Outokumpu Oyj - Company Announcement

Outokumpu to double ferrochrome production capacity in Finland

Stock Exchange Release
June 3, 2008 at 9.00 a.m.

Outokumpu's Board of Directors has approved plans to expand the
Group's ferrochrome production capacity in Tornio, Finland. The EUR
420 million investment will double the plant's annual capacity to
530 000 tons. The investment project starts immediately and the new
capacity is scheduled to be available during the first quarter of
2011.

The market price of ferrochrome has increased substantially during
the recent years due to the increased demand by the stainless steel
industry, and more recently, due to production constraints relating
mainly to the availability of electricity in the main ferrochrome
producing country, South Africa. The expanded ferrochrome capacity
will make Outokumpu comfortably self-sufficient in its primary
chromium needs. The ferrochrome smelter is supplied by the Group's
adjacent chromium mine in Kemi. The main benefit for Outokumpu is its
ability to source the material at cost while selling it at prevailing
market prices. The pricing mechanism of stainless steel allows
stainless steel producers to charge for all raw materials at market
prices. Additionally, the ferrochrome smelter is located at the same
site as the integrated stainless steel mill in Tornio, and thus
ferrochrome can be transferred to the stainless steel melt shop in
liquid form, giving an exceptional cost advantage as the material
does not need to be re-melted. Furthermore, the carbon monoxide
emanating from the ferrochrome process is used as fuel in the
stainless steel mill, thus reducing the need for external energy.

It is estimated that when the expanded ferrochrome capacity is in
use, the positive effect of a 5 USc/lb increase in the contract price
of ferrochrome on the Group's operating profit will increase from the
current EUR 10 million to some EUR 20 million annually.

CEO Juha Rantanen is pleased with the ferrochrome expansion project:"After a thorough evaluation, we are ready to proceed with our
investment plans. Doubling the ferrochrome production is an
exceptionally attractive and profitable project. Already today,
Outokumpu Tornio Works is the most integrated stainless steel mill in
the world. The investment will support Outokumpu's strategy
realization, maintain cost leadership, secure raw materials and
capitalize on our own chromium asset. We have estimated that with
current prices the expansion will bring additional annual operating
profits in the order of EUR 200 million." As a result of the
expansion, Outokumpu's electricity consumption will increase
considerably. "I trust that decisions related to reliable electricity
supply will be made in due course to secure the competitiveness of
the energy-intensive industry in Finland", adds Rantanen referring to
the Fennovoima nuclear power plant initiative.

When the new ferrochrome capacity is in use the electricity
consumption of the Tornio Works will increase to some 3.3 TWh
annually. Outokumpu has a significant stake in the Fennovoima nuclear
power plant initiative in Finland. The at-cost, reliable and emission
free electricity supply from Fennovoima, proposed to start in 2018 -
2020, would strengthen Outokumpu's cost competitiveness in producing
ferrochrome and stainless steel for years to come. Outokumpu is for
the interim, in addition to its existing long-term electricity
contracts and investments in energy supply, currently finalizing a
ten-year, one TWh per year, electricity supply contract with a major
European utility company.

The ferrochrome expansion will increase the Group's annual CO2
emissions by some 270 000 tons, because of the use of coke which
cannot be substituted in the ferrochrome process. However, to produce
ferrochrome in Tornio using the in-house developed state-of-the-art
technology will significantly reduce the otherwise produced global
carbon dioxide emissions. In addition to the energy efficiency of the
plant, the electricity for the Tornio site is sourced from hydro and
nuclear power plants. It is calculated that expanding capacity in
Tornio will reduce the global carbon dioxide emissions by some one
million tons as opposed to sourcing the raw material from South
Africa or Kazakhstan, where mainly fossil based energy is used.

Today, the Group's ferrochrome smelter satisfies the primary chromium
needs of Tornio Works only, while the melt shops in Avesta and
Sheffield are supplied from the market. Outokumpu is currently in the
process of expanding the ferritic grades output (stainless steel
containing no nickel) in Tornio, as well as expanding the output of
the Avesta and Sheffield melt shops. This necessitates an increased
reliable source of primary ferrochrome.
Background information, including CEO Juha Rantanen's comments on a
video, are available in the Internet at www.outokumpu.com.

For further information, please contact:
Antti Pihko, SVP - Tornio Works, tel. +358 16 454 278, mobile +358 40
848 2948
Päivi Lindqvist, SVP - Communications and Investor Relations, tel.
+358 9 421 2432, mobile +358 40 708 5351
Eero Mustala, VP - Project communications, tel. +358 9 421 2435,
mobile +358 40 504 5146

CEO Juha Rantanen and EVP Pekka Erkkilä will be available for
telephone interviews, please contact Anna Vuolanen, VP - Media
relations, tel +358 40 705 5734, for the interviews.

Attachments:

FeCr_expansion.EN