Annual Report & Accounts 2013
Severstal Annual Report 2013 Home > Performance > Severstal Russian Steel > Outlook and strategic priorities for 2014

Outlook and strategic priorities for 2014

The division’s 2014 target CAPEX is US$487 million.

Major development projects include the following:

  • Launch of the Balakovo mini-mill;
  • Revamping of our cold rolling mill at the Cherepovets Steel Mill (the 4-stand cold rolling mill);
  • Upgrade of the Hot Rolling Mill 2000 at the Cherepovets Steel Mill;
  • Completion of a specialised service centre near St. Petersburg;
  • Continuing reconstruction and modernization of the Orel Steel Plant (Severstal Steel Solutions).
  • In 2014 we will continue investing in emissions reduction programmes at the Cherepovets Steel Mill.

Details of selected projects:

Upgrade of the 4-stand Cold Rolling Mill at the Cherepovets Steel Mill

This project will increase the mill’s annual production capacity by approximately 200 thousand tonnes and raise the annual output of cold rolled products to around three million tonnes. The upgraded equipment will produce cold rolled steel sheet with a width of up to 1,850 mm, compared to the current maximum width of 1,420mm.

We are investing more than 2 billion rubles in this project, which we plan to complete within two years.

Upgrade of the Hot Rolling Mill 2000 at the Cherepovets Steel Mill

We are launching a project to upgrade Cherepovets Hot Rolling Mill 2000. The upgrade will improve product quality and enhance operational efficiency and reliability. Mill 2000’s roughing stand drive will be refurbished and most drives will be replaced. In addition, Severstal plans to upgrade the mill’s roughing stand’s automation system. A leading edge automated system will be installed to replace the current control system. The new automation system will operate cutting-edge rolling techniques and will connect the roughing stand to modern control systems for the adjoining furnace, finishing train, and disposal sections. Mill 2000 will be transformed into a single integrated facility better able to meet the challenges of modern manufacturing.

Approximately 810 mln rubles will be invested in this project. 80 per cent of the roughing stand’s electronic equipment at Mill 2000 will be upgraded. This will reduce equipment downtime and cut down on maintenance and repair costs.

Installation of filters to reduce air emissions

In 2013, Severstal continued construction and assembly work to replace converters in the stands’ main and auxiliary drives. This work will not have an impact on production and will continue into 2014. The switchover to the new control system is expected to take place during Mill 2000’s overhaul in 2014.

The project commenced in Q1 2013. Siemens is supplying the core equipment while the main contractor is OAO Domnaremont and the designer is OOO Severstal-Project (both are subsidiaries within Severstal’s Russian Steel division).

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 Russian Steel

Russian steel producers enjoy a unique advantage over their global peers, in that the country is strong in iron ore, coking coal and primary energy, making vertical integration, a low cost base, and market resilience all a reality.

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