Metalloinvest, a leading global iron ore and HBI producer and supplier, and one of the regional producers of high-quality steel, announces that it has signed an agreement with Zagorsky Pipe Plant (ZTZ), one of the largest Russian suppliers of large diameter pipes for oil and gas pipelines and steel products for construction, to sell JSC Ural Steel (Novotroitsk, Orenburg region).
According to the agreement, ZTZ acquires 100% of JSC Ural Steel from Metalloinvest. The transaction is expected to close in February 2022. Metalloinvest will continue to supply Ural Steel with iron ore raw materials on market terms.
Nazim Efendiev, CEO of Management Company Metalloinvest, commented: "Metalloinvest is fully focused on developing assets in Central Russia to strengthen our leadership position in green metallurgy, namely the production of direct-reduced iron and products based on it. The transaction is in line with our Qualitative Change Strategy, enabling us to improve our profitability and optimise our trade balance. “Production and use of coking coal, sinter and pig iron will be completely eliminated from the Company's production processes, which will in turn reduce its direct greenhouse gas emissions by 48%.
“ZTZ is acquiring an enterprise with the most advanced electric arc furnace production facility in Russia. As a result of the deal, Ural Steel will have new opportunities to strengthen its position on the billet market and enhance production efficiency.”
The acquisition of Ural Steel will enable ZTZ to form a vertically integrated holding company and to considerably expand its capabilities to supply iron and steel products to the Russian and foreign markets.
Denis Safin, CEO of ZTZ, said: "Ural Steel will become an important part of ZTZ's strategy to build an integrated steel holding company, allowing us to continue supplying Russian and foreign consumers with high-quality steel products.
“We will significantly expand our capabilities and go beyond the production of our traditional pipe products. ZTZ plans to continue developing the enterprise and increase its production efficiency. Ural Steel will continue to meet all its contractual obligations to existing Russian and foreign customers in full and on schedule.”
Ural Steel has been a part of Metalloinvest since 2006. Metalloinvest's total investment into the development of the enterprise amounts to about USD 1.2 bn, with a focus on developing and modernising production facilities as well as minimising the environmental impact of production. The decommissioning of the obsolete open-hearth technology and the modernisation of equipment have reduced emissions by more than a third compared to 2006.
Since 2017, Metalloinvest has been implementing a comprehensive development programme at Ural Steel. In 2019, the reconstruction of electric arc furnaces was completed with the introduction of the innovative Flexible Modular Furnace technology. A unified integrated financial and business management system based on SAP S/4 HANA was implemented at the enterprise. In 2021, Blast Furnaces #2 and #3 were reconstructed, the enterprise’s combined heat and power plant was modernised and a new air separation unit was built. Ural Steel is a full-cycle steel enterprise comprising sinter and coke production, steelmaking and rolling facilities. The enterprise is Russia's leading producer of bridge steel and a leading supplier of steel products for construction, pipe production and highquality shipbuilding steel. In 2021, Ural Steel produced 2.4 mn tonnes of pig iron and 1.5 mn tonnes of steel.
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