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TMK and SMS Group sign Strategic Partnership Agreement

OAO TMK (TMK), one of the world’s largest oil and gas pipe producers, and SMS Group (Germany), one of the world’s leading manufacturer of metallurgical and pipe-rolling equipment, have signed an agreement on strategic cooperation through to 2015.

The strategic partnership foresees coordination of long-term joint activities to develop and implement SMS Group’s best technologies and equipment for the production of steel and seamless steel pipes at TMK’s mills.

During the signing meeting, Chairman of the Board of Directors of OAO TMK Dmitriy Pumpyanskiy and SMS Group President Heinrich Weiss expressed satisfaction with the results of their joint efforts. TMK is implementing a $1.2 billion Strategic Investment Program to be completed by 2010 that will implement the most advanced technologies and increase the output of high-tech pipe products. The share of already launched projects involving SMS Group’s equipment in TMK’s Strategic Investment Program exceeds 50%.

In 2006, TMK and SMS Group signed agreements for the delivery of a pipe rolling mill with a Premium Quality Finishing (PQF) line for Taganrog Metallurgical Works (TAGMET, a part of TMK) and an electric arc furnace for Seversky Pipe Plant (SPP, also a part of TMK) . The basic engineering of the projects has been completed.

The new pipe rolling mill will allow TAGMET to increase production capacity, expand its range and increase the quality of its products. The new mill is to be launched in the first half of 2008 and will be capable of producing 600,000 tonnes of pipes per year. Pipes for oil and gas (casing, tubing, drilling pipes) as well as seamless pipes for engineering shall be produced in accordance with international standards.

The electric arc furnace for Seversky Pipe Plant will be capable of producing 990,000 tonnes of steel per year and is to be launched in late 2007. The installation of the furnace will culminate in the creation of a modern steel-producing complex for Seversky Pipe Plant, to complement already launched ladle furnace and a continuous casting machine.

In the agreement, TMK and SMS also express their intention to create a joint venture on the basis of Seversky Pipe Plant that will manage service and repair for equipment used in the production of steel and seamless pipes. This will be to the highest standings of advanced manufacturing technologies and best world practices.

TMK and SMS Group have been in close cooperation since 2001. The mutual projects undertaken include stretch-reducing mill and threading lines at Taganrog Metallurgical Works, upsetting press machines at Taganrog Metallurgical Works and Sinarsky Pipe Plant, and continuous casting machines at Volzhsky Pipe Plant, Taganrog Metallurgical Works and Seversky Pipe Plant.