woodworking and pulp and paper). Major Russian Holdings in : Withstanding Global Recession. July 2009 The survey provides an insight in structure and performance of 17 top holdings in their key business areas (Gazprom, Lukoil, Alfa Group, Rosneft, Renova, Surgutneftegaz, Severstal, Norilsk Nickel, Evraz Group, AFK Sistema, Russian Technologies, Magnitogorsk Iron & Steel Works, Novolipetsk Steel, Mechel Steel Group, Gazmetal, Tatneft, Basic Element). Russia s Gas Industry in June 2009 The survey provides information on major trends in Russia s gas industry in H2009 (demand, gas reserves, production, exports, transportation issues, gas distribution and gasification of Russian regions, regulation of prices for natural gas, setting of domestic gas market). The survey also covers performance of top gas producing companies (Gazprom, NovaTEK, Surgutneftegas, Rosneft, Lukoil, TNK-BP). Russia s Agriculture in May 2009 The survey provides information on major trends in Russia s agriculture in , regulation, export performance, import penetration, fixed-capital and foreign investments, financials, debt burden, regional production of key products, holding's structure (Razgulay Group, Cherkizovo Group, APK Agros, Prodimex-Holding, Stoilenskaya Niva, BEZRK-Belgrankorm, Prioskolye, Rusagro, Firma Agrokompleks, Ravis-Sosnovskaya Poultry Plant, Prodo), performance of key sectors (plant growing, livestock agriculture).

7 INTERFAX CORPORATE NEWS AGENCY Head of Research Dr. Igor Y. Volosov Tel.: Fax.: Internet: Interfax - Corporate News Agency has become Russia s leading provider of business, financial and risk-related information to clients doing business with Russia, CIS, Baltics, Central and Eastern Europe. Interfax-CNA's research products are widely recognized as an unbiased information source. The company cooperates closely with SPARK Database, the Economic Development and Trade Ministry, the Ministry for Industry and Energy, the State Customs Service, Federal Financial Markets Service and other key agencies. Interfax-CNA also relies on data feed from Interfax News Agency, which has earned the reputation on the world market of an independent, competent, and reliable source of news and information. Interfax-CNA product range includes: Profiles on more than Russian companies Profiles on Russian banks and insurance companies Marketing profiles (regions, goods, producers, exporters etc.) In-depth analysis on Russian markets and industries Macroeconomic research and policy impact analysis Identification and evaluation of potential business partners Individual data search