February 4, 2021
PAO Severstal (“Severstal”; “the Company”), one of the world’s leading
vertically integrated steel and steel-related mining companies, today announces
its capital investment programme for 2021.
Severstal plans to invest approximately $1.35 billion in 2021, focusing on a
number of major projects in its Russian Steel and Resources divisions, as well
as on key focus areas of the Company’s strategy, namely, excellent customer
experience, cost leadership and new opportunities.
In 2021, Severstal will invest $453 million in the maintenance of its
existing facilities and $42 mln in industrial safety system improvements,
labour protection and environmental projects.
$124 million will be allocated towards investments in IT and digital
projects, including the ongoing transition of the Company’s divisions to a new
generation of the SAP ERP system – the SAP S/4 HANA solution, developing
e-commerce, the automation of production, supply chain management and the
implementation of digital tools.
Russian Steel division
Investments in Severstal’s Russian Steel division in 2021 will amount to
approximately $785 million, of which $469 million will be directed to
development projects. The division’s largest projects are the second stage of
the construction of coke oven battery No. 11 (first commissioned at the end of
2020, with the full capacity expected to be completed in 2022), bringing blast
furnace No. 3 to design capacity, and also investment in the long-range mill
and the heating furnaces.
Resources division
Investments in the Company’s resources enterprises in 2021 will amount to
approximately $524 million, $267 million of which will be used to develop
production. One of the most important investment areas for the Company this
year will be the main phase of construction of the Cycle-flow technology
complex at Karelsky Okatysh. CPT is a modern technology used for transporting
rock mass by dump truck, which significantly reduces emissions from the
operation of quarry equipment. Severstal will continue its programme to
increase production at the Yakovlevsky mine, which will increase the Company’s
iron ore production to 5 million tons by 2023. Other investment priorities for
Severstal’s resources assets include increasing production volumes at
Vorkutaugol and the development of the Pechegubsky field via the Olkon
mine.
Alexey Kulichenko, CFO of Severstal, commented:
“Severstal continues to implement its large-scale transformation programme,
which has enabled us to maintain our global efficiency leadership despite the
crisis in 2020. As usual, in 2021 the majority of investment will be focused on
development projects that will help us to achieve a significant, long-term
advantage over our peers in the cost of basic products, to provide customers
with unique solutions and products of guaranteed high quality, and to increase
our steel production volumes and strengthen Severstal’s vertical integration.
Blast furnace No. 3 and coke oven No. 11 will have a significant impact on
reducing the cost of steel production starting this year, and this will help to
create additional value for shareholders. Total investments in 2021 will be
comparable to investments in 2020.”
All of these amounts are subject to adjustments dependent on FX changes. The
majority of the Company’s expenditure in 2021 will be in rubles.
