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Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
Nlmk kaluga presentation
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Nlmk kaluga presentation

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  • 1. NLMK KALUGA 27 May 2014
  • 2. DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the presentation of the Company and may not be reproduced, retransmitted or further distributed to any other person or published, in whole or in part, for any other purpose. This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any shares in the Company or Global Depositary Shares (GDSs), nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. The distribution of this document in other jurisdictions may be restricted by law and any person into whose possession this document comes should inform themselves about, and observe, any such restrictions. This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this document. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in future periods. The Company does not undertake any obligation to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. By attending this presentation you agree to be bound by the foregoing terms. 2
  • 3. NLMK Group’s Russian production assets NLMK Kaluga Licences for deposit development NLMK GROUP RUSSIAN ASSETS Moscow Novolipetsk Sinter: 15 m t Coke: 2.6 m t Steel: 12.4 m t Flat products: 5.7 m t VIZ-Steel Transformer steel: 0.2 m t Altai-Koks Coke: 4.7 m t Stoilensky Iron ore concentrate: 14 m t Sinter ore: 1.8 m t RUSSIA США NLMK Russia Long Crude steel: 2.2 m t Long steel: 1.9 m t Metalware: 0.5 m t 3 NLMK Kaluga Crude steel: Stage 1 – 1.5 m t Long steel: Stage 2 – 0.9 m t Stage 3 (estimate) – 0.6 m t Moscow Kaluga NLMK Kaluga
  • 4. NLMK RUSSIA LONG DIVISION 4 • Part of NLMK Group since December 2007 • Capacities: o Steel (EAF) – 3.7 million t o Long products – 2.9 million t o Scrap – 3.5 million t • Long product market share in Russia: c. 20% * • Sales regions: over 95% of sales to the Russian market (Ural, Southern, Central Federal Districts) CRUDE STEEL AND FINISHED PRODUCT OUTPUT 1,7 1,5 1,8 2,2 1,4 1,5 1,7 2,2 0,0 0,5 1,0 1,5 2,0 2,5 2010 2011 2012 2013 Crude steel Long products and metalware million t NLMK RUSSIA LONG FINANCIAL PERFORMANCE 1377 1794 1645 1716 46 34 170 95 0 500 1000 1500 2000 2010 2011 2012 2013 Revenue EBITDA $ million NLMK Kaluga NSMMZ UZPS Moscow Yekaterinburg NLMK Russia Long production sites * The NLMK Russia Long Division average share in the domestic markets: rebar, wire rod and metalware in 2013
  • 5. • Strategic priorities o Develop scrap-collecting facilities to maximize cost- efficient sufficiency in scrap o Expand market presence o A flexible sales strategy and improved customer service o Expand the range of long products and metalware o Ensuring high efficiency at all stages of the process • Market goals after NLMK Kaluga launch o Increase rebar market share from 17% in 2012 to 22- 23% in 2015 o Enter the sections market o Around 1/3 of long steel for construction in the Central region of Russia STRATEGIC GOALS 5 NLMK RUSSIA LONG MARKET SHARE IN 2015 22-23% 12% 33% 0% 5% 10% 15% 20% 25% 30% 35% Rebar market Sections market Long products for the construction market in the Central region LONG PRODUCT CONSUMPTION GROWTH RATES IN RUSSIA, 2010-2013 19% 6% 10% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Rebar Sections Long products in the Central region Average growth rate in 2010-2013
  • 6. 336 ~ 950 0 100 200 300 400 500 600 700 800 900 1000 2013 2014E ‘000 t/y FINISHED STEEL PRODUCTION PLAN AT NLMK KALUGA 6 CRUDE STEEL AND ROLLED STEEL PRODUCTION CAPACITIES AT NLMK KALUGA NLMK KALUGA: COMPANY OVERVIEW • Location: Kaluga region, Borovsky district, Vorsino Industrial Park, c.~70 km away from Moscow • Production site area: 202 ha • Capacity: 1.5 m t/y of steel, from 0.9 to 1.5 m t/y* of long steel • Products: billets and long steel for construction – rebar, channels, angles • Capex: RUB 38 billion • Logistics: option to deliver products by rail from the plant’s own station – Vorsino – and by trucks • Beginning of construction: 2008 • Start of operation: H2 2013 • In 2014: ~ 900,000 tonnes of steel products will be produced 1,5 1,5 0,9 1,5 0 0,2 0,4 0,6 0,8 1 1,2 1,4 1,6 Stage 1 and 2 Stage 3 (under consideration) Steel Rolled products m t/y * Potential to expand rolling capacity by 600,000 t/y
  • 7. NLMK KALUGA COMPETITIVE ADVANTAGES 7 The market Efficiency Products o A developed construction sector o High level of long steel consumption o Shortage of long steel in the region o Surplus of scrap collection in the region o Low transportation costs o Developed scrap collection network o Energy- and resource-saving production o An extensive mix of long products in high demand
  • 8. CONSTRUCTION SECTOR IN CENTRAL RUSSIA • The Central region of Russia has the highest density of population o 59.7 people/km2, 7 times higher than the Russian average • The most developed construction sector across all Russian regions o Share in construction activity: 24% in 2013 o Share in residential completions: 28% in 2013 o Moscow and the Moscow region account for a significant share • The construction sector continues to grow o In 2013 residential completions in the Central region grew by 8.2% y-o-y o In Q1’14 residential completions in the Central region increased by 28% y-o-y REGIONAL SPLIT OF THE RUSSIAN CONSTRUCTION SECTOR, 2013 30,2 3,7 18,3 22,6 14,7 3,6 1,5 0,3 0 5 10 15 20 25 30 35 Central North Western Southern North Caucasian Volga Ural Siberian Far Eastern sq m of residential completions per 1 sq km of region area 16% 8% 76% Moscow and the Moscow region Central Region w/o Moscow and the Moscow region The rest of Russia AMOUNT OF CONSTRUCTION ACTIVITIES IN 2013 Source: Rosstat 8 Source: Rosstat Note: shares in total volume of construction works given in rubles
  • 9. LONG PRODUCTS MARKET • Growth of long products consumption o 2013 long steel consumption grew by 3% yoy o Driver – increased construction activity o 2013 residential completions up by 5.5% yoy to the record of 69.4 sq. m o Cement consumption up by 7% yoy and by 15% since 2008 o Consumption of long products for construction is expected to grow by 2-3% in 2014 • Import substitution potential o 2013 long steel imports grew by 12% yoy and by 71% compared to the pre-crisis level, to 3.25 m t o Share of imports in consumption increased up to 18% o Q1’14 imports went down by 47% yoy due to rouble devaluation, share of imports in consumption – to 11% • Regional demand/supply imbalance o ~3.7 m t/y shortage of long products in the Central region o In 2013, long products consumption in the Central region +2% LONG STEEL PRODUCTION/CONSUMPTION BALANCE BY REGION 45% 21% 9% 8% 8% 7% 1% 0% 17% 12% 29% 18% 11% 10% 3% 1% 0% 10% 20% 30% 40% 50% Ural Siberian Central Volga North Western Southern Far Eastern North Caucasian Share in long steel production Share in long steel consumption long steel shortage – 3.7 m t/y 0% 5% 10% 15% 20% 25% 30% 0,0 0,5 1,0 1,5 2,0 2,5 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Import Rebar produced by Russian companies Import share, rhs Source: Metal Expert REBAR MARKET, CONSUMPTION IN RUSSIA m t record 2008 level NEW LONG STEEL CAPACITIES 9Source: Metal Expert. Data for 2013.Source: Metal Expert, NLMK research 0,9 2,4 0 1 2 3 4 5 6 Other announced capacities (2013- 2014) NLMK Kaluga m t 2,4 2,0 1,25 Other imports Imports from Ukraine Capacities with low utilization rate
  • 10. 4,7 2,0 1,2 1,5 0 1 2 3 4 5 6 7 8 Scrap generation Consumption in the region Sales to other regions of Russia Export 23,3 18,2 0 5 10 15 20 25 2013 Scrap collection (obsolete+prompt scrap) Scrap consumption SCRAP MARKET • Significant export substitution potential in Russia o Export accounted for ~28% (or 5.1 m t/y) of annual scrap processing volumes in 2013* • Regional demand/supply imbalance o Scrap surplus in the Central Federal District is ~ 2.7 m t/y • Pricing trends o High competition at the international scrap market 10 SCRAP PRICES 0,9 1,2 1,4 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Average prices in Russia SCRAP MARKET BALANCE IN RUSSIA AND THE CENTRAL REGION m t/y January 2010 = 1.0 SCRAP MARKET BALANCE IN RUSSIA 0 0,5 1 1,5 2 2,5 3 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 Sales to the Russian market Export m t/month In 2013, the share of export in total scrap processing was ~28%* 4,7 5,8 5,8 5,1 2010 2011 2012 2013 Scrap exports, m t Source: Metal Expert, Russian Railways, NLMK estimatesSource: Metal Expert, Metal Bulletin ~5 m t is exported m t/y Russia Central region ~2.7 m t - surplus ~30% exported from the Central Region Source: Metal Expert, Russian Railways, NLMK estimates * Obsolete scrap
  • 11. COST ADVANTAGES • Low transportation costs for the delivery of raw materials and finished steel o Developed captive scrap collection network “Vtorchermet NLMK” in the region o In 2013, a new shredder was launched in Podolsk (Moscow region) o Located close to key customers • Efficient resource use o Processing of by-products generated at the main operations o Use of pig iron and waste metal generated at Novolipetsk as feedstock o Advanced technologies and equipment 11 100% 100% 100% 90% 82% 104% 80% 85% 90% 95% 100% 105% Specific energy consumption Specific natural gas consumption Efficiency of raw material use Average for Russian producers NLMK Kaluga NLMK KALUGA VS. RUSSIAN PEERS 0 1000 2000 3000 4000 ZSMK Mechel MMK NSMMZ Abinsky EMZ Rostovsky EMZ Severstal - Balakovo Severstal - Vologda Revyakinskiy MZ NLMK Kaluga 70 km from Moscow DISTANCE FROM LONG STEEL PRODUCERS TO THE MOSCOW REGION km
  • 12. EQUIPMENT AND PRODUCTS • Equipment suppliers o Steelmaking - Siemens VAI o Long product rolling - SMS Meer • Universal high performance continuous rolling mill o Ability to roll rebar at high speed and produce small and medium sections at a single line • In 2013-2014, NLMK Kaluga is planning to master over 30 product types: o Billet 100х100, 125х125, 150х150, 160х160 o Rebar #10-40 o Angle #25-100 o Channel #5-12 Rebar Sections А240 bars А500S bars in compliance with GOST 52544 Angles Channels #10 #10 L25 SH5 #12 #12 L32 SH6,5 #14 #14 L35 SH8 #16 #16 L40 SH10 #18 L45 SH12 #20 L50 #22 L63 #25 L70 L75 L80 L90 L100 - to be mastered in 2014 12 - already mastered
  • 13. CORPORATE RESPONSIBILITY • Air protection o Modern dust and gas cleaning systems with efficiency of at least 99% o Emissions less than 1kg per tonne of steel (almost 7 times lower than for its Russian peers) • Water protection o Closed water supply system o Low level of natural water consumption due to cleaning • Waste processing • New jobs o 1,250 at the plant and 600 at the service companies • Investments into personnel development o About RUB 55 million into personnel training o Additional study programmes to train qualified professionals at regional learning establishments • Regional development o Construction of new apartment buildings for employees 13
  • 14. THANK YOU!
  • 15. APPENDIX
  • 16. NLMK KALUGA • EAF steelmaking capacities 1.5 m t/y • Long product capacities 0.9 – 1.5 m t/y NLMK RUSSIA LONG DIVISION 16 NLMK RUSSIA LONG OPERATING CAPACITIES • Captive scrap processing 3.5 m t/y • EAF steelmaking 2.2 m t/y • Long products (Nizhniye Sergi) 1.1 m t/y • Long products (Berezovsky) 0.8 m t/y • Metalware (Berezovsky) 0.5 m t/y

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