28 January 2015

NLMK extends its slab supply contract with OMK till 2019

NLMK Group (LSE: NLMK), Russia’s largest steelmaker and one of the most efficient steel companies in the world, and OMK Group (United Metallurgical Company), Russia’s leading pipe manufacturer, have extended their contract for the supply of Novolipetsk slabs for the production of large diameter pipes at the Vyksa Steel Works up to and including 2019.

As per the agreement, NLMK will continue to supply the continuously cast steel slabs featuring superior chemical composition and steel structure standards that are rolled into plates for the production of large diameter pipes at the OMK Group Vyksa Steel Works.

The initial agreement between NLMK and OMK was signed in August 2012; and in November 2013 the companies signed an agreement of long-term cooperation for 2014-2017.

NLMK Group President Oleg Bagrin said:

”Today we can confidently state that our partnership hasn’t just passed the test of time, but has acquired particular significance in the current economic context. Our decision to set up a high-tech Russian chain to produce large diameter pipes has been proven to be strategically correct. The successful partnership between NLMK and OMK can serve as an example not just for steelmaking companies, but for companies in other industries of the Russian economy”.

OMK Group President Vladimir Markin added:

”We are glad to have NLMK Group as our reliable long-term partner for the third year running. I hope that our mutually beneficial cooperation grows even stronger in the future. Guaranteed supplies of high-quality slabs for rolling into plates at our Mill-5000 for the subsequent production of large diameter pipes at Vyksa at one of the most modern large diameter pipe complexes in the world will provide Russian and international pipe projects with the highest quality products”.

For reference:

NLMK slabs are used to produce wide plates at the VMZ Mill-5000 to be further used for the production of large-diameter pipes at the VMZ Electric-Weld Pipe Workshop No. 4. Since the launch of Mill-5000 at the end of 2011, it produced over 1 million tonnes of plates from NLMK slabs.

In 2012–2014, VMZ produced 2.5 million tonnes of large-diameter pipes. These products were supplied to Russian and international pipeline projects such as Bovanenkovo–Ukhta, Ukhta–Torzhok, Central Asia–China, Arctic Circle – Purpe, the Southern Corridor, and a number of others. OMK is currently a global leader in supplying pipes for the underwater parts of gas pipelines owing to its participation in such projects as Nord Stream; Varandey Oil Export Terminal; the Baydaratskaya Guba and Dzhubga-Lazarevskoe-Sochi gas pipelines and the Nevelsky Strait in the Sakhalin-Khabarovsk-Vladivostok project. In the international South Stream project OMK was awarded 35% of orders for the underground parts of the first two strings.

About NLMK Group

NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK’s high-quality metal products are used in various industries, from construction and engineering to the manufacture of power-generating equipment and offshore wind turbines.

NLMK's production assets are located in Russia, Europe, and the United States. The Company’s liquid steel production capacity is over 17 million tonnes per year, of which about 16 million tonnes are produced in Russia. The Company generated $5.4 billion in revenue, $1.1 billion in EBITDA, and $332 million in net profit in H1 2014.

NLMK’s ordinary shares are traded on the Moscow Stock Exchange (MICEX-RTS, ticker symbol: NLMK), and its global depositary shares are traded on the London Stock Exchange (ticker symbol: NLMK:LI).

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 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.