The Russian steel producer Magnitogorsk Iron and Steel Works (MMK) has announced that the Russian Ministry of Economic Development has approved its joint implementation (JI) project ‘Implementation of arc-furnace steelmaking at MMK' within the framework of the Kyoto protocol. As a result, MMK has received ‘project investor' status and is entitled to receive emission reduction units (ERUs).
MMK expects to receive additional (carbon) revenue of approximately €70 million from the sale of ERUs in 2011-2013. The funds will be used to repay the project-related loans and to further finance its modernization program up to 2013.
During 2004-2006, MMK conducted a major reconstruction of its smelting facilities, which included the complete switch to continuous steel casting and the replacement of open-hearth production methodology with state-of-the-art electric furnace steelmaking. As a result, MMK increased its capacity to produce high quality electrical steel (including profiled and slab grades) from two to four million mt. At the same time, as a result of the project, MMK will be able to reduce its CO2 emissions by seven million metric tons during 2008-2012, which is the largest reduction rate achieved in the Russian metallurgical industry.
MMK's partner in the JI project is Carbon Trade and Finance (a joint venture of Gazprombank and Commerzbank) which will act as the buyer of all generated ERUs and provider of project development services.
According to the reports, among the list of the Ministry of Economic Development's 18 approved JI projects within the framework of the Kyoto protocol, are also projects of another four Russian metallurgical companies, i.e., TMK, Rusal, NLMK, and Ashinskiy Metallurgical Works.