Metalloinvest Presentation on Raw Materials in Russia

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Information about Metalloinvest Presentation on Raw Materials in Russia

Published on January 23, 2008

Author: jasmo

Source: slideshare.net

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Madrid, September 2007

Russian Metallics Market Madrid September 2007

Consumption of steel products in Russia According to the Program of strategic development of metallurgical industry of the Russian Federation till 2015 (approved by the Government in May 2007) consumption of steel products in Russia is expected to increase in 2015 by 53%. Consum ption flat products in Russia, m m t Consum ption long products in Russia, m m t 30 30 25 25 20 20 15 15 10 10 5 5 0 0 2003 2004 2005 2006 2015 2003 2004 2005 2006 2015 Source: Metallcourier, Minpromenergo RF Source: Metallcourier, Minpromenergo RF

Russia steel production Crude steel production in Russia in 2006 was over 70 mln mt. Since 2002 average growth rate of Russian steel production is 3.7%. EAF production in 2007 will reach 19 mln. Mt. According to the forecast of the Russian Government EAF steel production is expected to increase to 25 mln. Mt. by 2015. Steel m aking by process in Russia, m m t 90,00 80,00 BOF EAF OH 70,00 60,00 50,00 40,00 30,00 20,00 10,00 0,00 2000 2001 2002 2003 2004 2005 2006 2007 2015 Source: IISI, Rosstat

Structure of rolled steel production and sales The main items of Russian steel export are slabs and billets. Share of semifinished products is about 50%. Structure of rolled steel production and sales 2006, M tons 35,0 30,0 8,2 25,0 5,8 Slab export Squares export 20,0 4,0 9,6 Rolled steel export 15,0 Domestic sales 10,0 16,8 14,2 5,0 0,0 Long Flat Source: Metall-Courier, GTK RF

Russian steel product shipments In 2006 Russia produced 58 mln. mt. of finished steel products. 49% were exported. According to optimistic scenario of the Government forecast In 2015 production of finished steel products is expected to reach 76 mln. Mt. Export tonnage will drop by 2 M t. but its share in total output will change from 50% to 35%. The share of semis in export will also decrease. Russian steel products shipm ents, m m t 90 80 Export Domestic market 70 27,0 60 27,8 27,9 50 29,0 28,3 28,9 40 29,5 30 49,6 20 40,1 43,6 31,7 35,1 25,2 29,9 10 0 2005 2006 2007 2008 2009 2010 2015 Source: Minpromenergo RF

Continuous casting in Russia In 2006 the share of continuous casting was 67%. By 2015 it will exceed 90%. Home scrap amount shall drop. Continuous casting in Russia, m m t 90 80 70 60 50 40 30 20 10 0 2003 2004 2005 2006 2015 Source: Metallcourier, Metalloinvest

Steelmaking raw materials structure Due to increase of steel production and changes in steel production technology structure (BOF, EAF, OH) the demand for steel making raw materials in Russia will raise. It should be mentioned that scrap collection in Russia during the last 15 years was higher than consumption of steel products. Russian charge m etallics structure, m m t 100 90 80 70 46 60 44 50 40 30 39 20 32 10 8 0 2 2006 2015 Source: Minpromenergo RF, Metalloinvest DRI/HBI Scrap Iron

Russian scrap export Within the next 3 years export of scrap from Russia will continue to decrease and it will drop to 1-1.5 mln mtpy. Scrap export from CIS, m ln. ton Russian EAF steel production and scrap 18 export from Russia, m ln. ton 20 19 18 16 Scrap export 17 EAF steel production 16 14 15 14 13 12 12 11 10 10 9 8 8 7 2004 2005 2006 2007 2004 2005 2006 2007 Source: CRU Source: Rosstat, CRU

Russian scrap resources Due to changes in Russian steel industry the structure of scrap origin by source will change. Certain increase in industrial scrap will not compensate decrease of home scrap generation and obsolete scrap collection. Russian scrap resources, m m t 45 40 35 12 7 30 25 9 12 20 15 10 21 19 5 0 2006 2015 Source: MAIR, Metalloinvest Old scrap New scrap Home

Net steel scrap trade on the world market There is no reason to expect that the volume of the global scrap market will increase in the nearest few years. Unless China turns into exporter of scrap. Scrap international m arket, m m t 70 60 50 40 30 20 10 0 2002 2003 2004 2005 2006 Source: UN

Pig iron international market According to the UN statistics international pig iron trade has been growing during the last 5 years. According Russian official forecast pig iron production in Russia is not going to increase. By 2015 pig iron output in Russia is expected to drop by 2-3%. Pig iron international m arket, m m t 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

World DRI/HBI production After a relatively long period of stagnation DRI/HBI production now is booming. During the next 4 years global HBI/DRI production will grow by 60%. Only relatively small amount of additional material will be supplied to the market. The most part will be used for steelmaking on the spot. World DRI/HBI production, m m t DRI/HBI international m arket, m m t 100 9 90 8 80 7 70 6 60 5 50 4 40 3 30 20 2 10 1 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2010* 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Midrex * forecast Source: ISSB, UN

Russia on the World SRM market After 2010 Russia will stop massive export of steel scrap Russia on international m etallics m arkets, 2006 Russia on international m etallics m arkets, 2015 45% 50% 40% 45% 40% 35% 35% 30% 30% 25% 25% 20% 39% 44% 20% 15% 15% 30% 10% 10% 17% 17% 5% 5% 0% 0% 0% Pig iron Steel scrap DRI/HBI Pig iron Steel scrap DRI/HBI Source: UN Source: Metalloinvest

Metalloinvest DRI/HBI shipments By 2015 Metalloivest will supply to the world market 5 mln. Tpy of HBI. M etalloinvest m erchant DRI/HBI shipm ents, m m t 6 5 4 3 2 1 0 2006 2007 2008 2009 2010 2011 2015 Source: Metalloinvest

Structure of Metalloinvest Holding, 2006 Metalloinvest Iron Ore Products Steel Products Lebedinsky GOK Ural Steel Mikhailovsky GOK OEMK Saleable Material Production Volumes Pellets 18,2 m t Pig Iron 2,5 m t Concentrate 16,2 m t Steel 6,3 m t Ore 2,5 m t Rolled Products 5,2 m t HBI 1,0 m t

Main Targets of Metalloinvest mining To increase the share of higher value added products (HBI) in the sales mix To save production costs To improve product quality To unify management technologies and processes To introduce advanced technical and solutions To realize efficient energy saving program The principal strategic target of the Iron Ore Division is to increase the production of HBI by 2015 to 8 mtpa 16

Technical Development of Metalloinvest Iron Ore Division Iron Ore Division Development Strategy 2.8 m tons of 2015 briquettes 8 m tons of 5.2 m tons of briquettes briquettes Estimated HBI production 2006 2008 2015 1.0 m tons 2.5 m tons 8 m tons LGOK – 100% LGOK – 100% MGOK – 35% LGOK – 65% 17

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