On  August  26,  2004  JSC  "Liepājas  metalurgs"  signed  a package of

agreements  about a large-scale modernisation of steel production unit,

to be launched in September of this year.

The package consists of four documents:



1)      letter  of  intent  on  construction  with  a/s  "UPB" and with

developer of project design "GIPROMEZ",



2)      an  agreement with "VAI POMINI" about delivery of steel casting

equipment and



3)      a three-party agreement between "VAI", "GIPROMEZ" and "Liepājas

metalurgs"  about  developing  a  master  plan  for the second phase of

reconstruction,  including experts' opinion about process modernisation

as well as about assuring the required electric power capacities.



The  first  modernisation  phase  will  require investment of EUR 11-12

million  (a  new continuous steel casting equipment will be installed);

the  second  phase  provides for replacing the open-hearth process with

electric furnaces.

Full reconstruction of the steel works requires investment of about EUR

100 million.