NLMK.L Regulatory News (NLMK)

Press release

21 December 2017

NLMK Group to boost capacity of steelmaking shop 2 at Lipetsk site by 19%

NLMK Group, an international steel company with operations in Russia, the USA and the European Union, has begun construction and assembly works at energy infrastructure and gas treatment units at steelmaking shop (BOF Shop) No.2 (its current capacity is 8.5 mtpa) as part of a large-scale upgrade of blast furnace (BF) and basic oxygen furnace (BOF) operations at NLMK Lipetsk.

These activities are part of a large-scale project to reconstruct the largest of NLMK's two BOF shops, that will enable an increase in its productivity by 19% to 10 mtpa of steel, and cut specific air emissions by 56% by 2020.

 Konstantin Lagutin, NLMK Group Vice President of Investment Projects, said:

"This large-scale reconstruction project addresses a whole set of NLMK Group's strategic objectives, including growth of production output, efficiency improvement, as well as drastically reduced environmental footprint. We are not only going to boost productivity of two of the shop's three BOF's and radically cut emissions; we are also going to enable the use of BOF gases for captive energy generation."

As part of the project to reconstruct BOF Shop-2, there will be a phased replacement of BOF's No.2 and No.3 300 tonnes each with units 330 tonnes each; new oxygen supply machines will be installed, and advanced process automation and analysis systems for off-gases will be implemented. Each of the new BOF's will be equipped with gas-exhaust ducts with emission recovery and treatment systems.

The recovery system will operate based on a high-efficiency process with the use of finely dispersed water supply. Treated water reuse will ensure a two-fold reduction in water consumption. Special screens and exhaust systems will reduce the dust content at work places by over 95%.

The project was launched in 2014, with the design of the gas cleaning system. NLMK plans to complete the entire reconstruction in 2020. The total cost of the project is estimated at RUB 17.2 billion. This project is part of NLMK Group's previously announced programme to perform major repairs with partial reconstruction at NLMK Lipetsk midstream operations.

In 2011, similar reconstruction was completed at BOF Shop No.1. As a result, specific emissions at the shop were down by 61%.

About NLMK Group

NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world.

NLMK Group's steel products are used in various industries, from construction and machine building to the manufacturing of power-generation equipment and offshore windmills.

NLMK operates production facilities in Russia, Europe and the United States. The Company's steel production capacity exceeds 17 million tonnes per year.

NLMK has the most competitive cash cost among global manufacturers and one of the highest profitability levels in the industry. In 9M 2017, the Company generated $7.25 billion in revenue and $1.87 billion in EBITDA. As of 30 September 2017, Net debt/EBITDA stood at 0.3х. The company has an investment grade credit rating from S&P and Fitch.

NLMK's ordinary shares with a 16% free-float are traded on the Moscow Stock Exchange (ticker "NLMK") and its global depositary shares are traded on the London Stock Exchange (ticker "NLMK:LI"). The share capital of the Company is divided into 5,993,227,240 shares with a par value of RUB1. For more details on NLMK shareholder capital, please follow the link.

NLMK Group received the Steel Industry Leadership Award at the prestigious 2016 Platts Global Metals Awards held by S&P Global Platts, a leading international industry analytical periodical.

For more information on NLMK Group, please visit our website.