Impairment of assets

We determined that the value in use of the European division significantly exceeded its carrying value. We applied a 13.36% pre-tax discount rate for the calculation of the value in use of this cash generating unit. The increase of its recoverable amount was mostly due to the projected increase in the share of most profitable products in total production and the projected increase of sales volumes of the European division. As a result, we reversed the impairment loss recognised in 2008 and 2009 in respect of property, plant and equipment of the European division in the amount of $73 million.

In 2011, we recorded a loss from impairment of investment in associate, the Volgograd River Port, in the amount of $2 million.

In 2011, we determined that the carrying value of TMK-Kaztrubprom exceeded its recoverable amount. As a result, we recognised a loss from the impairment of goodwill in the amount of $3 million.

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