Updated August 13, 2008

In 2008 Ural Mining and Metallurgical Company (UMMC) intends to invest about RUR 3 billion into its core enterprise – Uralelectromed, and this figure exceeds the volume of investments twice as compared to

the last year.

"Uralelectromed needs investments, as the company hasn't been upgrading its production capacities for a long time", marks Metropol Company analyst Maxim Khudalov.

"The major part of investments will be spent to upgrade the equipment.

Moreover, some facilities' volume will be directed to the development of copper production projects".

The situation with Mechel Company, when Russia's PM Vladimir Putin has accused it of overpricing for the Russian consumers and of understatement of the taxable base, will in the nearest future result in the FAS claims (Federal Antimonopoly Service) to companies engaged in the transfer pricing,

the expert considers.

UMMC can get to this list, therefore, the management is trying

to make the companies of the holding more transparent, and that will certainly attract investors.

"The company is non-transparent yet: it is not quite clear, how money streams are generated", underlines Maxim Khudalov.

"Moreover, one should mark that since 2005 UMMC was promising to hold IPO.

I think that securities placement on a stock exchange takes place in the long term".

"Frankly speaking, I consider Uralelectromed activity as very negative, as well as all UMMC holding, as they use the transfer pricing, and that impedes the company capitalization growth at the financial market", comments Antanta Capital analyst Evgeny Ryabkov.

"However, it is favorable for the holding".

Uralelectromed is the second largest (after MMC Norilsk Nickel) producer of copper cathodes in Russia with the market stake of 38%. The enterprise exports more than 2/3 of its products.

Uralelectromed stake at the world market attains 2,2%.