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Production and Shipments

Metalloinvest continued to pursue its policy aimed at increasing the share of high value-added products. In 2017, the Company ramped up its output and shipments of HBI – a premium metallised raw material for the production of high-quality steel grades, as well as shipments of HVAHVA – High value-added. steel products, including high-quality rolled steel (SBQ).

The rise in HBI output has been driven by the commissioning of HBI-3 Plant at Lebedinsky GOK.

The launch of the plant was a milestone investment project for Metalloinvest, boosting the Company’s HBI production capacity to 4.5 million tonnes per year.

Production

Iron ore products

In 2017, Metalloinvest produced 40.3 million tonnes of iron ore. The 1.0% year-on-year decline was mainly due to a change in the ore mixture.

The pellet output was down 0.4% to 25.1 million tonnes as a result of scheduled maintenance works at pellet plants and a change in the pellet assortment a in the product structure to meet the requirements of HBI-3 Plant, commissioned in July 2017.

The launch of HBI-3 Plant at Lebedinsky GOK has increased the HBI/DRI output by 22.6% year-on-year to 7.0 million tonnes. The output of hot briquetted iron at Lebedinsky GOK has grown by 48% year-on-year from 2.7 million tonnes to 4.0 million tonnes.

Output of iron ore products in 2013–2017
million tonnes
Output of steel products in 2013-2017
million tonnes


Mining Segment production in 2013–2017
million tonnes
Steel products

In 2017, Metalloinvest produced 2.7 million tonnes of hot metal. The output was down by 9.3% year-on-year, mainly due to scheduled maintenance and repair works.

The steel output grew by 2.1% to 4.8 million tonnes driven by higher utilisation of the continuous casting machine (CCM #1) at Ural Steel under contracts with Russian customers.

Steel Segment production in 2013–2017
million tonnes

Shipments

Iron ore products

In 2017, the share of HVA iron ore products (pellets, HBI/DRI) came at 61.1% of total shipments, with the HBI/DRI rising to 13.3% from 9.0% in 2016.

In the reporting year, the Company shipped 3.6 million tonnes of HBI/DRI, up by 42.1% year-on-year.

In 2017, destinations of our iron ore shipments remained largely the same as in 2016. The majority of our products continues to be shipped domestically (61%) and to Europe (25%).

Major consumers of Metalloinvest’s HBI are steelmakers in Western Europe, where approximately half of our total HBI output is shipped. MENA (the Middle East and North Africa) and Asian markets account for another third of total HBI shipments.

With HBI-3 Plant now on stream, Metalloinvest is planning to ramp up its domestic shipments. The growing production of high-quality steel in Russia has led to a shortage of highgrade scrap, potentially leading to a stronger demand for HBI from Russian steelmakers. The Company also expects higher demand for this product internationally.

Iron ore shipments in 2013–2017
million tonnes
Iron ore shipments by destination in 2017
million tonnes


Mining Segment shipments in 2013–2017
million tonnes


Steel products

In 2017, Metalloinvest supplied 2.1 million tonnes of pig iron and 4.4 million tonnes of steel products to its customers.

During the year, the Company grew shipments of HVA steel products by 7.1% year-on-year to 1.9 million tonnes. The growth was driven by an increase in shipments of merchant SBQ HVA by 12.0% and semi-finished HVA products by 34.3%. In 2017, the share of HVA products in total shipments of steel products rose from 41.3% to 43.3%.

In 2017, the share of domestic shipments in total shipments of steel products came at 27.3%, up 3.5 p.p. year-on-year. Shipments to Asia also rose by 1.4 p.p. to 4.2%. At the same time, shipments to Europe declined by 2.9 p.p. to 14.4% and to MENA countries by 6.0 p.p. to 22.6%.

Shipments of pig iron and steel products in 2013–2017
million tonnes
Shipments of pig iron and steel products by destination in 2017
million tonnes


Steel Segment shipments in 2013–2017
million tonnes

Diversified Sales Geography