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Severstal has reduced production costs along the entire technological chain

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PAO Severstal, one of the world's largest vertically integrated steel and mining companies, is implementing projects to improve production efficiency. In 2020, the company reduced production costs along the entire technological chain at the Cherepovets Steel Plant (CherMK, one of the largest integrated steel plants in the world, is part of the Severstal Russian Steel division). Naton slab costs in Q4 2020 were $ 160, compared with $ 227 in the same period in 2019.

“Despite the crisis in 2020, Severstal remains one of the most resilient steel companies. Today our gap with the nearest competitors in terms of cost is more than 20%. We must remain the leader in production efficiency, as the market situation can change at any time and is difficult to predict. Low costs allow maintaining stability in any development of events. Our priorities today are maintaining minimal costs, smart investments and a competent repair strategy, "commented Evgeny Vinogradov, CEO of the Severstal Russian Steel division and resource assets.

The first limit of the metallurgical chain invests a large percentage of the cost and cost reduction - coke-and-blast furnace production (KADP). At the same time, a significant result was obtained from efficient work with its own raw material base. The economic effect from end-to-end projects with resource enterprises of Severstal amounted to $ 117.6 million. This is an increase in the share of the use of its own raw materials: Vorkutaugol coal, Olkon and Karelsky Okatysh products, sinter ore and blast furnace ore of Yakovlevsky GOK. The Upstream Technological Development Center (TCD), together with employees of Cherepovets Steel Works and resource enterprises, is looking for solutions that reduce the company's dependence on market volatility. The savings in 2020, including, were obtained due to the development of technologies for the production of coke, sinter and pig iron with a constant selection of the optimal composition of the incoming raw materials. For example, in 2020, TCD developed its own technology for using an increased share of iron ore pellets in the charge in traditional blast furnaces. In addition, $ 26.8 million was brought by local production initiatives, as well as price effects.

Significant cost reduction at the end of 2020 was obtained in the steelmaking production (JV) of CherMK - $ 56 million. About $ 41.7 million is the through effect of projects with the participation of the joint venture divisions. In the second half of the year, $ 12 million was the economic effect of the introduction of the technology for smelting converter steel without the use of scrap metal, which is currently used for industrial purposes. The change in the technological process is due to the launch of a new blast furnace No. 3 and the need to process increased volumes of liquid iron. Significant local savings were obtained due to a decrease in the metal storage facility - the specific consumption of loaded scrap and pig iron per ton of finished products. In 2020, this figure reached 1123.8 kg /t. In particular, equipping the converters with the combined steel blowing technology made it possible to increase the smelting efficiency and shorten the smelting cycle. The system of digital tools (calculators) automatically calculates alloyed breakages and allows you to select the optimal charge for each melt. The "Automated melt release" program control complex for controlling the converter rotation drive allows increasing the yield of suitable steel. Thus, a set of organizational, investment and technical measures to reduce metal filling facilities additionally brought about $ 13 million in 2020.

Also in 2020, the approach to the formation of the cost of the main products of rolling production was revised. Thus, the work of small project teams and the implementation of an agile approach in the production of flat-rolled products of CherMK brought about $ 6.4 million (more than 53% of the total reduction in conversion costs) due to the optimization of zinc consumption, reduction of metal consumption and the cost of paint and varnish materials.

A significant contribution to reducing the cost of production and, in general, costs is made by CherMK's own power generation. In 2020, with the total electricity consumption of the plant of more than 5.7 billion kWh, the share of the company's own electricity amounted to 80.8%. Among other things, CherMK is introducing a strategy for increasing efficiency and development of the energy sector, as well as operational control over the use of energy resources.

The company's logistics as a business process is also a resource for reducing costs. Multimodal and intermodal transportation is gaining great popularity in Russian Steel, which allows not only to reduce delivery costs, increase the number of orders and geography of deliveries, but also to help clients in solving logistics issues.

Also in 2020, by almost 1 , 2 billion rubles in relation to 2019, the Severstal Russian Steel division has reduced the cost of repair funds.

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