15 February 2008

NLMK advances Phase 2 of its Technical Upgrade Programme

In 2007, as part of the 2nd phase of the Technical Upgrade Programme, NLMK implemented a number of new investment projects at Lipetsk production site. These projects are aimed at making its products more competitive, enlarging the product range and improving environmental aspects of production.

Coke battery No. 2, which has a capacity of 460,000 tpa, was re-commissioned after refurbishment. This will ensure the failsafe operation of the battery, reduce environmental impact, and improve the quality of the coke. The project capex is approximately RUR1.7 billion.

The refurbishment of the reheating furnace No. 4, used for heating steel slabs before hot rolling and which has a capacity of 320 t of steel per hour, will ensure a higher quality of slab heating and production of rolled flats using advanced resource saving and greener technologies. The project capex exceeded RUR1.5 billion.

In the transformer steel production, the cold rolling reversive mill was refurbished, enabling an increase in capacity from 67,000 to 130,000 t per year. More than RUR400 million was invested into this project.

In place of the two outdated rolled flats pickling lines in the transformer steel production, a new hi-tech equipment was commissioned with a capacity exceeding 300,000 t per year, as well as a chemical plants block for the recovery and recycling of hydrochloric acid. The commissioning of this equipment has made it possible to withdraw two outdated lines from operation and to improve the quality of the products. Therefore, the level of the pollutants discharged into the Voronezh River decreased by 800 tonnes per year ( - 8% YOY). The generated ferriferous wastes will be used in the sintering plant. The project capex is approximately RUR2 billion.

The initiation of the new transformer steel coils slitting line, which has a capacity of 60,000 t per year, enabled the company to broaden its range of products. Investments in the projects amounted to approximately RUR240 million.

In addition, NLMK signed several contracts with foreign companies to supply equipment for the implementation of these new projects. They include the construction of the blast furnace No. 7 (overall project capex – RUR 21. 6 billion), two ladle furnaces (RUR1.9 billion), a hot metal desulfurization station (RUR1.2 billion), RH vacuum degasser (RUR3.2 billion), hot dip galvanizing line No. 4 (RUR2.2 billion), pre-painting line №3 (RUR4.0 billion), continuous casting machine (CCM) No. 8 (RUR4.3 billion), and BOF No. 1 (RUR9.4 billion).

Total investment capex into the Technical Upgrade Programme in 2007 is approximately USD 1 billion.

For reference:
The key objectives of the 2nd phase of the Technical Upgrade Programme for 2007 - 2011 include:

- increase in crude steel output from 9 up to 12.4 million t per year.

- further increase of self-sufficiency in key raw materials.

- increase in finished rolled flats output from 5 to 9.5 million t per year due to the enhancement and upgrade of NLMK’s existing rolling facilities and the acquisition of new rolling assets.

Total investment capex into the 2nd phase of NLMK’s Technical Upgrade Programme for 2007-2011 will exceed USD4 billion.