27 May 2015

NLMK Group increases deliveries of steel for large-diameter OMK pipes by 32% in 2015

NLMK Group (LSE: NLMK), Russia’s largest steelmaker and one of the most efficient steel companies in the world, increased deliveries of steel feedstock for the production of plates at Vyksa Steel Works (part of United Metallurgical Company, OMK) by 31.6% year-on-year to 326,500 tonnes during the period of January to April 2015.

NLMK plans to increase steel slabs deliveries by 25% year-on-year in 2015 to reach 900,000 tonnes compared to the 724,000 tonnes delivered in 2014. The steel, which features superior chemical composition and structure standards, is rolled into plates for the manufacture of large-diameter pipes (LDP) at the OMK Group Vyksa Steel Works.

Ilya Gushchin, NLMK Group Vice President for Sales, said:

“The decision to set up a Russian high-tech chain for the production of large-diameter pipes turned out to be mutually beneficial and strategically sound. As part of our cooperation with OMK, which has been developing since 2012, NLMK Group has delivered more than 1.6 million tonnes of steel feedstock; including over 1 million tonnes of steel with complex characteristics; for the production of large-diameter pipes and for use in projects including Power of Siberia, Central Asia–China (SAK-3), Bovanenkovo–Ukhta and the Southern Corridor, amongst others.”

Eduard Stepantsov, OMK Vice President, said:

“The entirely Russian production ‘from ore to pipe’ that resulted from our partnership is an example of successful import replacement in the steel sector. The quality and stability of NLMK steel deliveries plays an important role for Vyksa Steel Works, Russia’s largest manufacturer of large-diameter pipes, in terms of the reliability of our work to supply pipes to Russia’s strategically important oil and gas infrastructure projects.”

NLMK Group’s Lipetsk site continues to master technology for producing specialty steel with an ultra-low sulphur (up to 0,002 %) and hydrogen (up to 0,002%) content with a more accurate breakdown of the parameters of alloy elements and non-metallic inclusions. This ensures delivery of unique, large-dimension steel slabs of extra high quality for the subsequent production of end products that comply with the strictest chemical and physical requirements to European and American companies; as well as Russian large-diameter pipe manufacturers.

For reference

NLMK steel is used to produce wide plates at the VMZ Mill-5000 for use in the production of large-diameter pipes at the VMZ Electric-Weld Pipe Workshop No. 4.

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, amongst others. OMK is currently a global leader in the supply of pipes for the underwater parts of gas pipelines owing to its participation in projects such 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.

NLMK has the most competitive cash cost among global manufacturers; and one of the highest profitability levels in the sector. The company generated $10.4 billion in revenue; $2.4 billion in EBITDA; and a net profit of $845 million in 2014.

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