6 November 2015

NLMK Group to grow HDG output by 11% in 2016

NLMK Group to grow HDG output by 11% in 2016
NLMK Group (LSE: NLMK), the largest steel producer in Russia and one of the most efficient steel companies in the world, has begun upgrading one of its continuous hot-dip galvanizing lines - HDG-1 at the Lipetsk production site.

The project will boost the line HDG-1 productivity by 30% to 500,000 tonnes per year; and increase Lipetsk site value added manufacturing capacity to produce HDG steel for the construction, automotive, and ‘white goods’ sectors to 1.25 million tonnes.

As a result, NLMK will solidify its position in the HVA rolled steel market, where demand exceeds the capacity of Russian manufacturers and is covered by imports, including from far-abroad countries. NLMK has created a reserve stock of galvanized steel for key consumers in machine building, automotive and ‘white goods’ sectors in order to offset the impact of the reconstruction on the market. The decrease in coated steel output will also be offset by higher CRC supplies.

HDG-1 reconstruction will also result in:

• a 25% reduction in HDG-1 natural gas consumption though using modern burners and furnace control systems;
• a 15% reduction in HDG-1 electric energy consumption through optimizing equipment configuration;
• a 30% reduction in HDG-1 air emissions through optimizing the natural gas afterburning system (the gas being used to fuel the furnace) Investment in the project will total approximately 2 billion rubles; with a payback period of 2 years.
Ilya Gushchin, NLMK Vice President for Sales, said: “NLMK is one of the leaders in high-quality coated steel production in Russia. The new project will strengthen NLMK Group’s position in key markets and increase the share of HVA products in our sales. Construction of HDG-5 at Novolipetsk will serve the same purpose. It will expand our production capacities in the most complex HDG segment: sheets less than 0.4 mm thick. The launch of HDG-5 in 2017 will increase NLMK’s HDG capacity by 450,000 tonnes to 1.7 million tonnes.”

NLMK is the leading producer of hot-dip galvanized steel in Russia with over 21% market share in domestic production. There are currently four continuous hot-dip galvanizing (HDG) lines in operation at the Lipetsk site with a total capacity of over 1.1 million tonnes. This equipment supports the production of strip with a width of up to 1800 mm and thickness ranging from 0.4 mm to 4 mm.

Hot-dip galvanized steel is used to manufacture roll-formed shapes, steel structures for construction and components for automotive and ‘white goods’.

About Novolipetsk (NLMK’s main production site in Lipetsk)

Novolipetsk is the main production site of NLMK Group, Russia’s leading manufacturer of steel and high value added rolled products, and one of the most efficient steelmaking companies in the world. Novolipetsk is the nucleus of NLMK Group’s single production chain, with assets in Russia, the EU and the USA.

The steel production volume of the Lipetsk site is approximately 18% of all steel produced in Russia, and approximately 80% of all steel products produced by NLMK Group.

Novolipetsk’s high-quality steel products are used in various strategically important industries, from construction and engineering to the manufacture of power-generating equipment and large-diameter pipes. Novolipetsk produced 12.56 million tonnes in 2014. This represents an all-time high over the 80 years of NLMK’s history. This record performance was supported by productivity improvements throughout the value chain of the site. With capacities running at 100%, production grew by 1.3% compared to 2013.

About NLMK Group

NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK’s 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 $4.4 billion in revenue; $1.1 billion in EBITDA; and a net profit of $491 million in H1 2015.

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).