NLMK supplies OMK with 1 million tonnes of slabs for large-diameter pipes

Since 2012, as part of a long-term contract, NLMK Group (LSE: NLMK), a major Russian steelmaker, has supplied OMK Group (Unified Metallurgical Company), a leader in the Russian large-diameter pipe market, with over 1 million tonnes of slabs for the production of large-diameter pipes.

The figures were announced at a working meeting between NLMK Group President Oleg Bagrin and OMK Group President Vladimir Markin, held on 20 June 2014 in Novolipetsk.

The contract between NLMK and OMK was signed in August 2012. In November 2013, the companies signed a Long-Term Cooperation Agreement. Under the Agreement, in 2014–2016 NLMK will supply Vyksa Steel Works with more than 2 million tonnes of slabs with superior chemical composition and steel structure standards, and in dimensions that are unique for the Russian market.

NLMK Group President Oleg Bagrin said: “This partnership between NLMK and OMK is strategically important in the effort to reduce imports by manufacturing high-quality steel domestically. Almost two years of successful collaboration between us have proved the efficiency and viability of an all-Russian high-tech production chain for large-diameter tubes: from mining and steelmaking to the end product, we have created a solid foundation for further cooperation.”

OMK Group President Vladimir Markin added: “We are able to keep our process chain in central Russia compact and efficient, from mining to manufacturing large-diameter tubes, thanks to OMK’s use of the latest wide plate and pipe manufacturing technology and to our partnership with NLMK Group. In turn, this has allowed us to consistently reduce the amount of imported tube plates while maintaining the consistently high quality with the help of end-to-end monitoring of all production stages. The next step for OMK is to certify our plates rolled from Lipetsk slabs for the second string of the underwater portion of the South Stream. We expect this to allow us to stop importing high-quality plates and generate substantial value for the Russian budget”

For reference:

NLMK slabs are rolled into wide plates at the VMZ Mill-5000 for subsequent use in the production of large-diameter pipes at VMZ Electric-Weld Pipe Workshop No. 4. In 2012–2014, VMZ produced approximately 1.8 million tonnes of large-diameter pipes. These products have been supplied to Russian and international pipeline projects such as the North European Gas Pipeline, Bovanenkovo–Ukhta, Ukhta–Torzhok, Central Asia–China gas trunk line, and the Southern Corridor.

OMK is currently a global leader in supplying pipes for the underwater parts of gas pipelines owing to its participation in such projects as the Nord Stream, the Varandey Oil Export Terminal, the Baydaratskaya Guba and Dzhubga-Lazarevskoe-Sochi gas pipelines, the Nevelsky Strait in the Sakhalin-Khabarovsk-Vladivostok project, and now the South Stream, where OMK got 35% of orders for the underground parts of the first two strings.

About NLMK Group

NLMK Group is a vertically integrated steel company and leading Russian steelmaker and manufacturer of rolled products with high value added. NLMK’s high-quality metal products are used in various industries, from construction and engineering to the manufacture of power-generating equipment and offshore wind turbines.

NLMK production assets are located in Russia, Europe, and the United States. The Company’s liquid steel production capacity is over 17 million tonnes per year, of which about 16 million tonnes are produced in Russia. In 2013, the Company generated USD 10.9 billion in revenue, with EBITDA of USD 1.5 billion.

NLMK’s ordinary shares are traded on the Moscow Stock Exchange (MICEX-RTS, ticker symbol: NLMK) and its global depositary shares are traded on the London Stock Exchange (ticker symbol: NLMK:LI).

In 2013, NLMK successfully passed an audit by the Norwegian classification society Det Norske Veritas (DNV) as a potential supplier of slabs for the production of large-diameter pipes needed for the Nord Stream Extension (NEXT) project.

About OMK

United Metallurgical Company (OMK) is one of Russia’s largest producers of products for leading energy, transport, and manufacturing companies. OMK produces a wide array of pipes, railway wheels, sheet steel, pipeline joints, and fittings. OMK comprises six large metallurgical enterprises: Vyksa Steel Works (Nizhny Novgorod Region), Almetyevsk Pipe Plant (Republic of Tatarstan), Trubodetal Plant (Chelyabinsk Region), the Casting and Rolling Complex (Nizhny Novgorod Region), Blagoveshchensk Valve Plant (Republic of Bashkortostan), and OMK Tube Plant (Texas, USA).

The key buyers of OMK’s products are major Russian and international companies such as Gazprom, Russian Railways, Lukoil, Transneft, Surgutneftegas, Rosneft, TNK-BP, ExxonMobil, Royal Dutch Shell, General Electric, and Samsung. OMK products are delivered to 30 countries worldwide.

The Chairman of the Management Board is Anatoly Sedykh and the Company’s President is Vladimir Markin.

Based on NLMK Group information