MMK posts Ruble 1 billion gain via metal charge optimization

The Russian steelmaker Magnitogorsk Iron and Steel Works (MMK) has registered an economic gain of about Ruble 1 billion (approx. $32 million), as a result of the optimization of its metal charge structure including the increase of the consumption of recyclable resources and also of its own raw materials. Thus, the share of consumption of its own raw materials in agglomerate production has increased by 7.2 percent compared to the pre-crisis period, from 22 percent to 29.3 percent. As a result, the prime cost of producing commercial products has decreased by Ruble 63/mt ($2/mt), bringing an economic gain of Ruble 120 million ($3.83 million). Moreover, the increase of agglomerate consumption in the blast furnace charge from 61.3 percent to 91 percent has resulted in a decrease of production costs by Ruble 170 million ($5.43 million). In addition, MMK has increased pig iron consumption in its steelmaking production, as the pig iron production cost is significantly lower compared to the price of scrap when delivery and processing are taken into account. In H1 2009, the share of pig iron used in the melting of converted steel went up from 77 percent to 79 percent compared to Q3 2008. MMK has also increased the share of its own scrap in metal charge from 9.2 percent in Q3 2008 to 69 percent in Q2 2009. In May and June of the current year, the plant was operating only on the basis of its own pit scrap. In Q2 2009, MMK’s use of its own scrap amounted to 156.3 kg/mt compared to 40.5 kg/mt in Q3 2008. MMK’s economic gain in the second quarter of the current year due to increased pig iron consumption and increased use of its own scrap amounted to Ruble 701 million, while its cost of manufacturing commercial products was reduced by Ruble 233/mt ($7.5/mt).