Strategy

In March 2019 NLMK Group announced the launch of its new Strategy 2022. NLMK’s new Strategy is balanced across operational and investment gains: our target operational efficiency gains are of the same magnitude as our target gains from investment projects. The new Strategy is also well-balanced in terms of capital allocation: NLMK invests in growth projects while maintaining its financial stability and adhering to a highly competitive dividend policy. As part of Strategy 2022, we will continue to work on maximizing stakeholder value.

Strategy 2022 targets net gains of +$1.25 bn to EBITDA* pa, with $0.5 bn pa from operational efficiency programmes that require no additional capex.

Strategy 2022 is based on enhancing NLMK Group’s competitive advantages. Through operational efficiency initiatives and investment projects, as well as debottlenecking our steelmaking operations, steel output at our Lipetsk site will increase by 1 m tpa. Steel output growth will be 100% covered by captive iron ore from Stoilensky.

Added steel output will be sold in the form of premium and niche HVA products. Target growth in sales of HVA products will total 1.7 m t, driven by investment into the Group’s rolling operations in Russia, Europe and the US.

As part of its strategic goal on sustainable development, NLMK will continue to execute its target programmes aimed at reducing its environmental footprint, improving occupational health and safety, and reducing the injury rate.

* Full effect expected in 2023. Effect calculated vs. 2018. 

Strategy 2022 goals*:

1. Leadership in operational efficiency

• Focus on operational efficiency and approaching best production practices
• Global leadership in cash cost of steel production
• Target EBITDA gain: $0.5 bn pa

2. Growth in low-cost steel production  

• Growth of steel output at NLMK Lipetsk by 1 m t to 14.2 m tpa
• 100% self-sufficiency in iron ore maintained through growth of concentrate output by 2.6 m t to 20 m tpa; and growth of pellet output by 1.3 m t to 8 m tpa at Stoilensky
• Growth of NLMK Lipetsk energy self-sufficiency from 60% to 95%
• Decrease in coal consumption, including deficit grades
• Target EBITDA gain: $0.3 bn pa

3. World-class sales portfolio

• Growth of steel product sales to 18 m tpa
• Growth of premium product output and sales by 1.7 m t
• Growth of sales in key ‘home’ markets by 2.7 m t
• Target EBITDA gain: $0.45 bn pa

4. Leadership in sustainability and safety

• Minimization of environmental footprint, including a reduction of specific emissions per tonne of steel at NLMK Russia to the level of best available EU technologies
• Reduction of injury rate to LTIFR** 0.5
• High level of personnel motivation and engagement

For more details on NLMK’s Strategy 2022, please follow the link.