An investment project to build up the capacity of EVRAZ KGOK to reach 55 million tonnes of crude ore per annum (+10% capacity) is progressing according to plan. It is expected to be completed in December 2012. We are also on schedule with Sobstvenno-Kachkanarskoye ore deposit (SKD) project at EVRAZ KGOK, in Q2 2012 a cut-off parameter report and an estimation of resources report for 6.9 billion tonnes of iron ore were approved by the Russian Ministry of Natural Resources, the SKD design and engineering works are well in progress and in Q4 2012 are expected to be submitted for approval by the state construction expertise.

Evrazruda, another iron ore mining company, in Q2 2012 completed a scoping study and is launching the major reconstruction of the Sheregesh iron ore mine to gradually increase its production of ore by 2.5 times and in 2016 to reach a capacity of 4.8 million tonnes per annum. At the Tashtagol mine a successfully commissioned back-fill mining process gave access to extra 32 million tonnes of iron-reach resources. Evrazruda also completed the debottlenecking programme at the Abagur benefication plant, which improved the quality and reliability of the plant’s operations, especially in severe Siberian winters.

Cost savings and operational improvements stayed in focus of our mining division. In H1 2012 the following positive economic effects were realised from these initiatives USD 10.5 million at EVRAZ VGOK, USD 3.0 million at EVRAZ KGOK and USD 4.0 million at Evrazruda. This was achieved through increase in labour productivity and more effective cost control measures. In Q2 2012 a special programme of operational improvements was developed for Evrazruda with the help of international mining consultants. Started in 2012, the programme is expected to drive up labor productivity by 15% by 2014 thus increasing production by 1.6 million tonnes per annum.

Source - Evraz

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