MOSCOW, September 14 (RIA Novosti) - The Magnitogorsk Iron & Steel Works [RTS: MAGN, LSE: MMK] is to receive a 365 million-euro ($507-million) loan for the Russian company's largest investment project this decade, a consortium of banks said Friday in a news release.

Under an agreement signed by ABN AMRO, Deutsche Bank and ING Wholesale Banking with Russia's largest ferrous industry company, the loan, which will mature in 10 years, will finance equipment supplies and services offered by German company SMS Demag for the project to build a rolling mill and a slab production facility.

Export credit agency Euler Hermes Kreditversicherungs insured 85% of the cost of the services and supplies, and acts on behalf of the German government.

"The facility is the largest loan to Russian companies under Euler Hermes guarantees since 1998," the press release said.

Expected to cost over $1 billion, the Mill 5000 project will put out cost-effective plate iron that will primarily be used in the oil and gas industry, shipbuilding, bridge construction and machine-building.

The mill will have a capacity of 1.5 million tons, and its first stage will be commissioned in the summer of 2009.

The Magnitogorsk Iron & Steel Works (MMK), located in Magnitogorsk, in the Chelyabinsk Region, performs the complete production cycle, from preparation of iron ore materials to high value-added processing of steel. Its share on the Russian market of steel products is some 20%.

In 2006, MMK produced 12.5 million metric tons of crude steel and 11.3 million metric tons of commercial steel products, with a net profit of $1.4 billion.

The main MMK beneficiary is Viktor Rashnikov, who owns 85.55% of the company.