The Modernization of Joint-Stock Company Liepājas Metalurgs


16 February 2007                                                                

The Modernization of Joint-Stock Company Liepājas Metalurgs, the biggest        
industrial enterprise in Liepaja and Latvia, is in progress. The first stage of 
the modernization program has been completed - the new continuous casting       
machine (CCM) was commissioned last year and is working in the meltshop, which  
for now is still bearing the name of the Siemens-Martin (Open-Heart Furnace)    
shop.                                                                           
In accordance with the Contract, it was Siemens/VAI together with its partners  
which has developed the general layout of the modernization program. During the 
meeting last November at the Siemans/VAI corporate headquarters in Linz,        
Austria, the top executives and specialists of Liepājas Metalurgs met with the  
staff of Siemens/VAI, when it was also decided that the next working meeting    
will be held in Liepaja.                                                        
At the end of January a Board Member of Siemens/VAI Mr. Karl Gruber (Vice       
Chairman of the Board) came to Liepaja together with his colleagues the Project 
Director Mr. Roland Fabris, Head of the Translation Department Mr. Roland       
Neubauer, and Executive Vice-President of Sales Mr. Karl Veigl. The goal of the 
visit was to reach an agreement in respect to the further development of the    
project - to set the work time schedule and define activities to be performed in
order to complete the general layout of the modernization program.              
On behalf of Liepājas Metalurgs negotiations were held by the Chief Executive of
the modernization program, Chairman of the Council of the Joint-Stock Company   
Mr. Sergey Zakharin, and on behalf of Siemens/VAI by the Board Member of the    
Company Mr. Karl Gruber.                                                        
The next working meeting between the modernization project management team of   
Liepaja's steel plant and Siemens/VAI experts will take place next week with the
goal to conduct the last discussions before finalizing the Contract. The        
representatives from Siemens/VAI will arrive to Liepaja on February 26.         
According to Mr. Egils Kupshis, the Chief Engineer of Liepājas Metalurgs, along 
with the before mentioned steps, the last activities related to the coordination
of particular technical matters are still in progress. Those matters are to be  
solved within the framework of the existing Pre-Engineering Contract. Also last 
week the staff of Siemens/VAI worked at Liepājas Metalurgs. The staff consisted 
of electricians who worked together with the local experts to thoroughly solve  
any last uncertainties.                                                         
In the nearest future JSC Liepājas Metalurgs, Siemens/VAI and other participants
in this modernization venture are being prepared to sign the Agreement regarding
the further modernization of the metallurgical plant. It envisages the          
replacement of the existing Siemens-Martin (Open-Heart) furnaces with an        
electric arc furnace (EAF) and adding a ladle furnace (LF), as well as a        
construction of a new Rolling Mill.                                             

With best regards,                                                              


Joint-Stock Company Liepājas Metalurgs                                          
Chief Economist 							B. Imbovica