Magnitogorsk Iron and Steel Works (MMK), together with Deloitte, has produced a list of MMK’s future digital transformation projects, to be completed by 2025. A thorough selection process resulted in a list of 110 projects in 18 areas of the company’s core business. These will form the basis of MMK’s overall digitalization strategy.
MMK’s readiness to implement more modern digital solutions stems from the fact that the existence of industrial automation, as well as the widespread use of information systems, are nothing new in the company. The Deloitte methodology allowed not only to balance digital development between the redistributions in the value chain, but also to provide a systematic increase in technological maturity between functional areas.
Among the selected projects for digitalisation are various programmes aimed at improving labour efficiency and at strengthening positions in priority markets. Overall, digitalisation will affect all strategic areas of MMK.
MMK plans to build a new ecosystem of interaction with consumers. It should simplify and speed up order placement, make tracking the completion of a task easier, and should ensure control over mutual settlements and joint planning of actions. To do this, MMK plans to use the latest version of the ORACLE OeBS accounting system and the adapted scheduling system for the production of Ausferr OKPP AS.
Essentially, the fundamental vision is the implementation of projects that will reduce the consumption of material and energy resources and increase the yield of metal suitable from the first processing, while also increasing the efficiency of operations in general. Optimisation of the use of iron ore and its useful components begins with the identification of the chemical composition of the raw materials when they are delivered from suppliers, and the selection of appropriate technological operating modes of the equipment. The use of machine vision and the automation of sampling and research of samples should increase the rate of identification of process deviations, significantly reduce overheads and allow MMK to recycle rejected products at most stages.
There will be repair services which will also help to increase overall efficiency by introducing predictive analytics projects, mobile workplaces for repair personnel, and integrated planning tools to assess the impact of changes to the original repair schedules. The quality and efficiency of general repair work will be further enhanced through intelligent management of spare parts, and by 3D printing some particularly critical items.
Andrey Eremin, MMK’s CFO, noted: “We have selected projects to include in MMK’s digitalization strategy up until 2025. We were guided by a comprehensive assessment that took into account its alignment with the plant’s overall strategy, corporate requirements for payback, balanced risks and other important factors. The final project portfolio shows a higher planned return on investment than MMK's standards for operating profitability. It should be noted that our digital portfolio includes revenue, platform and research initiatives. We expect the total volume of digitalization projects to increase the EBITDA of the plant by at least 4.5%.”
“MMK took a very pragmatic approach to the compiling of digitalisation strategy projects, evaluating not only its own willingness to implement them in terms of data availability, established business processes and personnel, but also the market's ability to provide localised and already-proven solutions. We are pleased that the Deloitte methodology was able to adapt to the requirements of MMK and was able to fully achieve the goals set for the project, allowing the joint team to create an organic portfolio of projects that complement the strategic directions of MMK’s development,” says Alexander Oleynik, Director of Deloitte Consulting LLC.
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.
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