Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Resources > Costs


In 2013 we continued to fight cost inflation at our mining business units and achieved certain progress at all Russian operations. Vorkuta’s unit total cash costs (TCC) were down by 3.3 per cent year on year to US$87/t, Karelskiy Okatysh decreased its TCC by 6.8 per cent to US$55/t, Olkon retreated by 10.0 per cent to US$45/t. PBS was the only unit where TCC rose by 3.7 per cent year on year to US$111/t as a result of lower sales volumes.

At a big picture level, we have managed to decrease the cost of production at all of our units in the last three years, a task that will continue.

Total cash costs at our mining units were all down over last 3 years

Vorkuta coking coal concentrate total cash costs

PBS coking coal concentrate total cash costs

Karelskiy Okatysh pellet total cash costs

Olkon iron ore concentrate total cash costs

  2013 2012Change, %
Cost of sales structureUS$ million% of totalUS$ million

% of total

Grinding balls and rods32.92.0%34.02.0%(3.2%)
Metal – roll23.01.4%1.50.1%n/a
Technological coals29.81.8%35.62.1%(16.3%)
Other materials136.28.3%183.210.6%(25.7%)
Integral implements and spares102.36.2%123.47.1%(17.1%)
Total materials 377.5 22.9% 438.6 25.4% (13.9%)
Electric power191.011.6%175.810.2%8.6%
Other energy resources75.54.5%92.35.3%(18.2%)
Total energy 366.6 22.2% 362.3 21.0% 1.2%
Staff costs474.328.7%511.429.6%(7.3%)
Depreciation and amortization242.114.7%228.113.2%6.1%
Change in inventories34.62.1%(15.0)(0.9%)n/a
Total costs1,652.0 100.0%1,724.9 100.0% (4.2%)

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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