Long-term Strategy

Management of the Company is confident that Metalloinvest’s strategy, based on a well-developed resource base, long-term relationships with the largest consumers and a stable financial position, will allow the Company to maintain leading positions in the market and provide conditions for stable development. We pay particular attention to the comprehensive analysis of current and prospective conditions of the markets, and our results and achievements. The current strategy ensures our prompt reaction and continued sustainable development under various market conditions”.
Yuriy Gavrilov,
Strategy & Development Director
Metalloinvest’s strategy is aimed at strengthening the Company’s leading positions in the HBI/DRI segment in the global market, and in the iron ore products segment in the regional market.

Mission

To be the Company which effectively extracts and processes iron ore raw materials into metallised and high-quality steel products to ensure the growth of the Company’s long-term value, and the development of staff and society.

Strategic Goals

  • Increase the scale of the business and achieve higher efficiency
  • Grow sales margins
  • Increase operational and management efficiency
  • Increase investment attractiveness

More details on strategic goals

Strategic Priorities

  • The effective development of existing iron ore deposits
  • Decrease in cost of ore extraction and ore-to-concentrate processing as a result of the optimisation of existing processes and introduction of new technologies
  • Increase the Company’s share in the global market of metallised raw materials, mainly HBI/DRI
  • Strengthen the Company’s positions in the high-quality rolled steel market
  • Ensure the sustainability of the business and increase the Company’s long-term value
  • A balanced approach to work that provides for the development of staff and the protection of communities and the environment

Values of the Company

Leadership

Metalloinvest is a highly efficient company. It has the second largest iron ore reserves in the world. The Company is a global leader in merchant HBI production, a regional leader in iron ore raw materials production, and a leader in the high-quality steel products segment.

Responsibility

Compliance with the law; social and environmental responsibility in the regions where the Company operates, responsibility to shareholders for the achievement of set goals.

Teamwork

The Company operates as a single whole. It is cooperative and strives to be a reliable partner to its business counterparties. It encourages trust, respect and readiness to help among its employees and partners.

Efficiency

The Company sets goals and achieves them. A Corporate Competencies Model was developed in 2014 based on Metalloinvest’s values. It is aimed at improving competence of each employee of the Company.

More details on corporate competencies model

Strategic goal: Increase the scale of the business and achieve higher efficiency

The effective development of existing iron ore deposits

Metalloinvest has the second largest iron ore reserves in the world. The Company develops deposits with 14.4 billion tonnes* of iron ore reserves as per JORC international classification, which guarantees approximately 150 years of operation at the current extraction level.

More details on global iron ore reserves

Growing the Company’s share in the global market of metallised raw materials

Metalloinvest ships iron ore, metallised products and rolled steel of high quality to consumers, meeting the needs of the industry along the entire chain of value-added products —from iron ore processing to end products for construction, machine building and other industry sectors.

Metalloinvest’s strategy aims to increase the output of merchant HBI, maintaining and gradually strengthening its leading positions in the global market for this type of product. The factors that support stable demand for HBI in the long term are the increasing amounts of steel produced in electric furnaces and tighter requirements for reduced environmental footprint and product quality, as well as the increased demand for scrap alongside a drop in its quality.

The Company is currently constructing the HBI-3 Plant at Lebedinsky GOK and plans to upgrade the HBI-2 Plant by adding a briquette press unit to increase its HBI output. In addition, Metalloinvest is considering the possibility of building HBI production units at Mikhailovsky GOK in the future.

Metalloinvest has upgraded Metallisation Unit #3 OEMK with the view to increasing DRI output. The enterprise is already planning the overhaul of Metallisation Unit #4 and the upgrade of Metallisation Unit #2.

Optimisation of existing processes and introduction of new technologies

The Company plans to increase concentrate production at Mikhailovsky GOK by introducing new technologies for the beneficiation of oxidised quartzites. The successful completion of tests and the construction of an oxidised quartzite processing plant will allow increased iron ore concentrate production at Mikhailovsky GOK and considerable improvements to the efficiency of the enterprise’s operations.

Together with Outotec, Mikhailovsky GOK employees developed technological specifications and prepared a preliminary technical and economic feasibility study of the project (with the participation of IMC Montan). Pilot testing of beneficiation process was started at section #14 of the crushing and sorting plant at Mikhailovsky GOK in 2014, with the aim to eliminate technological risks and to identify optimal conditions for the beneficiation process.

More details on investment projects of the company

Strategic goal: Grow sales margins

Increasing the Company’s share in the global market

The Company’s main sales markets are The Russian Federation, Eastern and Western Europe, as well as countries in Asia, the Middle East and North Africa.

Metalloinvest determines the geography of its shipments depending on the conditions and outlook in regional markets. A flexible logistical chain (multimodal (land & sea) routes to Asia and Europe through the ports of the Black Sea and the Baltic Sea) makes the Company a strong competitor both to leading global suppliers and to local producers.

More details on the geography and the structure of the shipments

Decreasing production cost

The cost of pellet and HBI/DRI production at Metalloinvest’s enterprises is significantly lower than that achieved by its global competitors. According to Company data, in 2014, Metalloinvest maintained its production cost levels in the top quartile among global manufacturers.

The main factors supporting the low cost of pellet and HBI/DRI production at Metalloinvest’s plants are:


  • availability of an extensive resource base;
  • the development of open-pit mines at the Company’s cost, without third-party investments;
  • use of low-cost magnetic separation as the primary method of iron ore beneficiation;
  • “zero” operational costs for shipping iron ore concentrate from Lebedinsky GOK to OEMK through a 26-kilometre slurry pipeline;
  • energy-efficient production technology;
  • availability of the necessary infrastructure (natural gas, electricity, railways and roadways, etc.).

In 2014, the Company continued to implement a programme aimed at decreasing ore extraction and processing costs and improving products’ competitiveness in the global market. This programme included the switch to heavy pit equipment as part of the mining and transport unit development programmes.

More details on mining and transport operations

Strategic goal: Increase operational and management efficiency

Creation of optimal structure with separation of powers and responsibilities

Metalloinvest is currently implementing measures to increase the efficiency of its structural divisions. A pilot project is being performed to form a single centre for repairs planning and control. This project will allow the performance of repair services to be optimised, the standardisation of the planning and repairing processes and a united system of repair schedules to be built. The Company plans to unify the equipment and machinery used in its enterprises in the future.

Increased efficiency and productivity due to the automation of business processes

The Company plans to introduce an ERP automation system for planning all business processes. The project will allow Metalloinvest to switch to a rolling planning process and give its partners the ability to track their orders online.

Dynamic response to internal and external changes

Metalloinvest works on strengthening its risk management system by establishing a separate division for this function. At first, the Company plans to introduce a system for the categorisation and assessment of possible events that relate to different risks to the Company’s activity. At the next stage, the Company will develop regulations and introduce procedures to respond to risks and perform quantitative assessment of the potential damage to the Company.

Strategic goal: Increase investment attractiveness

Transparency in financial reporting and a clear corporate strategy are important factors to increase the investment attractiveness of a business.

Metalloinvest continuously increases the level of public disclosure and the frequency of its interaction with the investment community, striving to comply with international best practices of information disclosure. At present, the Company discloses its financial and operational information, as well as information on social projects and other activities, at the levels and within the timeframes associated with public company practices.

Metalloinvest participates in international conferences organised by investment banks and arranges investors events, including non-deal road shows and the annual Investor Day, continuously developing the base of existing and potential investors. Many investors and analysts are given the opportunity to visit the Company’s production assets.

Communication with rating agencies is an integral part of the Company’s work to increase its investment attractiveness. The Company has been receiving credit ratings by agencies since July 2010.

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