25 September 2014

Large diameter pipes produced from NLMK steel by OMK certified for underwater part of South Stream

The South Stream Transport company has certified large-diameter pipes produced by the United Metallurgical Company (OMK) fr om slabs supplied by NLMK.

This certificate allows for the use of pipes produced from NLMK steel for the underwater part of the South Stream gas pipe.

In 2012, OMK signed a long-term contract with NLMK, Russia’s leading steelmaker, for the supply of slabs produced at the Lipetsk production site. In November 2013, the companies signed a Long-Term Cooperation Agreement. According to the Agreement, NLMK will supply more than 2 million tonnes of steel slabs between 2014–2016 that feature superior chemical composition and steel structure standards, and in dimensions that are unique for the Russian market. OMK has purchased over 1 million tonnes of steel slabs for the production of large-diameter pipes under the Agreement.

NLMK Group President Oleg Bagrin said:

“NLMK Group is focused on producing high-quality steel products, including those with unique properties that allow our customers, the consumers of these products, to boost their competitiveness not only in Russia, but also internationally. This long-term contract with OMK is a great example of such mutually beneficial and successful cooperation.”

OMK Group President Vladimir Markin added:

“The South Stream Transport certificate for pipes produced entirely from Russian steel was the logical result of our work with NLMK who have advanced equipment and wide opportunities for the production of special “pipe” slab grades and dimensions. If we win new South Stream Transport tenders, this certificate will allow us to fully localize pipe production in Russia, thus mitigating risks and logistics costs. Our total demand is up to 1 million tonnes of steel slabs per year. Purchasing them in Russia will undoubtedly contribute to the development of the country.”

In 2013, NLMK successfully passed an audit by the Norwegian classification society Det Norske Veritas (DNV) as a potential supplier of slabs for the production of large-diameter pipes needed for the Nord Stream Extension (NEXT) project.

About NLMK Group

NLMK Group is one of the leading steelmakers in the world, and the largest steel producer in Russia.

NLMK’s production facilities are located in Russia, Europe and the USA. The Company’s crude steel capacity is over 17 million tonnes per year, of which approximately 16 million tonnes are located in Russia. NLMK has modern production capacities that are on par with leading international manufacturers in terms of technology.

The Group’s vertical integration allows for control of the entire production chain, from mining to final processing and delivery to our customers.

The Group produces a wide range of flat and long steel products. NLMK is the world-leading supplier of slabs and transformer steel, and the largest Russian supplier of HVA products, including pre-painted steel, galvanized steel and electrical steel, as well as long products.

The Company has a diversified sales topography, delivering products to over 70 countries around the world.

NLMK has the most competitive cash cost among global manufacturers; and one of the highest profitability levels in the sector. The Company generated $10.9 billion in revenue and $1.5 billion in EBITDA in 2013.

NLMK is the only steelmaker in Russia with an investment grade credit rating from international rating agencies. It is included in the TOP10 for corporate governance and transparency among Russian public companies by international rating companies.

NLMK’s ordinary shares are traded on the Moscow Stock Exchange (ticker “NLMK”) and its global depositary shares on the London Stock Exchange (ticker “NLMK:LI”).

About OMK

United Metallurgical Company (OMK) is one of Russia’s largest producers of products for leading energy, transport, and manufacturing companies. OMK produces a wide array of pipes, railway wheels, sheet steel, pipeline joints, and fittings. OMK comprises six large metallurgical enterprises: Vyksa Steel Works (Nizhny Novgorod Region), Almetyevsk Pipe Plant (Republic of Tatarstan), Trubodetal Plant (Chelyabinsk Region), the Casting and Rolling Complex (Nizhny Novgorod Region), Blagoveshchensk Valve Plant (Republic of Bashkortostan), and OMK Tube Plant (Texas, USA).

The key buyers of OMK’s products are major Russian and international companies such as Gazprom, Russian Railways, Lukoil, Transneft, Surgutneftegas, Rosneft, TNK-BP, ExxonMobil, Royal Dutch Shell, General Electric, and Samsung. OMK products are delivered to 30 countries worldwide.

The Chairman of the Management Board is Anatoly Sedykh and the Company’s President is Vladimir Markin.

In 2012–2014, VMZ produced approximately 1.8 million tonnes of large-diameter pipes. These products have been supplied to Russian and international pipeline projects such as the North European Gas Pipeline, Bovanenkovo–Ukhta, Ukhta–Torzhok, Central Asia–China gas trunk line, and the Southern Corridor. OMK is currently a global leader in supplying pipes for the underwater parts of gas pipelines owing to its participation in such projects as the Nord Stream, the Varandey Oil Export Terminal, the Baydaratskaya Guba and Dzhubga-Lazarevskoe-Sochi gas pipelines, the Nevelsky Strait in the Sakhalin-Khabarovsk-Vladivostok project, and now the South Stream, wh ere OMK got 35% of orders for the underground parts of the first two strings.