5 April 2015

Novolipetsk innovation programme gains for 2014 up three-fold

Economic gains generated by implementing innovative solutions at Novolipetsk, NLMK Group’s main production site in Lipetsk, reached 543 million rubles during 2014; three times higher than the 2013 total.

This threefold increase in economic gains was driven by the implementation of several successful high-yield solutions. For instance, innovators suggested a change to the fuel regime of the recovery co-generation plant boilers which resulted in the share of blast furnace gas in heat energy generation increasing from the projected rate of 60% to 85%; meaning that the share of gas dropped from 40% to 15%. Natural gas purchases decreased five-fold to 4000-5000 m³/h, making a saving of 305.5 million rubles per year.

More than 2,400 innovative solutions were implemented in 2014. The most efficient were aimed at improving equipment operations and technological processes; optimizing the use of material and energy resources; and improving product quality.

Sergey Filatov, Novolipetsk Managing Director, said:

“We are currently seeing an increase in the gains from a programme that was given new impetus in 2007, after we adopted our Regulations on employee involvement in cost-cutting initiatives. In 2014, around 1,700 company employees proposed over 2,500 new technical solutions aimed, among other things, at achieving the best operational efficiency results in the sector".

To stimulate research and the development of employees’ intellectual potential, Novolipetsk is running a personnel training and financial incentive system. There are bonuses offered to employees depending on the economic or the technical effect of their solutions.

Participation in innovative activities for employees under 30 years of age is a great way for them to boost their career in the company; it also helps them improve their living conditions through participation in the corporate ‘Housing for Young Steelmakers’ programme.

NLMK organizes annual viewings of innovative research and development solutions proposed by young workers to determine the efficiency of innovative initiatives. 383 employees participated in the event in 2014. Best young innovator and their supervisors received bonuses. Economic gains from innovations proposed by young NLMK employees alone exceeded 138 million rubles in 2014.

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. Novolipetsk annually produces approximately 80% of all NLMK Group steel products, or about 15% of all steel produced in Russia.

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.

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 employs more than 29,000 people.

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).