Slide 1: NLMK Site Visit Presentation
NLMK SITE VISIT PRESENTATION YURIY LARIN VICE-PRESIDENT DEVELOPMENT AND ENVIRONMENT Lipetsk, 26 August 2011
Slide 2: Disclaimer
DISCLAIMER This document is confidential and has been prepared by NLMK (the “Company”) solely for use at the investor 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 documen
Slide 3: Balanced and Favorably Located Assets
BALANCED AND FAVORABLY LOCATED ASSETS Russian production platform enhanced with international assets Sharon Coating NLMK Kaluga mini-mill Novolipetsk Usinsky-3 HDG 0.8 mtpa DanSteel (under Steel: 9.3 m t Coking coal deposit Thick plate: construction) Slabs: 3.98 m t NLMK Pennsylvania 0.38 m t Projec
Slide 4: Efficient Vertical Integration
EFFICIENT VERTICAL INTEGRATION Ensures cost advantage in raw materials supply One of the most competitive steel players EBITDA PER TONNE, NLMK VS RUSSIAN PEERS o Last 5‐year EBITDA margin of 35% $ Sustainable growth with a proven delivery record o 2006‐11 liquid steel capacity increase of 70% o Dive
Slide 5: Diversified Sales and Product Mix
DIVERSIFIED SALES AND PRODUCT MIX Timely response to improved market environment Efficient export/domestic markets balance 2010 SALES BY REGION (TONNES) Ability to switch products between geographic markets Wide product mix with high value‐added share North America Europe Russia 12% 26% 32% Transfor
Slide 6: Strong Financial Position
STRONG FINANCIAL POSITION Sustainable performance and confident outlook Robust results in 2010 DEBT MATURITY o Revenue $8.351 billion, +36% y‐o‐y $ million o EBITDA $2.349 billion, +63% y‐o‐y o EBITDA margin 28% (+5 p.p.) Sustainable performance in Q2 2011 o Revenue $2.982 billion, +26% q‐o‐q o EBIT
Slide 7: Phase 2 Technical Upgrading Programme
PHASE 2 TECHNICAL UPGRADING PROGRAMME Development strategy for 2007/2012 Key objectives CRUDE STEEL CAPACITY GROWTH million t pa • Expanding low cost steel production platform – +40%, or by 4.9 million tonnes per year 4.9 • Improving quality and product mix – Increase in automotive sheet output up t
Slide 8: Development of Blast Furnace Facilities (Lipetsk)
DEVELOPMENT OF BLAST FURNACE FACILITIES (LIPETSK) Key projects PIG IRON CAPACITY ① Sinter Plant: 3.4 Growth from 14.1 to 14.7 m t of sinter/t; ② Blast Furnace: Growth from 9.4 to 12.8 m t of pig iron/y: – construction of BF No.7 (innovative project); • unique oxygen heating system • energy generatio
Slide 9: Development of BOF Steel-making Facilities (Lipetsk)
DEVELOPMENT OF BOF STEEL‐MAKING FACILITIES (LIPETSK) Crude steel output increase up to 12.4 mt/y in line with pig iron BOF CRUDE STEEL CAPACITY output Key projects 3.3 ① In BOF Shop No.1 o revamping of BOF off‐gas systems, CCMs Nos. 3 & 4, o installation of two ladle furnaces, o and other activities
Slide 10: Development of Hot Rolling Facilities
DEVELOPMENT OF HOT ROLLING FACILITIES Expansion from 7.3 up to 9.9 mt/y* HOT ROLLING COILS CAPACITY Flat steel ① Revamping of mill-2000 at Lipetsk plant o expanding capacity from 5.3 up to 5.7 mt/y. 0.4 ② Plate mill reconstruction at DanSteel o … targeting plate output expansion from 0,5 to 0,6 mill
Slide 11: Development of Cold Rolling and Coating Facilities
DEVELOPMENT OF COLD ROLLING AND COATING FACILITIES Expansion from 2.9 mt/y up to 3.2 mt/y COLD ROLLING COILS CAPACITY Key projects • Construction of Reversing mill o +350 kt/y of CRC 0.3 • Transformer steel o Reversing mill construction at Lipetsk to start production of premium quality transformer s
Slide 12: Improved Product Quality
IMPROVED PRODUCT QUALITY Measures RESULTS • 100% desulphurization ‐35% Decrease in wastes • 50% of vacuum‐degassed steel +100% New high quality steel with low sulphur content • 100% ladle furnaces treated • 100% casting quality control +100% New types of slabs with various dimensions* • 100% of HRC
Slide 13: Expansion of Iron Ore Production (2011)
EXPANSION OF IRON ORE PRODUCTION (2011) Open pit expansion IRON ORE PRODUCTION CAPACITIES o Location: Stoilensky (Stary Oskol) Concentrate Pellets o +30% growth in iron ore raw extraction o Goal: maintain 100% self‐sufficiency in low cost iron ore Pelletizing plant o Location: Stoilensky (Stary Osko
Slide 14: Energy Supply
ENERGY SUPPLY* Key projects ENERGY SELF-SUFFICIENCY • Construct Utilization Heat & Power Plant using blast furnace gas 55% • Construction of two new Air Separation Units • Construct New Heat & Power Plant turbogenerator 47% • Construct New Blast Furnace Top Gas Pressure Recovery +179 MW Turbine adde
Slide 15: Upstream Development: Coal
UPSTREAM DEVELOPMENT: COAL Projects COAL PRODUCTION AND SUFFICIENCY o Zhernovskoye mine ‐ launch in 2014 mt o Capacity/grades: 3.6 mtpa (GZh, Zh grades – semi‐ hard) o Usinsky mine ‐ launch in 2017‐2018 o Capacity/grades: 2.7 mtpa (2Zh, KZh ‐ hard) Future strategy o Further improvement in vertical i
Slide 16: Development of Coke Facilities
DEVELOPMENT OF COKE FACILITIES Key objectives in coke production considering partial REDUCTION OF COKE CONSUMPTION replacement of coke with PCI are: o >100% sufficiency in coke supply for BF operations Replaced by o PCI to ensure a coke consumption decrease by over 20% PCI coal o Sale of commercial
Slide 17: Long Steel Division
LONG STEEL DIVISION Kaluga project Billets N. SERGY Re‐bar 1.1 mt 0.97 mt Rolled products 1.0 mt Steel output: REVDA 3.9 mt EAF steel BERYEZOVSKY RE‐bar/ Wire rod 2.4 mt Rolled products 1 mt 1.0 mt Billets Finished 1.0 mt rolled products Billets 3.62 mt 0.2 mt KALUGA* Rolled products RE‐bar, light 1
Slide 18: NLMK Europe and NLMK USA (ex SIF)
NLMK EUROPE AND NLMK USA (EX SIF) A solid part of downstream integration strategy Acquisition of SIF rolling assets rationale SLAB SUPPLY FLOWS TO JV o Increase presence in the markets o Diversify products and markets portfolio o Hedge sales of additional crude steel production Operating and financi
Slide 19: Environmental Protection
ENVIRONMENTAL PROTECTION NLMK is pursuing a Resource Efficiency Policy, WASTE WATER DISCHARGED INTO THE RIVER • according to which its mission is to provide the required m3/t steel amount and quality of products at minimum costs using kg/t steel 8 resource saving methods, equipment and technologies.
Slide 20: Lipetsk Plant
LIPETSK PLANT Production flowchart A Raw materials B Converting coal into C Melting pig iron, D The process of rolling coke and raw making crude steel, slabs into coils 1. Scrap materials into sinter casting into slabs, to 18. Hot-rolling mill 2. Coking coal ore for charging the either be sold or co