Yelena Remizova

After the decade of stagnation, the Russian iron & steel and nonferrous metals industry gradually gains strength, and its progress more and more accords with world tendencies. The credit for this is to a large extent due to the new management which was born in the conditions of a transient economy and came to the control of steel works as a result of privatization. The most important structural changes in this industry are now dictated by three key factors: a set-up of large integrated companies, widening of home market of metal products, modernization of production on the basis of state-of-the-art technologies.

CONSOLIDATION OF PROPERTY
The economic situation developed in the Russian steel and nonferrous metals industries on the eve of the 21st century initiated a more active introduction of new forms of business making by enterprises‘ owners and managers in order to strengthen their positions in the market and support financial stability.
In Russia this sector is now at the stage of active concentration of property and resources. Here are only few prominent examples. Vertically-integrated corporations (Russian Aluminum, SUAL-Holding, Ural Mining and Metallurgical Company) were set up in the aluminum and copper branches. Severstal JSC, one of the biggest works in Russia, expands its activities through an alliance with tube works and an acquisition of shares of automobile plants. Tube Metallurgical Company is formed within the financial and industrial group controlled by MDM-Bank. EvrazHolding is purposefully consolidating its structure based on three big works significant for this country.
The companies‘ shareholders step-by-step change their priorities: now not an accumulation of some enterprises‘ shares but an effective management of the production potential under their control.
Meanwhile the integration processes go on, and in the near future new holdings may appear. Of interest is a plan on board now – the establishment of an united structure on the basis of three integrated works (Magnitogorsk, Chelyabinsk and Orsko-Khalilovsk) with an active involvement of steel wire products plants (Beloretsk and Magnitogorsk). Efforts of this kind have a positive effect on the investment climate since the consolidation of fixed assets paves the way to a full-scale modernization of production operations, substantially lowers risks in implementation of big projects and affords an effective use of up-to-date scientific & technical ideas.

R   E   F   E   R   E   N   C   E For three last years on the average, capital investments in Russian steel & nonferrous metals industries are US$1.7 billion per year, including 0.7 in steel sector and 1.0 in nonferrous metals sector. The main scope of investments is due to own funds of plants/works. The share of credits and loans in fixed assets is no more than 10-15 %.

EXPANSION OF MARKET
The macroeconomic indicators and main trends of the development of individual sectors of the Russian economy permit a prediction as below to be made with respect to the home metal products market. By 2005, in Russia steel consumption will be 26.5 million tons, and 33 million tons by 2010. When comparing these figures with the 2000 year level (20 million tons), the expected growth rate looks all the more impressive: 20.5 and 50 %, respectively. Higher demand for steel is claimed by machinebuilding, especially, machine-tool and agricultural, as well as by public utilities and transport branches. Later on, an outgrowing development of science-intensive and high-tech sectors is expected, and it will widen the consumption of special steels and other metals of particular application. The consumption of alloying elements, alloys and master alloys based on rare metals (Nb, Ta, W, Mo, Rh) may at times show a two-fold growth, and at other times a 20-fold growth. The demand for steel rolled products in capital construction will increase by 37-40 %.
The analysts predict further progressive changes in the market of steel rolled products which is associated with the development of automotive industry, shipbuilding, pipeline transport, manufacture of household appliances.
The requirement for steel tubes/pipes will be governed not only by the construction of new main pipelines and the expansion of updating of existing ones but also the progress in the other sectors of this market which are connected with gas and water supply in agricultural areas and water amelioration of land.
It is proposed to set up or greatly increase mass-lot production of advanced metal product types required by the Russian industry. These types may include:
– cold-rolled sheet of high press formability with first category surface finish and various protective coatings,
– wide electrolytic tinplate of 0.15-0.20 mm in gage,
– Ti-free cold-rolled stainless steel sheet,
– large-diameter pipes with corrosion-resistant coatings for main pipelines to be applied in regions with heavy climatic conditions and for submarine construction,
– higher strength and cold resistance plate from special steels for large-diameter tubes, ship hulls, bridges and other structures of critical application,
– clad plate for chemical and oil & chemical industries, modern shipbuilding, agricultural machinebuilding,
– highly-ductile long products from carbon, low-alloyed and alloyed steels made by up-to-date technologies from virgin charge for state-of-the-art metal working (fine blanking, cold forming and other metal working processes),
– highly-safe rails to be applied in main railroads for high-speed traffic of passenger and freight trains.
As to nonferrous metals producers, good prospects are open for rapid expansion of demand for packing materials, aluminum-works in construction, cable products, corrosion-resistant coated rolled products.

RECONSTRUCTION OF WORKS
The major part of steel companies and separate enterprises have their long-term programs of modernization and future development of their production operations. The programs based on actual production-and-economic capabilities pursue well-defined goals. We shall cite some examples to show the character and the scope of reconstruction in the Russian steel industry.
The Magnitogorsk Iron & Steel Works (MMK JSC) intends to expand an output of value-added products, for example, high-quality automotive sheet. With it in mind, the reconstruction of the 2500-mm cold mill and the 1200-mm tinplate mill shop began, and new facilities, a 2000-mm two-stand reversing cold mill and a hot-dip galvanizing line, are being built. In the near future the works will start the reconstruction of the 2500-mm wide hot strip mill which will become a more general-purpose one as a result of it and will produce not only up to 10 mm-thick coiled strip but also 12-30 mm-thick, up to 2200 mm-wide plate of various grade mix.
At the Lipetsk Iron & Steel Works the program is aimed, above all, at the improvement of equipment level. The worn-out and outdated complex of electric arc furnace (EAF) shop with the old continuous casting machine (CCM) and the hot strip mill will be phased out. Instead of them, a curved CCM, two ladle treatment stations will be constructed, and three CCM and the 2000-mm wide hot strip mill will be reconstructed. It is planned to build a compact Steckel mill for electrical alloyed steel strip. The construction of a 500,000 tpy capacity plate mill is under examination.
In Severstal JSC the emphasis is on the reconstruction of the 5000-mm plate mill, a key project for future production of large-diameter pipes to be made in cooperation with tube plants. Two more projects must be noted among the most important modernization lines. The first project is connected with the production of highly-formable automotive sheet from IF ultra low carbon steel. The second project implies a set-up of lot production of Al-Zn and Zn-coated cold-rolled sheet steel, in particular, for the manufacture of automotive exhaust systems and fuel tanks.
The Oskol Electric Steel Works (OEMK JSC) is Russia‘s only and Europe‘s largest plant of BF-free steelmaking. Here metallized pellets are used as a main burden material in order to make high-purity metal. Improvement of this unique technology is of special interest for the development of metallurgical science and practice. Now OEMK completes the preparation for the commissioning of a 350-mm small/medium section mill. Then it will be required to match the steelmaking and rolling capacities by installing additional steelmaking and casting facilities. Moreover, it is planned to install an electromagnetic stirring system at CCM and reconstruct the 700-mm heavy section mill. The completion of these modernization plans will make it possible for the works to enter markets with competitive products, high-quality bars – rounds, squares, hexs of 12-75 mm in size.

The BOF shop of the Magnitogorsk Iron & Steel Works. New BOF No.3 complies with the srate-of-the-art technologigal level.

The development program of the Nizhny Tagil Iron & Steel Works (NTMK JSC) has been carefully studied. As a result, the shareholders and the managers introduced substantial changes into the technical and production strategies. The most important task became the implementation of the biggest Russian project, construction of a large-diameter pipes plant comprising a 5000-mm mill and tube-welding mill shop with a coatings department. Alongside this project, NTMK goes on with the modernization of existing production operations: blast furnaces, basic oxygen furnaces (BOF) are being reconstructed, and the rail production operations are being updated.
The Orsko-Khalilovsk Steel Works (NOSTA JSC) carries out the reconstruction of the 2800-mm mill and the EAF shop where the furnaces are being replaced and the CCM is being modernized. On completion of this program, the works will be able to begin the production of high-strength plate steel for arctic application.
At the Chelyabinsk Iron & Steel Works (Mechel JSC) it is planned to set up a new complex oriented to the production of high-quality hot and cold rolled stainless steel sheet. The economic situation induces the management to choose such technical solutions which will afford the investments to be paid back for a very short period, no more than a year. Here resource-saving technologies are preferred. For example, due to process improvements the BOF life was 3-fold prolonged. Substantial savings are expected to be obtained after the reconstruction of the EAF shop where one UHP furnace in combination with one CCM will replace six existing units. The commissioning of UHP EAF, ladle treatment and vacuum degassing plants will originate technical capabilities for the improvement of quality properties of Chelyabinsk steel products. The development strategy of the Kuznetsk Iron & Steel Works implies a radical reconstruction of the EAF and rail & beam mill shops with a view to producing rails intended for high-speed main railroad lines in the North and Siberia. The higher capacity of the EAF shop will permit a transition to the next modernization stage – the construction of a new bar & section mill.
At the West-Siberian Iron & Steel Works great changes will take place in the steelmaking and rolling operations. The one million tpy capacity CCM complex designed for casting tube billets will be reconstructed. It is planned to build a two million tpy capacity CCM complex to produce billets for the mill shop. The bar mills will also be modernized for future widening of steel products range. Among other projects, there must be noted the construction of a combined thin slab casting and rolling line of one million tpy capacity and new 250-mm wire rod mill No.2.

DEVELOPMENT OF COMPANIES
Ural Mining and Metallurgical Company has the most large-scale program in the nonferrous metals industry. Nowadays UMMC controls 20 enterprises. They generate a complete cycle of copper & copper products (copper wire rod, copper rolled products, radiators, various cables and conduits) making as well as a complete flowsheet for steel products, including rolled and other finished products. Because of this, no wonder that the strategy of UMMC is not restricted to the task of modernizing separate production operations, it is of a comprehensive nature suggesting large structural changes. The company‘s plans include the strengthening of the raw materials base by developing new deposits and an involvement of technogenic reserves, an updating of main metallurgical facilities and a substantial increase in the output of higher-value products.
This comprehensive approach may be exemplified by a polymetallic production project on the basis of the Kirovgrad Copper Smeltery. UMMC‘s plants accumulated a great stock of dump waste and slags containing nonferrous and precious metals. Their involvement into reprocessing will afford this fairly large resource to be used and the opening of a new line in the expansion of the holding – zinc production. Further on, it is supposed to extend this process flowsheet up to galvanizing of rolled products at one of UMMC‘s plants.
Norilsk Nickel, a leader of the Russian nonferrous metals industry, carries out the implementation of the large programs for reconstruction and modernization of nickel, copper, platinum, palladium plants. The modernization includes all the lines of the company‘s activities, from ore mining to industrial waste reclamation.
In mining the emphasis is on the complex use of mineral resources alongside the development of new deposits and the putting-into-practice of state-of-the-art technologies of mining and dressing. A new concentrator is planned to be built. As to metallurgy, the first and second flash smelting lines of the Nadezhdinsky Plant will be reconstructed, and it will allow not only a 100 %-increase in capacity but also a wide range of melt products (including converter matte) to be made. It will assist in the elimination of an environment-dangerous obsolete converter process. The nickel refining operations is a big reconstruction project. The new process is based on the complex autoclave reprocessing of nodular converter matte with the production of commercial nickel and cobalt as well as residual copper sulfide where metals of platinum group are concentrated.
Russian Aluminum has worked out an investment program aimed at the technical re-equipping of aluminum plants and the expansion of raw materials base. In consideration of the shortage of own raw materials, this company pays much attention to alumina operations. The project of investments in bauxite open-cast mines in several foreign countries is under consideration. Russian Aluminum comprises the most high-capacity Russian aluminum plants – Krasnoyarsk, 800,000 tpy of primary aluminum, and Bratsk, 900,000 tpy. These plants intend to gradually fully modernize electrolysis operations. Besides, the company plans to step-by-step increase a share of semi-products and aluminum finished products, and with this aim it is proposed to implement a number of projects at rolling plants.
SUAL-Holding JSC, representing a size-second group in the Russian aluminum industry, has a more explicit raw materials orientation. The main facilities in bauxite mining and alumina production are concentrated there. A major part of the plants comprising a single process cycle is arranged in a fairly compact location. The vertical integration provides conditions for aimed planning of investments in main assets, improves efficiency of coordination of in-corporation flows of raw materials and semi-products. Among the projects under consideration now by the shareholders and managers, there is one of special interest: the set-up of a new center of aluminum industry on the basis of the Sredne-Timansky bauxite deposit. According to design solutions, this integrated complex will include a complete production cycle, from mining of bauxites till output of aluminum products. The production capacity is estimated as follows: 1.2 million tpy of alumina, 600,000 tpy of primary aluminum, 270,000 tpy of aluminum semi-products. But the implementation of such a large-scale plan will in reality depend on market situation and readiness of investors to put money into this high-flying project.
On the whole, the implementation of modernization and restructuring of the Russian steel & nonferrous metals industries will take a rather long time period. Meanwhile even the introduction of priority measures will afford a much better production structure and stable operating conditions of plants and companies. Lately, positive trends became clearly pronounced in the evolution of the metallurgical complex. The process of liquidating obsolete production facilities has been accelerated, the utilization level of plants increases, and their financial and economic positions are being improved. All this substantially expanded the possibility of implementing modernization which now includes virtually the entire steel & nonferrous metals industries of this country.