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Ilyich Iron and Steel Works

Metinvest invests $85 million in the modernization of Ilyich Iron and Steel Works of Mariupol

24 March 2014

Metinvest Group allocated about $85 million to modernize Ilyich Iron and Steel Works of Mariupol in 2014, the enterprise's general director Yuriy Zinchenko said in an interview on Mariupol TV station MTV.

According to Zinchenko, near-term plans include the reconstruction of three sinter machines to increase not just production capacity, but also considerably improve environmental performance. In cooperation with Italian company Теrmokimik Corporation, a large producer of environmental equipment, the enterprise is getting ready to reconstruct its sinter plant's gas cleaning unit.

Zinchenko drew attention to modernization of converter production: "During the first two months of 2014, we conducted a major overhaul of the mixer, and we plan a major overhaul of converter #1 by yearend. I would basically call it construction of a new conveyor. Along with repairs, we will fulfill an environmental item from the municipal program: completely replace the gas cleaning system. We are planning a 100% switch to converter steel, which is why we already invest money in our breadwinner."

Zinchenko believes that the future of the plant lies with the converter shop. "Its capacities are 100% utilized and there are some orders, which is why we have a special attitude toward the converter shop. At the same time, the situation with steel smelting is unclear. The open-hearth shop is undercapacity and production volumes are 60,000-70,000 tons per month, which is equal to the operation of one open-hearth furnace and imposed by market conditions. Open-hearth is becoming a thing of the past."

During the interview, a viewer asked about salaries and related payments: some people were worried if the enterprise's information center where workers can get answers to questions about salary remained open.

The director assured: "There are no deadlines: the information center will operate until it processes its last request and responds to everyone who needs to clarify salary issues. This includes not only current workers, but also ex-workers - they can also refer to our centre at any time. Practice shows that recalculations and additional charges for people who are supposed to have them are made very quickly. So far, 16,000 of our 50,000 ex-workers have received answers about salary questions."

Zinchenko also told about plans to preserve the workforce for the current year: "Today almost 30,000 people work at our enterprise, we are concerned with everyone and try to provide each of them with work. Our reorganization of production will continue. But, at the same time, the enterprise has active outsourcing programs and ensures social security to the maximum possible extent. We believe we will have orders. We will perform efficiently, reduce our production cost and withstand competition, which means that our large workforce will keep on working."

During the live broadcast, there was a comment on the recent events in Ukraine about Ilyich Iron and Steel Works of Mariupol allocating part of employees' salaries to reconstruct Maidan. He said, "These are unfounded rumours: We pay salaries in full. All of the plant's workers can verify that: they all get payroll slips that indicate their payments. I ask all residents of Mariupol: trust your eyes and your wallets, not in lies that are spread to destabilize society."

Zinchenko also announced that this year the partnership between the steelworkers and the city will move to a new level, new areas of cooperation will appear and, in general, investments into the development of Mariupol will increase.

"This year, together with the city, we plan to invest UAH 16 million in a very important project to renew the bus fleet of the Tram and Trolleybus Department to resolve the transportation problems of city residents and enterprise workers. New large and comfortable buses will be purchased on convenient terms," said Zinchenko.

About the effect of the "Ukrainian crisis" on Ilyich Iron and Steel Works of Mariupol's operations, the plant's manager answered: "The position on this issue has been clearly defined by Rinat Akhmetov, SCM's  Shareholder. It consists of the following: our large group is in favor of an integral, indivisible, united and strong Ukraine. Our main goal is stable production. This factor can actually stabilize the situation in the country. Our contribution to overcoming the crisis are timely salary payments to our employees, provision of budget revenue at all levels of government, and contributions to the pension fund and other social funds in the form of taxes and payments."

For editors:

PJSC "ILYICH IRON AND STEEL WORKS OF MARIUPOL" is one of the largest integrated enterprises in Ukraine. The enterprise produces pipes and flat rolled products of carbon, low-alloy and alloy steels for different applications: hot-rolled plates and sheets intended for manufacturing of pipes for main pipelines, ships, pressure vessels, bridge structures, other steel structures for critical application; hot-rolled plates, sheets and strips including pickled; cold-rolled, including galvanized bands, sheets and strips, including for cold stamping, flooring and others.

Metinvest is a vertically integrated mining group of companies, operating the assets in each sector of the production cycle beginning with iron ore and coal mining and coke production up to the manufacture of steel semi-products and finished products, pipes and coils as well as production of other products with high value added. The Group consists of mining and steel works situated in Ukraine, Europe, and the USA and has a chain of sales covering the key world markets. The chief stockholders of Metinvest are SKM Group (71,25%) and Smart-Holding (23,75%) which jointly run the Company.

METINVEST HOLDING LLC – the holding company of the Metinvest Group.