Annual report 2015

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Annual report 2015

Four success factors

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Development
overview

Metalloinvest’s Development Strategy strives to increase output of products with high added value

Metalloinvest’s Development Strategy strives to increase output of products with high added value

Strategic investment programmes

417
USD million


Company's CAPEX in 2015

Mining segment

Boosting HBI market position

Construction of HBI-3 Plant at Lebedinsky GOK

The project will enable Metalloinvest to meet increasing demand from steel companies for high-quality metallised raw materials and retain its leading position globally in merchant HBI production.

The project is being implemented by a consortium made up of Primetals Technologies and Midrex Technologies (contract signed in 2012), and Russian design company GIPROMEZ (part of Metalloinvest). Rudstroy (also part of Metalloinvest) is responsible for construction, assembly and equipment installation works.

The Plant’s production capacity is set to amount to 1.8 million tonnes per annum

HBI–1 Plant: briquetting system upgrade

In 2015, the Company completed the upgrade of HBI–1 Plant’s briquetting system. This allowed the Company to reduce unscheduled briquetting equipment downtime, boost customer satisfaction due to the improved marketable appearance of HBI briquettes, and keep the briquettes’ strength properties unchanged while increasing furnace output rates. The overhaul of HBI–1 Plant made it possible to increase production capacity by 22,000 tonnes per annum.

Strengthening position in the high added-value iron ore products segment

Construction of Pellet Plant #3 at Mikhailovsky GOK

The construction of Pellet Plant #3 is a unique project, both in terms of scale and significance, encompassing all processing stages, from iron ore concentrate filtration and pelletisation to pellet roasting and shipments to customers.

The new roasting plant embraces the newest technological solutions, including automated systems to monitor processing data and manage production processes. When compared with existing roasting plants, Pellet Plant #3 features higher output rates, an enhanced energy efficiency profile, and state-of-the-art gas flow systems minimising air pollutant emissions.

The plant will enable Metalloinvest to increase Mikhailovsky GOK’s pellet production capacity to 15 million tonnes per annum (up 50%).

Beneficiation technology improvement programme at Lebedinsky GOK

The programme is expected to launch new products into the market, including high-grade concentrate with an iron content of ca. 70% and high basic iron ore pellets with an iron content of 65.8%.

Efficient development of iron ore resources

Construction of a crushing and conveyor facility at Mikhailovsky GOK

In 2015, Metalloinvest began the construction of a crushing and conveyor facility at the south-eastern tip of the open pit for Mikhailovsky GOK’s mining transportation division. The project envisages two crushing and conveyor facilities – one each at the south-eastern and north-eastern tips of the open pit.

The facilities will help the Company achieve annual magnetite concentrate production targets, ensure the required quality, bring down the stripping ratio, improve railway transport performance, reduce the number of mining vehicles and loading devices, and start developing previously inaccessible ore reserves to provide an industryleading ore charge makeup.

The Company signed a contract with NKMZ to prepare a feasibility study and supply equipment for the upcoming crushing and conveyor facility at the south-eastern tip of the open pit.

Construction of cyclical and continuous ore mining facilities at Lebedinsky GOK’s open pit

In 2015, Lebedinsky GOK launched pre-project planning to introduce a cyclical and continuous method of rock mass transportation. The new cyclical and continuous mining facilities and related infrastructure will bring ore production costs down and address the issue of maintaining the production capacity of a non-oxidised quartzite open-pit mine.

Construction of the cyclical and continuous mining facilities at the southern tip of Lebedinsky GOK’s open-pit mine will make it possible to deliver most of the crushed ore straight from the open pit to the beneficiation plant, significantly reducing ore transportation costs.

Production of up to 10 mtpa of concentrate from oxidised quartzites at Mikhailovsky GOK

In 2015, the Company continued commercial testing of a technology to beneficiate oxidised ferruginous quartzites at the reconstructed processing section #14 of the crushing and beneficiation plant. The testing utilised the combined beneficiation process involving the application of lowand high-intensity magnetic separation, and reverse cationic flotation. To beneficiate quartzites in the strong magnetic field, the Company used high-intensity magnetic separators produced by Eriez Maqnetics, Longi and Outotec.

The testing at processing section #14 proved the possibility of obtaining iron ore concentrate from oxidised ferruginous quartzites with a mass fraction of 66.0%. The tests also provided the data required to develop an optimal ore processing scheme and the beneficiation technology for oxidised ferruginous quartzites.

Technical upgrade

In 2015, Lebedinsky GOK received two locomotive units, 70 dump cars and two large frontal loaders with 9.3 cubic metre buckets as part of the Company’s programme to upgrade and renovate its mining transportation facilities. Mikhailovsky GOK’s mining transportation division received two NP–1 locomotive units equipped with dump cars, one EKG–15M excavator and two SBSH–250 MNA drilling rigs.

Steel segment

Maximising returns in the steel segment

Installation of a reducing and sizing block (RSB) in the medium section of OEMK’s Rolling Mill 350

The RSB in the medium section of Rolling Mill 350 will allow the Company to significantly improve the quality of rolled steel (most notably, SBQ bars), reduce metal losses from turning, and ramp up production at Rolling Mill 350 and the finishing shop.

For the purposes of this project, SMS group GmbH (Germany) was contracted as an equipment supplier and a service provider, while GIPROMEZ, a Metalloinvest subsidiary, was tasked with the preparation of design specifications and estimates.

The focus on medium-sized products is due to the high demand for this product category in the Company’s key sales markets.

The project completion is scheduled for 2017.

On top of that, the Company continues to assemble a hydraulic descaling unit at Rolling Mill 700 and started the upgrade of the second gas purification unit in the electric arc furnace shop.

Construction of an air separation unit at OEMK

OEMK commenced the commercial operation of an oxygen plant complete with a cryogenic air separation unit (ASU). The plant can produce 20,000 cubic metres of gaseous oxygen or nitrogen and 1 tonne of liquid argon per hour. The equipment was supplied by Linde Engineering Dresden GmbH (Germany).

The new plant was constructed to replace the old one, which had exceeded its useful life. The project enabled the Company to increase total production volumes by 75% for oxygen (required to make steel and metallised products) and 24% for nitrogen, and start its own argon production. The plant is designed to satisfy OEMK’s current and prospective air separation needs.

Construction of Coke Oven Battery #6 (COB–6) at Ural Steel

COB–6 reached its design capacity of 690,000 tonnes per annum of 6% moisture bulk coke. Quality targets for the produced coke have also been met. The project enabled the Company to normalise the quality of blast furnace charge, reduce its dependence on third-party suppliers, and cut production costs. Merchant coke is now also shipped to external consumers.

Construction of Casting Machine #5 at Ural Steel’s blast furnace shop

In Q4 2015, Casting Machine #5 (CM–5) was commissioned at the blast furnace shop to cast molten iron into ingots. This investment project will increase casting capacity for merchant pig iron by 0.5 million tonnes per annum. The machine’s design draws on the know-how of Russia’s leading market players, with operation and control processes being completely automated and computerised. The machine operator can choose between different casting modes and speeds. During the construction, the Company paid special attention to environmentally friendly solutions in order to mitigate its environmental impact.

Renovation of Blast Furnace #4 at Ural Steel

The Company completed the first-class renovation of Blast Furnace #4 (BF–4) with a design capacity of 1.5 million tonnes of pig iron per annum. The BF–4 overhaul and CM–5 construction are part of Ural Steel’s modernisation and development programme. The completion of these two projects will enable the Company to process its own iron ore and achieve higher pig iron production and shipment volumes.

Environmental responsibility

Upgrade of gas purification units at OEMK’s electric arc furnaces (DSP–150) #1 and #2

A project is underway to upgrade gas purification units at OEMK. So far, general construction works, steelwork assembly and installation of key production equipment have been completed.

The project’s first stage was implemented in June 2013 and covered gas purification systems at electric arc furnaces #3 and #4. As a result, residual dust content from waste gases fell by 40%, whereas the furnaces’ dust emissions fell by more than two-thirds. Workplace dust exposure decreased by an average of 50%.

The commissioning of upgraded gas purification units at electric arc furnaces #1 and #2 is scheduled for 2016. It is expected to reduce dust content from waste gases by over 75%.

OEMK is constantly working to reduce its environmental impact. The modernisation of gas purification systems decreases pollutant emissions and boosts production volumes.

Technical upgrades

Along with large-scale investment projects, OEMK took steps to upgrade and revamp its existing production facilities, including the purchase of mill rolls for Rolling Mill 700, modernisation of the ventilation system at the pelletisation and metallisation shops’ filtration section, and upgrade of process gas compressors as part of the metallisation unit #4 overhaul.

As part of a programme to upgrade and revamp existing production facilities, Ural Steel purchased mill rolls for the QUARTO and DUO cages of Rolling Mill 2800 at rolling shop #1; constructed the new surplus furnace gas burning bleeder stack #2 to improve occupational safety in case of an accidental failure of bleeder stack #1; replaced a steam turbine of TK turbocharger #8 at Ural Steel’s TPP to ensure a reliable supply of suitable hot blast to the blast furnace shop; and constructed an automated coal concentrate sampling section at the coke production site to ensure incoming checks for concentrate coming from third-party suppliers and reduce the risk of deteriorating coke quality due to the poor charge composition.

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