Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Russian Steel > Costs:


  • We consistently work to maintain our leading cost position through labour and energy productivity and operational enhancements.
  • In 2013, the Division’s cost of sales decreased by US$489 million from 2012, a figure that takes into account the fact that sales volumes were higher.
  • This cost efficiency was mainly due to the decrease in raw materials and energy prices (US$233 million), and the effect of the Severstal’s Business System (US$130 million).
Cost of sales structureUS$ million% of totalUS$ million% of totalChange %
Scrap metal763.812.3%866.312.9%(11.8%)
Iron ore775.212.5%817.912.2%(5.2%)
Ferroalloys and nonferrous metals350.25.6%406.66.1%(13.9%)
Other materials774.012.4%874.513.0%( 11.5%)
Total materials4,036.964.9%4,466.366.5%( 9.6%)
Electric power219.33.5%183.42.7%19.6%
Other energy resources65.21.1%58.30.9%11.8%
Total energy629.210.1%539.48.0%16.6%
Staff costs799.712.9%826.112.3%(3.2%)
Depreciation and amortization326.85.3%294.24.4%11.1%

Key Business System’s achievements at the Russian Steel Division in 2013:

  • Purchasing and logistics efficiency – a US$26 million gain;
  • Administrative cost optimisation - a US$46 million gain mainly due to organisational restructuring aimed at reducing the number of managerial levels within the company and streamlining its divisional structure;
  • Continuous improvement – a US$171 million gain. Key projects include:
  1. Technological initiatives aimed at reducing iron and BOF slab cost.
  2. Rolling process yield improvement.
  3. Production output growth and the removal of bottlenecks (sinter plant, hot rolling, long products facilities).
  4. Reduction in power utilities cost and higher volumes of power generation.
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