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Novolipetsk Steel

September 15, 2015

NLMK Group completes unique operation to replace 2 underground conveyors at Stoilensky within 10 days

NLMK Group, Russia’s top steel-producing company and one of the most efficient steel companies in the world, has replaced two obsolete conveyors at the Stoilensky ore crushing unit, successfully completing a unique project of reconstruction of an important link in the Company's integrated production chain.

A total of around 30 million tonnes of ore bulk is transported via conveyors each year. This equipment has worked without backup for more than 30 years, and following a significant increase in production the load placed on them has spiked. Conveyor breakdowns can cause lengthy stoppages leading to a slump in the productivity of the entire plant.

New conveyors have resulted in a 40% increase in the throughput capacity of the crushing unit, providing for technologically stable production of iron ore concentrate for the Lipetsk site. This and other projects, as well as Stoilensky's operational efficiency initiatives will allow an increase of the plant’s iron ore concentrate production capacity from the current 15.2 million tonnes per year to 17.2 million tonnes per year. This will ensure a supply of low-cost, high-quality iron ore raw material for the 6 million tonnes of pellets annual capacity pelletising plant, currently under construction with launch scheduled for 2016.

Experts say that projects of such complexity and scope and within the given timeframe have never before been accomplished by Russian companies. The conveyors are located in a space with limited access – a 150 m long underground gallery; with no project plans for expansion. Reconstruction was possible in these conditions thanks to new project solutions, careful design, and a professional project team.

The task was made even more challenging as Stoilensky experts were given just 10 days to prepare and replace the conveyors, as this was the period for which sufficient iron ore raw material had been accumulated to ensure continuous blast furnace operations at the Lipetsk site. The plant was able to accumulate enough reserves to last this long thanks to previous operational efficiency projects.

Stoilensky halted production while the conveyor replacement was underway. The plant used this time to do scheduled maintenance across the process chain.

Sergey Napolskikh, Stoilensky General Director, said:

‘This is a landmark project for the plant. It has eliminated a bottleneck in the process chain, ensuring continuous and reliable work with the increased load that will follow the launch of the pelletising plant. Preparation for the replacement of the conveyors took almost twelve months. In H1 2015 we increased iron ore raw material production 5% year-on-year to 8.54 million tonnes. This allowed us to accumulate enough concentrate to ensure Novolipetsk had the required raw materials during this unique operation. All this while employees from various contractor companies, as well as different Novolipetsk and Stoilensky departments, worked side by side to achieve the common goal. And they all did a great job!’

150 specialists took part in the conveyor replacement operation, working around the clock in shifts, monitored by representatives of the OHS department.

Investment in conveyor replacement totaled 246 million rubles.

About Stoilensky

Stoilensky (part of NLMK Group) is one of the three leading Russian iron ore-mining companies. The company accounts for over 15% of Russia’s total iron ore production.

Stoilensky is unique in combining high efficiency with low production costs and the very highest production quality. Its main products are iron ore concentrate and sinter ore. Its commercial reserves are over 6 billion tonnes.

In February 2014 NLMK Group announced its Strategy 2017, focused on unlocking the internal potential of the Group’s businesses by boosting operational and process efficiency and increasing self-sufficiency in its main raw materials.

The strategy is aimed at developing a world-class resource base for the Group by increasing self-sufficiency in iron ore with a flexible feed structure to 100% (pellets, sinter, sinter ore) and reducing consumption of valuable resources.

Construction of a pelletizing plant, the largest in Europe, with a capacity of approximately 6 million tonnes of iron ore pellets per year, is under way at Stoilensky as part of Strategy 2017. The programme will also involve increasing production of iron ore concentrate by 0.5-1 million tonnes per year through streamlining operations, constructing new concentrate production capacities and increasing the mine capacity.

About NLMK Group

NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK’s metal products are used in various industries, from construction and engineering to the manufacture of power-generating equipment and offshore wind turbines. NLMK's production assets are located in Russia, Europe, and the United States. The Company’s liquid steel production capacity is over 17 million tonnes per year, of which about 16 million tonnes are produced in Russia.

NLMK has the most competitive cash cost among global manufacturers; and one of the highest profitability levels in the sector. The company generated $4.4 billion in revenue; $1.1 billion in EBITDA; and a net profit of $491 million in H1 2015.

NLMK’s ordinary shares are traded on the Moscow Stock Exchange (ticker symbol: NLMK), and its global depositary shares are traded on the London Stock Exchange (ticker symbol: NLMK:LI).

Media contact info:
Sergey Babichenko
+7 (916) 824 6743
Investor Relations contact info:
Sergey Takhiev
+7 (495) 915 1575 



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