RUSAL Turning Consolidation into Global Opportunity Investing in Russia and CIS, 7 th Annual Conference New York, 13 March 2003

2 Introduction Russia’s top companies are consolidating themselves into competitive players at a fast pace Russia’s top companies are consolidating themselves into competitive players at a fast pace The oil sector was the advance guard… The oil sector was the advance guard… …but this impulse is spreading throughout the entire Russian industry …but this impulse is spreading throughout the entire Russian industry

3 Second largest primary aluminium producer in the world Second largest primary aluminium producer in the world Low cost producer Low cost producer Cash generative: over $4 billion in annual revenues Cash generative: over $4 billion in annual revenues Growing global asset base Growing global asset base Young, dynamic management team Young, dynamic management team Ambitious growth strategy – to be the leading aluminium producer Ambitious growth strategy – to be the leading aluminium producer RUSAL IS…

4 Aluminium Consolidation in Russia In early 90s, 11 independent smelters accessed the market: In early 90s, 11 independent smelters accessed the market: - Lack of raw materials - No international marketing expertise - No external financing Herfindal-Hirschman index Share of key players Bratsk Smelter – 28% Krasnoyarsk Smelter – 26% Sibal – 13% SUAL – 10% RUSAL – 75% SUAL – 25% Vertical integration (raw materials / primary aluminium) SUALRUSALSUAL GlobalisationNone RUSAL: assets in 5 countries

5 Recent Aluminium Industry Mergers March1998 Alcoa (USA) and Alumax (USA) August1999 August1999 March2000 Alcoa (USA) and Reynolds (USA) Alcan (Canada) and Algroup (Switzerland) RUSAL formed through merger of largest CIS aluminium producers Global M&A deals in metals and mining industry exceeded $170 bln in past 5 yearsGlobal M&A deals in metals and mining industry exceeded $170 bln in past 5 years March2001 BHP (Australia) and Billiton (S. Africa) January 2002 Norsk Hydro (Norway) and VAW (Germany)

6 Key Drivers of Industry Consolidation Better control over production - in March 1999 aluminium prices slumped to a five-year low of $1,140 MTBetter control over production - in March 1999 aluminium prices slumped to a five-year low of $1,140 MT Access to cheaper resources – over 60% of bauxite reserves located in Africa, Australia and Latin AmericaAccess to cheaper resources – over 60% of bauxite reserves located in Africa, Australia and Latin America Customer demands for higher quality products from critical end-user industries – packaging and automotiveCustomer demands for higher quality products from critical end-user industries – packaging and automotive Market diversification – penetration to the developed and emerging marketsMarket diversification – penetration to the developed and emerging markets Lower cost of capitalLower cost of capital Improved operating efficiencyImproved operating efficiency

7 Cost Management With 50% cheaper power than that of major peers- Natural advantages are not to be wasted With 50% cheaper power than that of major peers- Natural advantages are not to be wasted Key achievements to date : Key achievements to date : - Labour cost optimisation through reducing workforce by 8% and establishing centralised repair and maintenance for all production units - Over 20% reduction in transportation cost due to increased volumes, optimised routes and renegotiated tariffs - 15% reduction in alumina cost mainly through acquisition and contract renegotiation - 14% cut in overhead expenses

8 Investment – Key to Achieving No. 1 Portfolio worth over $3 blnPortfolio worth over $3 bln Capacity expansion at Nikolayev Refinery Bauxite & Alumina Modernisation and capacity expansion at the newly acquired Friguia refinery Participation in privatisation of NALCO (India) Dian-Dian bauxite deposit in Guinea Four-year modernisation programs for Krasnoyarsk and Sayanogorsk Smelters Primary Aluminium Capacity expansion at Sayanogorsk Smelter Construction of a new smelter in the Irkutsk region Semi-finished & Finished New beverage can plant in the Leningrad region

9 Market Presence Broadening customer base to end-users: Toyota, Mitsuibishi Broadening customer base to end-users: Toyota, Mitsuibishi Improved production mix: share of value added products increased from 19% to 26% Improved production mix: share of value added products increased from 19% to 26% Higher geographical diversification - North American sales more than doubled in 2002 Higher geographical diversification - North American sales more than doubled in Sales of primary aluminium and alloys by region

10 Financing Over $600 mln from international institutions Over $600 mln from international institutions Capital markets Capital markets - three-year Rb3 bln domestic bond issue - $200 mln from private investors Access to long-term financing Access to long-term financing - $150 mln investment loans by Sberbank for 5 years - seven-year loan under Hermes’ guarantee Total financial debt: $1.5 billion Further debt issuance opportunities considered, with a view to improve the existing debt structure Further debt issuance opportunities considered, with a view to improve the existing debt structure

11 Key Challenges of Consolidation Corporate culture: learning to listen Corporate culture: learning to listen Employee communications: robust program being rolled out Employee communications: robust program being rolled out Absence of corporate brand: new marketing and communication strategy Absence of corporate brand: new marketing and communication strategy Inefficient corporate structure: Inefficient corporate structure: - Outsourcing service functions - Spinning off non-core businesses - Complete buy-out of minority shareholders to take subsidiaries private

12 RUSAL’s Outlook Russian economy will continue to grow, fuelling domestic aluminium demand Russian economy will continue to grow, fuelling domestic aluminium demand The low interest rate environment favours investment The low interest rate environment favours investment The coming structural reform will increase competition in the power and transport sectors to the benefit of all… The coming structural reform will increase competition in the power and transport sectors to the benefit of all… … and RUSAL, in particular, as these sectors provide us critical inputs … and RUSAL, in particular, as these sectors provide us critical inputs RUSAL’s sales

13 Conclusion Consolidation has created opportunity for Russian companies to evolve as global players…Consolidation has created opportunity for Russian companies to evolve as global players… … and potential global leaders in their respective sectors… and potential global leaders in their respective sectors