NLMK buys 100 stake in Kaluga Electric Steelmaking Plant

Monday, 17 May 2010 13:55:04 (GMT+2)

The Russian steel producer Novolipetsk Steel (NLMK) has announced that on May 14 it purchased a 100 percent stake in Kaluga Electric Steelmaking Plant (KNPEMZ), currently under construction, from LLC Metallurgical Holding, a subsidiary of Maxi-Group, for a total consideration of Ruble 604.5 million (about $19.72 million), aiming to advance the development strategy of its Long Products Division.

"The acquisition by Novolipetsk Steel, a company with high credit ratings, will create additional ways to attract investment into the project on favorable terms. Since 2008, the construction project has been financed by NLMK," reads the company statement, adding that the amount of its funds invested in the project has already reached Ruble 7.3 billion (about $238 million). The total planned investment is around Ruble 37 billion (about $1.2 billion) including VAT.

The main Kaluga steel plant facilities, i.e., the EAF shop and rolling shop, are currently under construction. By the end of the year NLMK plans to have finished the construction of the main shops' building structures and to start installing the equipment.

The one million mt capacity Kaluga steel plant, located in Vorsino Industrial Park in Russia's Kaluga region, will supply high-quality long products to the construction market of Central Russia.

The startup of the Kaluga steel plant is scheduled to take place in phases. During the first and second stages in Q1 and Q2 2012 respectively, the EAF and rolling complexes will be put into operation, with an output of up to 1 million mt of liquid steel, as well as long products and profiles. NLMK plans to begin the commissioning of the facilities under the first and second stages in Q4 2011. The decision on further development of production facilities (third stage) will be considered in 2012. It will involve product mix expansion and a total output increase of up to 1.55 million mt of rolled products.

In addition, this project will create a new-generation mini-mill steel plant based on ferrous scrap recycling, which is very important for the development of recycling and improvement of environmental conditions in Central Russia. The Kaluga steel plant is included in the list of top-priority investment projects under the Russian Steel Industry Development Strategy to 2020.

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