Alchevsk Iron and Steel

Alchevsk Iron and Steel is a company with complete technological cycle. The key
activity of the company is the pig and cast iron production, as well as of billets,
sheets, steel and sinter. In addition, the company produces low magnetic and
titanium-alloy grades of steel, and is the monopolistic producer in Ukraine of
stainless plates, steel two-layer place and steel shots.

After collapse of the global prices for steel, the company was forced to suspend
its large-scale investment program. Yet, the first benefits of this program
emerged this summer, when by production volumes Alchevsk Iron and Steel
almost reached the level of top-3 steelmakers. However, the crisis affected its
output in autumn 2008, when the company’s capacities were utilized by
approximately 25%. Since the company experiences its hard times, the
management was forced to send on non-paid vacations some 25% of its workers.
Nonetheless, the market overestimated the company problems scale, which, as
we expect, will be solved in the second half of 2009. As a result, the company
shares plunged almost 18 times – from $0.143 to $0.008, and now look too
cheap even despite the high risks.