MagnitogorskIron and Steel Works (MMK) saved RUB 500.9 mln in 2018 through the use of a mathematical model to optimise the delivery and consumption of coal. These savings were achieved by improving the structure of coal charge and the quality of coke.

This model is part of MMK's large-scale digitalisation strategy. The programme is based on the creation of a comprehensive multi-level model of sinter production, designed to optimise the production processes of the first processing stage.
The optimisation model for the delivery and consumption of coal raw materials at MMK has been in operation since February 2017. MMK developed the model themselves, based on the study of coke and blast furnace production at the site since 2011. Implementation and development of the model is carried out at MMK's science and technology centre, by a group of mathematical modelling and system-analytical researchers. The model optimises the process both for the technologists and for the delivery specialists. The goal is to obtain the required quality of coke at the minimum cost.

To date, the model is used for purchasing coal concentrates and integrating the knowledge and requirements of all MMK services involved in this process: this includes category management of delivery (owner model), the science and technology centre, coke production and economy management. Monthly calculations are made as part of the process of purchasing coal concentrates:

• a forecast quality of coke when given the structure and volume of raw coal;
• optimisation of the structure of the delivery and consumption of coal charge;
• analysis of the sensitivity of the optimisation calculation to prices and calculation of the recommended effective prices for the purchase of coal concentrates.
All calculations are performed in the multi-user web interface - AIS 'Model of optimisation of delivery and consumption of coal raw materials'.
This is not the first successful mathematical modelling project to optimise production processes of the first stage of conversion (the contribution of the first stage to the cost of production is about 50%). The optimisation mathematical model for delivery and consumption of iron ore raw materials is being developed and the automated information system 'optimum cast iron' is being created. Big data technologies and artificial neural networks are used in development, but traditional physical and chemical models are also used, in particular, to take into account the dynamic characteristics of the domain process.

About MMK

MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel-producing unit encompassing the entire production chain, from the preparation of iron ore to downstream processing of rolled steel. MMK turns out a broad range of steel products with a predominant share of high-value-added products. In 2018, the company produced 12.7 mln tonnes of crude steel and 11.7 mln tonnes of commercial steel products. MMK Group had sales in 2018 of USD 8,214 mln and EBITDA of USD 2,418 mln.

Investor contacts:
Andrey Serov
tel.: +7 (3519) 24-52-97
E-mail: serov.ae@mmk.ru

Media contacts:
Dmitry Kuchumov
tel.: +7 (499) 238-26-13
E-mail: kuchumov.do@mmk.ru
Dmitry Bulin
tel.: +7 (499) 238-26-13
E-mail: bulin.dn@mmk.ru