Severstal North America, Inc. has filed a permit to install application with the Michigan Department of Environmental Quality to expand and enhance the larger of its two blast furnaces. The company will invest more than $180 million to add capabilities that will improve furnace productivity, efficiency and reliability and significantly reduce particulate emissions associated with the ironmaking process in its Dearborn-based steelmaking operations.

According to Donald Windeler, Manager of Environmental Engineering for the company, "Our blast furnace improvement plan provides us with the opportunity to upgrade the systems that impact environmental performance and will place C Blast Furnace among the most environmentally friendly iron producing assets in North America."

Severstal will introduce pulverized coal injection technology to reduce the use of metallurgical coke and natural gas, add a second taphole to increase furnace productivity, install a new furnace cooling system to improve furnace reliability and stability and construct a new secondary emissions capture system. The combined upgrades will help to significantly reduce airborne particulate emissions from the company's ironmaking operations.

As a part of the permit application, Severstal reported that it is evaluating the future of operating its smaller B Blast Furnace following the reline of its larger blast furnace. "With the added production capability of the enhanced C Blast Furnace, the question is simply whether or not the market will support the incremental tonnage produced by our smaller furnace in 2007 and beyond," said Ronald J. Nock, President and CEO of the company.

The reline of C Blast Furnace is expected to commence in March 2007 and last approximately 110 days.

Severstal North America is an integrated flat rolled sheet steel producer that primarily serves the automotive, converter and service center markets in North America. A wholly owned subsidiary of OAO Severstal (Russia's second largest steelmaker), Severstal North America employs approximately 2000 employees in its manufacturing facilities and corporate offices located in Dearborn, Mich.

Severstal North America is also an affiliate of the Severstal Group, a Russian-based conglomerate including metallurgy, mining, automobile manufacturing, machinery, transportation and other businesses. The Severstal Group employs approximately 150,000 people and operates more than 30 plants in 14 regions across Russia and the United States. In April 2005, the Severstal Group acquired a 62% interest in Lucchini SpA, an Italian based specialty steel manufacturer with 20 industrial plants and 9000 employees located in Italy, France, Poland, Great Britain and Sweden.