Annual report and accounts 2012

Severstal’s business model

The Severstal’s business model shows the component strengths which differentiate the company from its competitors.The model forms the foundation of how the company generates and creates value in the longer term. The company’s strategic priorities are then set to aim to develop the strength of the business model, and to move towards achieving the company’s goals.

Severstal is uniquely positioned in the steel industry with almost full self-sufficiency in iron ore and more than self-sufficiency in coking coal.

It is one of the few international steel companies with a strong position in both, and has significant reserves of both. Severstal also has its own scrap collection facilities. Vertical integration provides cost advantages, reduces exposure to raw material price fluctuations and market disruptions, and ensures a reliable supply chain. It also provides market flexibility, allowing Severstal to move quickly for market opportunities, while adjusting to falling demand and economic downturn.