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Novolipetsk Steel

December 26, 2016

NLMK Group to build new reheating furnace at NLMK Pennsylvania

NLMK Group, an international steel producer with operations in Russia, Europe and the USA, has signed an agreement for the purchase of the core process equipment for the construction of a new walking-beam reheating furnace to streamline the slab heating process at NLMK Pennsylvania (Farrell, PA, USA). The new furnace will replace 3 outdated pusher-type furnaces currently operational at the facility.

The reheating furnace, which will have a capacity of 395 tonne per hour or around 1.7 million tonnes per year, pre-heats steel slabs prior to further rolling at the hot strip mill. The project will significantly increase the quality of finished steel products due to the transition to a more advanced technology. It will also enable lower energy consumption and minimize environmental impact.

The project also includes the construction of a warehouse for slabs supplied by Novolipetsk.

Bob Miller, NLMK USA CEO, said: “The construction of the new furnace is a major project for NLMK Pennsylvania aimed to bolster the market presence of the company. It will improve the quality of hot-rolled steel by eliminating slab surface defects, which are characteristic of pusher-type furnaces. In addition there will be an approximate 45% decrease in natural gas consumption as well as a reduced emission rate”.

Construction and installation works are planned for Q3 2017; and the furnace is to become operational in 2018. Installation of the new equipment will not impact upon the facility’s production plan.

Project capex is estimated at $80 million. At current prices, the project will increase EBITDA by $29 million per year (for reference, NLMK USA's EBITDA for 9M 2016 was $144 million).

About NLMK Pennsylvania

NLMK Pennsylvania is the biggest plant in the NLMK USA division. The plant produces carbon and alloyed steel, including hot-rolled, cold-rolled and full hard steel. The facility has a production capacity of 1.7 million tonnes of hot-rolled steel per year. The majority of NLMK Pennsylvania’s products are produced from steel slabs supplied by Novolipetsk.

Sharon Coating, located nearby, uses NLMK Pennsylvania's rolled steel to produce a range of hot-dip galvanized steels that includes extra-deep drawing, high-strength, and dual phase steels.

NLMK Pennsylvania steel is used in machine building, railway equipment and pipe manufacturing and the mining, energy and space industries, and service centres.

About NLMK Group

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

NLMK Group’s high-quality 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 2016, the Company generated $5.671 billion in revenue and $1.423 billion in EBITDA. As of 30 September 2016, Net debt/EBITDA stood at 0.39õ. NLMK’s ordinary shares are traded on the Moscow Stock Exchange (ticker "NLMK") and its global depositary shares are traded on the London Stock Exchange (ticker "NLMK:LI"). For more details on NLMK shareholder capital, please follow the link.

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




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