17 February 2011
NLMK and Metalloinvest signed long-term contracts
NLMK (LSE: NLMK) and Metalloinvest Holding have signed four year contracts to supply a total of 21.6 mln tonnes of pellets. Both companies have successfully developed a pricing scheme for raw materials supplied under long-term contracts based on applicable market indicators. For the duration of the contract, pellet prices will be determined using a formula reflecting pricing dynamics in the international iron ore market.
The contracts represent a continuation of many years of mutually beneficial cooperation between the two companies and will ensure a stable sales channel for Metalloinvest Holding’s developing ore mining assets, as well as a stable pellet supply to NLMK’s expanding production facilities in Lipetsk. Pellets to Novolipetsk will be delivered from the Lebedinsky and Mikhailovsky mining and processing plants (assets of Metalloinvest Holding) located in neighboring regions less than 400 km from Lipetsk.
NLMK is one of the world’s leading producers of steel. In 2010 it produced 11.5 mln tonnes. The Company manufactures a wide range of steel products including slabs and billets, hot-rolled, cold-rolled steel, plates, pre-painted, galvanized, electrical steel and other HVA goods, as well as a wide range of long products including rebar, wire rod and metalware. NLMK delivers its products to the customers in over 70 countries worldwide. The goal of NLMK’s CAPEX Program is to increase production capacity by 40% (to 17 mln tonnes per year) by launching a new 3.4 mln tonne Blast Furnace (in 2011) at Novolipetsk, as well as constructing a mini-mill for the production of long steel products.The Company employed some 59,000 people in Russia, Europe and the US in 2010. NLMK shares are traded in Russia on RTS and MICEX, and GDRs – on the London Stock Exchange.
Metalloinvest owns the largest deposits of iron ore in the world and is one of the leading steel product manufacturers in Russia. The Holding comprises the mining division (Lebedinsky and Mikhailovsky), the steel division (Oskolsky Electrometallurgy Plant and Ural Steel), and auxiliary assets. Leaders in the field, Metalloinvest enterprises form an integrated value chain covering the entire mining & smelting process from the production of iron ore to downstream product output.