Mikhail Vedin
Magnitogorsk, Chelyabinsk region

Recently Russian steel companies have started to actively enter securities markets. The share of "steel" bonds in the Russian market amounts to 19 % giving way only to the banking sector. By volumes of their emission the Magnitogorsk Iron and Steel Works (MMK) is in the first three. But the market of eurobonds is, of course, the most attractive one. From 2001 to 2003 Russian companies issued eurobonds for $7B. The Magnitogorsk Iron and Steel Works is the only integrated steel mill being represented in this market. On February 18, 2002 MMK became the first among steel companies to float eurobonds on the Luxemburg Stock Exchange for the amount of 100 million euros with the turnover of three years.
MMK is on the list of Russia’s best exporters of products and services, which are determined on the annual basis by the Russian Ministry of Economy. It has received quite a few international awards. In 2001 the Magnitogorsk Iron and Steel Works was given a prize "For Technology and Quality" established by the Editorial Office Publishing House (Switzerland) to encourage companies, which are making a lot of efforts to upgrade their technological level of production.

ISYSTEM OF QUALITY MANAGEMENT
The high rating and successful investment policy may be considered results of the strategic course, which several years ago was set by MMK’s management and which was aimed to develop making competitive products of high process stages and advancing them to the domestic and world markets. Measures being taken by it to raise the quality and degree of metal processing permit to reduce dependence on market fluctuations. Despite all those problems that were emerging in markets of steel rolled stock, the Magnitogorsk Iron and Steel Works has been steadily holding the gained positions.
The major role in the successful adaptation to present-day market requirements belongs to the Code of Corporate Governance adopted at the Magnitogorsk Iron and Steel Works. Being focused on developing MMK as a transparent enterprise, it was worked out with due regard to the "Principles of corporate governance of the Organization for Economic Cooperation and Development (OECD)". The Code was deliberated with participation of the law company Debevoise & Plimpton LLC represented by Roswell B. Perkins, one of the oldest hands in formulating legal standards and principles of corporate governance. The Code proclaims protection of rights of the enterprise’s investors and stockholders to be the most important direction of MMK’s corporate policy. Other principles include ensuring observance of all legal standards, honesty of the management regardless of any leadership changes, protection of the environment and equal treatment of all investors and stockholders. The adherence to these rules let the Magnitogorsk Iron and Steel Works become even more attractive to both international and Russian investors, enter new markets so as to obtain relatively low-interest credits for production development and modernization.
Acting ahead of many other Russian enterprises MMK brought its accounts in line with international standards. Auditing is done under international requirements as well.
The provision on MMK’s development concept says: "Quality management is a priority direction of MMK’s general policy for top and middle executives as well as for everyone in the workplace. The board of managers is to look after implementation of the quality management system". In 2002 the enterprise’s specialists underwent training at the Personnel staff center in accordance with the international ISO 9001–2000 standards. MMK’s quality management system conforms to the international practice.
The enterprise established the permanent Council on Quality with its executive body being the department of development and internal checkups of the quality system. Together with other subdivisions the department’s staff workers determined goals and worked out the quality policy, compiled the quality manual, set over 70 standards and deliberated more than 20 instructions on the quality management system. They also updated and completed a lot of other documentation. As this work was being done, the introduction of the system itself was started. Simultaneously, internal auditing was being conducted and, besides, external auditing was arranged, including auditing among consumers of MMK’s products.
The oxygen-converter plant and several sheet-rolling shops, which are the enterprise’s leading units, were among the first ones to get certified as being in conformity with the ISO 9000 – 2001 standard requirements. In December 2002 auditors from Germany’s RV TUV and the Russian company Pronap-Cert checked the enterprise’s quality management system and recognized it as being in line with requirements of the international standards. After results of the checkup were approved by leaders of the certifying bodies, MMK received the quality management certificate in accordance with the international
ISO-9001 standard under the new version of standards adopted in 2000.
In the opinion of leaders at the Magnitogorsk Iron and Steel Works, the use of the new system of quality management will become a prerequisite for bringing the enterprise up to a higher production level. As most experts believe, precisely the quality management is becoming one of the most important factors, which today determine the state of the Russian economy as a whole and individual industrial enterprises.

INTEGRATED INFORMATION SYSTEM
The production efficiency and the competitiveness of products more and more depend on the level of information technologies (IT) being applied. In the words of Yuri Ipatov, the head of MMK’s Office of Information Technologies, the essence of the IT strategy at MMK comes to supporting and accelerating business process implementation. Information technologies have been actively introduced at the enterprise for already 15 years. The corporate information system of management (CISM) has been established with the ERP model becoming its basis. The establishment of CISM has been accompanied with setting up the system of reference documents with the status of the enterprise’s standards as required by the new law «On technical adjustment».
Another point of MMK’s IT strategy is to implement principles of open-ended systems. Until recently this process was, to a large extent, spontaneous. Developing the technology of open-ended systems raised the question about the purpose of their use.
At present, through joint efforts of the Office of Information Technologies, ZAO National Optical Conference, the Center of open-ended systems with the Institute of Radio Engineering and Electronics of the Russian Academy of Sciences efforts have been started to create MMK’s profile. As is planned, it will be ready in a year or year and a half. The profile will also get the status of the enterprise’s standard, under which there will be CISM’s integration processes, purchases of hardware and software will be made, portable hardware will be developed and certification tests will be conducted.
In a longer term developers see their goal as setting the industry’s standard. The importance of creating a profile as the industry’s standard has been proved by joint decisions of the steel industry’s representatives. And it will be determined by a large, over a thousand, potential users. According to the international practice, the higher the effectiveness of the industry’s profile is, the more active a participation of not only involved enterprises but also of IT-technology developers and suppliers of IT-products become.

The Magnitogorsk Iron and Steel Works (MMK) is placed 15th in the rating of the world’s largest steel companies. In 2003 MMK intends to produce 10 million tons of marketable metal products. It is expected that exactly this current year MMK will achieve a kind of landmark by producing the 500th ton of rolled stock since the start of its activity. This is a record level for enterprises of the Russian steel industry.

Starting June 2003 a new service has been started at the Magnitogorsk Iron and Steel Works. This service is called the Office of creating and developing a corporate information system. There are two world leaders in the market of corporate software. These are the American company Oracle and Germany’s SAP. As far back as several years ago MMK’s specialists made their choice in favor of Oracle: a corporate information system of the integrated mill will be created on the basis of the Oracle Applications of the ERP-system adapted to the enterprise’s existing conditions and completely realizable through the use of the Internet technologies.

P  R  O  F  I  L  E
Victor Rashnikov The general director of the Magnitogorsk Iron and Steel Works was born on October 13, 1948 in the city of Magnitogorsk. In 1974 graduated from the Magnitogorsk Mining-and-Metallurgical Institute specializing in metal’s non-cutting shaping. In 1994 received the second diploma in organizing production management. Doctor of engineering. Authored almost 100 scientific research works and engineering developments to perfect the technology of producing rolled stock and upgrade its quality. Laureate of the Peter the Great All-Russian Prize "For outstanding contribution to the economy of Russia". Received a number of other high state awards and prizes. President of the Club of Russia’s best managers. Married, has two daughters, two grand daughters and a grandson. Takes great interest in mountain and water skiing. Passionate hockey fan. President of the hockey club Metallurgist-Magnitogorsk, one of the strongest clubs in the Russian Hockey Super-League.

Specialists point out that MMK is ahead of many steel companies in developing advanced information technologies. Information projects available at MMK allow to considerably simplify and optimize the gigantic flow of figures, findings and reports. But local information modules working all by themselves cannot give the effect that their integration in a single system promises. Precisely the corporate information system (CIS) is expected to provide top managers of the integrated mill with such a visual information overview, which will make it easier to take competent management decisions. The integrated corporate information system will cover MMK’s main directions of activity and it will, above all, help accomplish tasks of everyday management of the enterprise and its resources.
The project, which will permit to use the most advanced and effective ways of managing business, is to be implemented in 1.5 years: On January 1, 2005 MMK’s corporate information system should be fully operational.