Metinvest announces 1q 2013 operational results

Metinvest B.V., the parent company of an international vertically integrated steel and mining group of companies (jointly referred to as “Metinvest Group” or “Metinvest”), today announces its operational results for the first quarter ended 31 March 2013.

1Q 2013 HIGHLIGHTS

• Production of crude steel down 6% y-o-y to 3,101 thousand tonnes
• Production of iron ore concentrate marginally up 1% y-o-y to 9,325 thousand tonnes
• Mining of coking coal marginally down 2% y-o-y to 2,896 thousand tonnes

METALLURGICAL DIVISION

In 1Q 2013, Metinvest produced 2,722 thousand tonnes of hot metal, down 5% y-o-y. Meanwhile, overall crude steel production fell by 6% to 3,101 thousand tonnes, as output declined by 31 thousand tonnes at Azovstal Iron and Steel Works (“Azovstal”), 118 thousand tonnes at Ilyich Iron and Steel Works (“Ilyich Steel”), and 46 thousand tonnes at Yenakiieve Iron and Steel Works (“Yenakiieve Steel”). Compared with 4Q 2012, crude steel production rose by 8% (220 thousand tonnes). 

Production of hot metal

Production of crude steel

In 1Q 2013, output of merchant semi-finished products was up 15% y-o-y to 671 thousand tonnes, driven by a rise in slab production of 51 thousand tonnes overall at Azovstal and Ilyich Steel and an increase in square billet output of 57 thousand tonnes at Yenakiieve Steel.

Compared with 4Q 2012, output of semi-finished products was down 12%. This was mainly due to a fall in output of merchant pig iron by 197 thousand tonnes, caused by an increase in its internal consumption as an alternative to scrap, which has been in short supply. Meanwhile, production of merchant slabs was up 122 thousand tonnes, due to a switch in production from rolled sections to flat products in response to changing demand (74 thousand tonnes) and the completion of the work to upgrade Ilyich Steel’s continuous casting machine (48 thousand tonnes). 

Production of metal products¹

In 1Q 2013, output of finished products rose by 5% y-o-y to 2,251 thousand tonnes, as the volume of flat products increased by 157 thousand tonnes due to more orders for coils (110 thousand tonnes) and plates (47 thousand tonnes).

Output of long products was unchanged y-o-y. Promet Steel boosted its volumes of rolled products by 40 thousand tonnes in response to greater demand. At the same time, output at the Group's Ukrainian facilities fell by 45 thousand tonnes due to the mothballing of Yenakiieve Steel's rolling mill 360 in 2H 2012 and a slump in orders.

As regards pipes, production declined by 157 thousand tonnes y-o-y, following the completion of various major projects in 2012.

Compared with 4Q 2012, output of finished products was up 14% (272 thousand tonnes):

• production of plates rose by 60 thousand tonnes at Azovstal and 31 thousand tonnes at Ilyich Steel
• output of coils increased by 84 thousand tonnes at Ilyich Steel and 16 thousand tonnes at Ferriera Valsider
• production of plates grew by 22 thousand tonnes at European re-rolling plants following the completion of upgrades there
• output of long products rose by 66 thousand tonnes due to greater orders from Bulgaria and the completion of the upgrade of rolling mill 150 at Yenakiieve Steel

MINING DIVISION

Production of iron ore concentrate and pellets

In 1Q 2013, overall production of iron ore concentrate amounted to 9,325 thousand tonnes, up 136 thousand tonnes y-o-y. The rise was the result of various measures to enhance operational efficiency and mine ore with a higher Fe content.

The volume of merchant concentrate for sale to third parties increased by 477 thousand tonnes to 3,740 thousand tonnes, up 15% y-o-y, as overall concentrate production targets were exceeded and the Group consumed less in-house.

The volume of pellets for sale to third parties fell by 72 thousand tonnes y-o-y. This was caused by a decline in production of 335 thousand tonnes at Northern GOK due to repair work on the pelletising machines, most of which was offset by an increase in pellet output of 263 thousand tonnes at Central GOK.

Compared with 4Q 2012, overall production of iron ore concentrate was up 266 thousand tonnes as capacity utilisation increase following a range of operational improvements. At the same time, output of merchant concentrate fell by 679 thousand tonnes, while the volume of pellets for sale to third parties rose by 1,081 thousand tonnes, the latter due to two factors:

• a reduction in internal pellet consumption (313 thousand tonnes)
• a resumption in production of merchant pellets in pelletising plant no. 2 at Northern GOK (768 thousand tonnes)

Mining of coal and production of coal concentrate

In 1Q 2013, the volume of coking coal mined declined by 74 thousand tonnes y-o-y to 2,896 thousand tonnes. The decline was due to a fall in output of 166 thousand tonnes at United Coal Company (“United Coal”) in the US, offset by a rise of 92 thousand tonnes at Krasnodon Coal Company (“Krasnodon Coal”) in Ukraine.

The growth at the Ukrainian mines was caused by an increase in operations: work was launched on new coalfaces at the Molodogvardeyskaya mine (Eastern Orlovskaya Face no. 30 in September 2012) and the Sukhodolska mine (Eastern Face no. 34 in March 2012).

Compared with 4Q 2012, the volume of coking coal mined was up 88 thousand tonnes. This was caused mainly by a rise in output of 114 thousand tonnes at the US operations, slightly offset by a fall of 26 thousand tonnes at Krasnodon Coal.

United Coal did not mine any steam coal in 1Q 2013 due to a lack of demand in the US.

 

_{¹ - Excluding intragroup sales and intragroup utilisation
Flat products include hot-rolled quarto and heavy plates, and hot-rolled, cold-rolled and hot-dip galvanised sheets and coils.
Long products include hot-rolled sections (light, medium, heavy), debars, merchant bars and wire rods.
Rail products include light and heavy rails, rail fasteners.
Large-diameter pipes are longitudinally submerged arc welded (LSAW) large-diameter pipes.
Other pipes include other electric resistance welded (ERW) pipes and seamless pipes.}

_{² - Excluding intragroup sales and intragroup utilisation
³ - Excluding intragroup sales and intragroup utilisation}