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1 March 2013

NLMK approves upstream efficiency enhancement programme at main production site

In February 28, 2013, NLMK Group (LSE: NLMK), a leading global steel producer, held a management board meeting at its main production site in Lipetsk. The management board approved a business process improvement programme for its flagship Lipetsk site to further enhance the efficiency of its upstream operations, namely sintering, blast furnace, coke and chemical, and steelmaking. Sergey FilatovSergey FilatovAdvisor to the President
, NLMK Managing Director, presented the programme. Vladimir LisinVladimir LisinChairman of the Board of Directors
, Chairman of the Board of Directors at NLMK, participated in the development of the programme and held a meeting with the management.

The management decided to introduce these operational improvements at Novolipetsk in order to further improve process efficiency and optimize the use of resources.

The new programme is based on systematic efforts to streamline coke and chemical, sintering, blast furnace (BF), and basic oxygen furnace (BOF) processes, as well as NLMK Group’s other assets that ensure the supply of raw materials. In-depth analysis and efficiency enhancements within the supplier–customer relationship will translate into lower production costs and improved equipment performance. Another feature of the new programme is incentivizing all employees to consistently look for improvement opportunities. The programme will require increased attention on the part of the Group management, as well as all process owners at Novolipetsk. The goal is to see substantial improvements by the end of 2013.

The main aspects of the new approach include the following:

- Maximizing the process efficiency of steelmaking equipment

- Minimizing raw material, fuel, other material, and energy consumption

- Optimizing the structure of fuel and raw material balances

- Reducing the facility’s environmental footprint, and minimizing waste

The Business Process Improvement Programme will drive further efficiency enhancements at Novolipetsk. In 2013 alone, cumulative savings are expected to reach RUB 2 billion.

Sergey FilatovSergey FilatovAdvisor to the President
, NLMK Managing Director, said, “Having completed the stage at which we prioritized increased output and product mix expansion, we are now faced with new challenges. We proposed bringing all the components of the system to best possible standards, focusing on best production and management practices. We have the full support of the Group management to do this, and I am confident we can live up to their expectations, achieving the set objectives and producing tangible results by the end of the year.”