Andrei Karunos

I

ntegration impact

The raw material division of the EvrazHolding Group, the company Evrazruda, was established as a single production complex in 2004. It manages two concentrating mills and seven mines located in three Siberian regions: the Kemerovo region, Republic of Khakasia and Krasnoyarsk Territory. The main consumers of iron ore being produced there are the West Siberian Steel Corporations and Novokuznetsk Iron & Steel Works, which are also integrated in the EvrazHolding Group.
Assessing results of the integration, president of Evrazruda Yevgeny Potapov notes that the consolidation of raw material enterprises and their restructuring were successful . "We cut down the number of the personnel, put out of operation non-specialized assets of subsidiaries and formed a new management system, which is working steadily", says Potapov summing up the first results of changes.
The company is about to start accomplishing the strategic task: to increase the share of supplies of its own iron ore raw material to the Holding’s integrated iron & steel plants. According to Sergei Eysmont, the director for long-term development at Evrazruda, this share should go up from 40% to 60%. The development program covers the period till 2014; it provides for the growth of production volumes by as much as 1.5 times. There are plans to reconstruct mines and concentrating mills, building new production facilities and making up for capacities being decommissioned. As Aismont says, investments will amount to about $70 million. But this is not "a fixed figure, it is constantly being corrected", points out the Evrazruda top manager.
The company’s management has already analyzed the technical as well as technological solutions to develop mines and corrected them by reducing the capital intensity, reconstruction and building terms. This results in a significant saving of funds. At the same time, plans embrace new production sites, which require additional investments. At present, Evrazruda is to start developing three new small deposits and in the mid-term, after getting a necessary experience, other deposits will be put in operation as well, which, in the words of Aismont, "are available in sufficient numbers in this region".
The company’s president Yevgeny Potapov believes that the main problem with developing Siberian deposits is in peculiarities of iron ore beddings, which do not allow to efficiently extract it by standard methods. That is why each structural subdivision has its own pre-determined priorities.
As far as underground deposits requiring a complicated and costly technology of extraction are concerned, it is necessary, above all, to increase production volumes and reduce costs. In Potapov’s opinion, there is a direct dependence between volumes and prime cost of production: he even mentions "the geometric progression" of reducing prime cost as production capacities are being increased.
The company’s president reveals that in the coming years Evrazruda is not planning to build any new mines. In his words, the obstacle is too high a cost of resources necessary for establishing such production sites in Siberia as well as the absence of deposits of ore rich with iron. Yevgeny Potapov cites the following impressing comparison: "we produce concentrate with the contents of iron equaling 58 %, while in Sweden such an ore is extracted from the underground".
As for open-cast mining, measures to intensify developing and extending service life of mines will be taken. However, as leaders of Evrazruda see it, the main task is to arrange construction of grinding-concentrating modules at edges of mines. This will allow to significantly reduce transportation costs. At present, taking into account Siberian distances and sufficiently big volumes of ore, which should be brought from sites of extraction to concentrating mills, these costs are rather high.

Choosing technologies

As Sergei Aismont notes, in order to avoid spending funds on transporting gob, it is necessary "to learn concentrating ore in the open air in harsh Siberian conditions". Market studies show that there is a need to combine the world experience and achievements of CIS specialists. The appropriate methods of grinding are proposed by such well-known companies as Metso Minerals and Sandvik, while technologies of concentrating and magnetic separation have been developed at the Russian plant Rudgormash (the city of Voronezh) and by Ukrainian machinists (the city of Lugansk). The pilot project has already been prepared and its implementation is about to be started.
In the words of Yevgeny Potapov, specialists from Evrazruda "are thoroughly choosing the best technologies and equipment". As for today, the ratio between foreign and domestic equipment is 50% to 50%". As the company’s president explains, "not any imported equipment is suitable for using in the local conditions". He believes that in order to ensure the competitiveness, the company should develop its own technologies.
The main task with respect to underground extraction was to propose efficient solutions for constructing shafts and shaft tower complexes. These are the most costly structures and, what is more, usually it takes a lot of time to construct them. The company’s specialists have developed options that allow to significantly reduce capital costs, while maintaining production volumes and quality of ore.
Sergei Aismont cites a few examples of how it could be done.
Shaft towers have always been the typical feature of mines raising above shafts. But, as it turns out, it is quite possible to do without them as well. "We are using engineering solutions, which allow us to put lifting gear right on the ground", says Aismont.
Usually in order to do preliminary underground fragmentation of ore, there should be powerful fracturing complexes at mines. This also costs much and it takes a lot of time. It takes from 4 to 5 years and excavation of about 8,000 cubic meters of rock mass so as to install such a complex. "We decided to install more economical crushers of smaller size and, thus, to reduce capacities of chambers by 2 or 3 times; according to estimates, this will make their construction much cheaper and faster", points out Aismont, when touching upon technologies. He states: developing underground deposits has promising prospects and that is why the company’s management does not worry about increasing their share in total volumes of ore extraction.
"We are leading in the underground extraction of iron ore", says the director for long-term development at Evrazruda. "We have five mines and only two open-cast mines. The available experience of developing deposits by the underground method makes it more advantageous to operate than to buy ore in the basin of the Kursk magnetic anomaly and to bring it to integrated iron & steel plants in Siberia", he stresses.
The growth of extracting ore assumes increasing concentration volumes. That is why specialists at Evrazruda worked out a program of developing capacities at its own concentrating mills, Abagurskaya and Mundybashskaya, which are located in the Kemerovo region. As Aismont says, this program provides for not only increasing volumes of ore procession but also raising contents of iron in concentrate and agglomerate. In his words, the process to improve quality of primary concentrates will embrace the whole technological cycle "starting with the face".

Bridge between business and authorities

The specific direction of the activity by the EvrazHolding Group and its raw material division is to maintain a constructive cooperation with the administrations of the regions. Their relations with authorities look perfect in the Kemerovo region, where both integrated iron & steel plants of the holding as well as main deposits and enterprises of Evrazruda are located. There are also other assets owned by the Group (in the coal and electric power industries) there. Governor Aman Tuleev trusts the Holding and considers its activity useful. He feels quite satisfied with the way it fulfills its obligations. As for relations with authorities of Khakasia and the Krasnoyarsk Territory, the Holding still has to prove its reputation.
The cooperation with the authorities of the Krasnoyarsk Territory headed by Alexander Khloponin, who in the recent past was the general director of Norilsk Nickel, looks especially promising. After the successful negotiations with the governor conducted by president of EvrazHolding Alexander Abramov on the company’s participation in developing deposits of iron ore there the first joint project was implemented: a bridge was opened across Kizir, the taiga river in the basin of Yenisey. This bridge is used by both railroad trains and motor transport.
The region’s administration started building this bridge in 2000, however, there were no enough funds and construction works were dragging out. An impulse was needed and it was provided by projects of EvrazHolding aimed at developing iron ore deposits. After that authorities of the Krasnoyarsk Territory invested necessary funds.
President of Evrazruda Yevgeny Potapov comments on the meaning of this event the following way: Building a bridge is not an end in itself. It is needed in the first place for the enterprise, which is developing a deposit on the other side of the river bank; "If there was no bridge, then, in half a year the question would arise about liquidating this enterprise".
And now there appeared new promising prospects. In Potapov’s words, "for the first time in the last 10 to 15 years in Russia a new iron ore deposit is to be developed". Although by reserves and contents of iron (no more than 30 %) it cannot compete with ores of the Kursk magnetic anomaly, it will provide, as Potapov says, "a serious supplement to the raw material balance at the integrated iron & steel plants of the Holding". Krasnoyarsk’s ore is good for concentrating, it is quite possible to get a concentrate from it with the contents of iron reaching 64%. "We will have more raw material on our own and it will be cheaper than the one, which is being brought about fom other places", says the president of Evrazruda.
In 2005 the company will commission the Burlukskoe deposit and within six months after that it plans to put in operation a new mine. In Yevgeny Potapov’s words, taking into account precisely these projects, the administration of the Territory decided to make investments in building the bridge. Governor of the Krasnoyarsk Territory Alexander Khloponin says that developing ore enterprises means new jobs, extension of the tax base, improvement of the social infrastructure. He hopes that in the future Evrazruda will bring out of the region not a raw ore but products of processing and concentrating. "If this is a product of better processing, it will cost more and, thus, we will get more taxes".
Alexander Khloponin stresses that under the agreement with the EvrazHolding Group the administration of the Territory takes upon itself an obligation to create appropriate conditions that will make these projects attractive for investments.
The bridge, of course, is needed not only for transporting ore. It is important in the social sense as well for improving transportation links with the faraway territories. The governor believes that this project proves a possibility of having "the civilized relations between authorities and business, which are based on the mutually advantageous cooperation".


Profile:


Yevgeny Potapov, the president of Evrazruda JSC. Born on August 31, 1974, in the town of Zheleznogorsk-Ilymsky (the Irkutsk region).
After the graduation in 1996 from the Irkutsk State University specializing in the science of law worked at the commercial bank Classic-Bank JSC (the city of Irkutsk). Later became deputy head of the department of personnel, communal services and social matters at VostSibugol JSC and, then, executive director of Razrez Tugnuiskiy JSC.
In 2002 was invited to work at the Novokuznetsk Iron & Steel Works, where being director for economy and finances and later as executive director personally participated in efforts to bring this enterprise out of crisis.
After the successful accomplishment of this task in August 2003 was appointed president of Evrazruda JSC.


Photo captions:
In the quarry of the Ibrynsky mine
The bridge across Kizir
The Gorno-Shorsky unit: the Novo-Kletevoy shaft


На поля (и/или) Reference:
The structure of Evrazruda includes mining and concentrating enterprises in the southern part of Siberia, which have the status of being its subsidiaries. In the Kemerovo region they are: the Tashtagolsky mine, Sheregeshsky mine, Kazsky mine, Gurievsky mine, Mundybashskaya concentrating mill, Abagurskaya concentrating-and-sintering mill. In the Republic of Khakasia they are: the Abakansky mine, Teisky mine. The Irbynsky mine is located on the Krasnoyarsk Territory.

The production capacities at Evrazruda make it possible to extract and produce:

- over 14 million tons of raw ore a year;
- over 7.5 million tons of primary concentrate;
- over 4.5 million tons of secondary concentrate;
- over 3 million tons of agglomerate;
- 2.5 million tons of commercial limestone.