17 May 2010 НЛМК-Калуга

NLMK to purchase 100% stake in Kaluga Electric Steelmaking Plant

On May 14, 2010 NLMK purchased a 100% stake in CJSC Kaluga Electric Steelmaking Plant (KNPEMZ) from LLC Metallurgical Holding (a Maxi-Group subsidiary) for a total consideration of RUR 604.5m. The value of the company’s stake was determined by an independent appraisal. The main objective behind the acquisition is to advance the development strategy of NLMK’s Long Products Division. The acquisition by Novolipetsk Steel, a company with high credit ratings, will create additional ways to attract investment into the project on favourable terms.

Since 2008, the construction project has been financed by NLMK. The amount of the Company’s funds invested into the project has already reached RUR7.3 billion. The total planned investment is around RUR37 billion including VAT.

This project will create a new-generation “mini-mill” steel plant based on ferrous scrap recycling, which is very important for the development of recycling and improvement of environmental conditions in Central Russia. State-of-the-art environmental protection technologies will also ensure a high degree of environmental safety and help achieve a reduction in specific emissions per tonne of steel of over 6-fold as compared to the average specific emissions volume at Russian integrated steel plants.

The main Kaluga steel plant facilities – the EAF Shop and Rolling Shop - are currently under construction. By the end of the year we plan to have finished the construction of the main shops’ building structures and to start installing the equipment.

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CJSC KNPEMZ (Kaluga steel plant, located in the Vorsino Industrial Park in the Kaluga region) is included in the list of top-priority investment projects under the Russian Steel Industry Development Strategy to 2020. The plant will supply high-quality long products to the construction market of Central Russia.
The plant startup is scheduled phase-by-phase: during the first and second stages in Q1 and Q2 2012, EAF and rolling complexes will be put in operation, which will have an output of up to 1 mln tpa of liquid steel, as well as long products and profiles. We plan to begin the commissioning of the facilities under the 1st and 2nd stages in Q4 2011. The decision on further development of production facilities (third stage) will be considered in 2012. It will involve product mix expansion and total output increase up to 1.55 million tpa of rolled products.