MMK invests $ 2 billion in cost cuts steel billets

Magnitogorsk iron and steel works (MMK) plans to invest in projects to reduce the cost of steel billets (slabs) about $ 2 billion through 2025. Thus the company Victor Rashnikov plans to reduce the cost of procurement 313 to 266 USD per ton, according to the materials that were presented at the investor Day in London.

According to the company, the new investment projects, in particular, sinter plant, coke production, blast furnace and steam power plant, will increase pre-tax profit (EBITDA) for 483 million dollars. Other Russian metallurgical holding companies also intend to reduce the cost of production of its slabs. The cost of MMK slabs while the highest in Russia, due to the smallest level of vertical integration among Russian steel companies.

Only through the implementation of three investment projects, the company will reduce the cost to $ 47 per ton:

    • new sinter plant will reduce to $ 9,
      • new coke complex also will reduce the cost $ 9,
        • new blast furnace will reduce melting costs from $ 29.

Capital expenditure (CAPEX) of a new sinter plant, whose commissioning took place in 2019, is $ 400 million with effect on EBITDA of 47 million. New coke will be put in 2021-2022 years, CAPEX — 785 million effect on EBITDA of 54 million. The CMI will introduce new blast furnace and a steam turbine power plant in 2024, CAPEX — 694 million effect on EBITDA of $ 119 million.

PJSC "MMK" is one of the world's largest steel producers and holds a leading position among the enterprises of ferrous metallurgy of Russia.

the company's Assets in Russia include a large metallurgical complex with full production cycle from preparation of iron ore raw materials and finishing deep processing of ferrous metals.

MMK produces a broad range of steel products with a predominant share of products with high added value.

In 2018, the company produced 12.7 million tonnes of crude steel and sold 11.7 million tonnes of steel products.

the MMK Group's Revenue in 2018 amounted to 8,214 billion, EBITDA 2,418 billion.