Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Resources > Key production facilities

Key production facilities

Iron ore production

We operate two iron ore extracting complexes: Karelsky Okatysh, which produces iron ore pellets, and Olkon, which produces iron ore concentrate.

Karelsky Okatysh, in Karelia, north-western Russia, is one of the country’s leading and most modern iron ore mining complexes, producing around 20 per cent of all Russian iron ore pellets. It mines magnetite quartzite ores and produces high-quality iron ore pellets with an iron concentration of between 63 per cent and 65 per cent. The two major deposits, Kostomuksha and Korpanga, have an estimated life of 30 years. The average iron concentration of reserves is approximately 28 per cent. The complex has consistently increased its output in recent years. In 2013, the production volume of iron ore pellets exceeded 10.6 million tonnes.

Olkon, in the Murmansk region, is Russia’s most northerly iron ore complex, and has been supplying Cherepovets Steel Mill since the 1950 s. It mines magnetite-hematite quartzite ores from five open pits, and produces high-quality iron ore concentrate, crushed stones and ferrite strontium powder. Olkon acquired an additional mining licence for the Anomalny deposit, which has estimated non-JORC reserves of 47 million tonnes. Olkon’s deposits have an estimated life of 12 years. In 2013, the production volume of iron ore concentrate exceeded 4.6 million tonnes.

Coal production

We mine coal at Vorkutaugol in Russia and at PBS Coals in Pennsylvania, United States.

Vorkutaugol is near Vorkuta in the Komi Republic in north-east European Russia. It mines coking and steam coal, and is one of Russia’s largest producers of hard coking coal. Coking coal produces coke which is used for steel production. Steam coal is used in the energy and chemical industries. We operate the Vorkutinskoye and Vorgashorskoye coal deposits here, with an estimated life of 29 and eight years respectively. The business consists of five longwall mines, an open-pit mine and three washing plants.

PBS Coals produces coking and steam coal from several surface and underground mining complexes near Somerset, Pennsylvania. Estimated coal reserves are approximately 53 million tonnes and estimated resources are 73 million tonnes. Steam coal is sold for domestic electricity generation, and coking coal is shipped to the steel industry worldwide and to our own nearby steel-producing facilities.

CEO statement

Our strategic goal remains the same: we aim to be a leader in value creation. In the current volatile and challenging market environment, this means the ability to generate solid positive free cash flow throughout the market cycle.

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Chairman statement

Since listing we have been committed to the highest standards of corporate Governance and aim for full compliance with the UK Corporate Governance Code.

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Performance review 2012

Severstal achieved a solid set of results in 2012, despite worsening economic conditions, maintaining the Group’s EBITDA margin at 15.0%, reflecting the resilience of the business.

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Performance review 2012 - Severstal Resources

Our strong asset base enables us to capture excellent margins and generate significant free cash flow in strong markets, but it is also resilient enough to provide positive results even in the current weak markets.

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