JSC "Zaporizhstal"

(Ukraine)
Zaporizhstal Integrated Iron-and-Steel Works

Company’s business profile

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Moscow
October, 2014
 JSC “Zaporizhstal” (company business profile)

CONTENTS

1. General information ................................................................................................. 6

2. The enterprise structure, capacities, range of products........................................ 7

3. Production and tendencies of its development ..................................................... 12

4. Sources and suppliers of raw materials ................................................................ 15

5. Sales .......................................................................................................................... 23
Domestic market ...................................................................................................... 24
Exports ..................................................................................................................... 30

6. Competitiveness ....................................................................................................... 37

7. Personnel .................................................................................................................. 40

8. Environmental Measures ....................................................................................... 42

9. Privatization and shareholders .............................................................................. 48

10. Financial Standing ................................................................................................ 50

11. Realised projects and the program of development of the enterprise ............. 53

Appendix 1: The main productive facilities and their characteristics ................... 63

Appendix 2: Range of products and their characteristics ...................................... 64

Appendix 3: Zaporizhstal’s Rolled Steel Exports in 2001-2013 by kind (customs

codes) and country, thousand tons ............................................................................ 71

Appendix 4: Contact information.............................................................................. 98

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 JSC “Zaporizhstal” (company business profile)

List of Tables

Table 1: Dynamics of release of products at Zaporizhstal in 1997-2013, thousand

tons
Table 2: Supplies of Coke to JSC “Zaporizhstal” in 2004-2013, thousand tons
Table 3: Supplies of iron ore resources to “Zaporizhstal” in 2001-2013, thousand
tons
Table 4: Supplies of iron ore resources from Russia to JSC “Zaporizhstal” in 2001-
2013, thousand tons
Table 5: Geographic pattern of domestic sales of JSC “Zaporizhstal” in 2003-2013,
%
Table 7: Share of exports in total production of rolled steel by “Zaporizhstal” in
2000-2013
Table 8: Structure of exports of rolled products of Zaporizhstal in 1998-2013 by
types of products, %
Table 9: Changes of the pattern of exports of Zaporizhstal exports by region in 2005-
2013, thousand tons, %
Table 10: Average annual export prices on netal products of MC “Zaporizhstal” in
2001-2013, $/ton
Table 11: Data on Zaporizhstal personnel in 2001-2013
Table 12: Financial results of “Zaporizhstal” in 2001-2013, million UAH

List of Figures

Figure 1: Process flow sheet of JSC Zaporizhstal production

Figure 2: Distribution of sales of metal products of JSC “Zaporizhstal”by regions in
2013, %
Figure 3: Average prices on flat rolled steel products of MC “Zaporizhstal” on the
domestic market of Ukraine in 2007-2009, $/ton, including VAT
Figure 4: Average prices on flat rolled steel products of MC “Zaporizhstal” on the
domestic market of Ukraine in 2010-2014, $/ton, including VAT
Figure 5: Dynamics of the crude steel production and atmospheric emissions of
Zaporizhstal in 2002-2013

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 JSC “Zaporizhstal” (company business profile)

ANNOTATION

This report (business portrait) is a description of one of the largest Ukrainian

steel companies - JSC "Zaporizhstal".
The report consists of 11 sections, contains 98 pages and includes 12 tables, 5
figures and 4 appendices.
The business portrait is based on desk research. As information sources, data
Ukrstat (the State Statistics Committee of Ukraine), the State Customs Service of
Ukraine, official statistics of rail transport, annual and quarterly reports of issuers of
securities, as well as Internet sites of companies-producers were employed.
The first section is a general information about the company.
The second section providesdata about the structure and capacities of the
enterprise, its product mix .
The third section gives the volume of output of products for various processes
and their dynamics, and discusses the development trends.
The fourth section is devoted to sources of raw materials and their suppliers,
both domestic and foreign .
Marketing of products is discussed in the fifth section, supplies on the
domestic market and for export are considered separately.
The sixth section we consider the competence of the company, determining its
competitiveness.
Data on productivity, staffing, compensation can be found in the seventh
section.
The eighth section is devoted to one of the most important areas of
functioning of industrial companies at the present stage - environmental activities.
The privatization of the company, its course, the shareholders and their impact
on the company are described in the ninth section.
Data on the financial condition of the company during the years 2001-2013 are
shown in the tenth section.
The eleventh and final section is devoted to the development program of the
enterprise and the implementation of planned projects.
Appendices provide information about the main technological equipment and
its characteristics, the enlarged product portfolio, the geographical structure of
exports of rolled products by kinds in 2001-2013, as well as the company address
book.

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 JSC “Zaporizhstal” (company business profile)

1. General information
Zaporizhstal Integrated Iron-and-Steel Works, located in Zaporozh'e city, is
one of the largest Ukrainian steelmakers.
In terms of production of ferrous metals (iron, steel, rolled steel) the plant is
one of the leading companies in the country. At the plant the production of iron,
semis, flat-rolled products from carbon, low-alloyed, alloyed and stainless steels,
curved profile, sheet metal, building materials and consumer goods is carried out.
Zaporizhstal is a Ukrainian monopolist in production of stainless and alloyed
flat-rolled thin steel (sheet), roll-formed section, tin-plate for cans, polymer-coated
sheet (metal-plastic). In addition, it is the only Ukrainian producer of a cold-rolled
sheet of especially complicated drawing for the automobile production.
In 2013, the company share in the production of pig iron in Ukraine amounted
to 11.1%, of crude steel -11.7%, and of flat-rolled steel -37.4%.
The Works was commissioned in early 1930s to produce carbon steel sheet for
autobody and tractors.
Its geographical position is rather favorable: next to sources of raw materials
(Krivorozhsky iron ore basin, Donbas coal basin), of power DneproGES
(hydroelectric power plant), Zaporozh'e GES, Zaporozh'e nuclear power plant), of
water (Dnepr river), the availability of the developed transport infrastructure
(railway, roads).

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 JSC “Zaporizhstal” (company business profile)

2. The enterprise structure, capacities,

range of products

“Zaporizhstal” is a company with a complete metallurgical cycle. The

capacities of Zaporizhstal Integrated Iron-and-Steel Works are around ХХ million
tons per year of iron and ХХ million tons per year of steel.
The maximum production capacity for hot-rolled steel is ХХ million tons per
year, for cold-rolled steel – ХХ million tons, for roll-formed shapes – ХХ thousand
tons.
The company has unique facilities for production of large-sized cold-rolled
sheet from special steels, as well as polished wide strip and sheet from stainless steel.
The enterprise structure is presented in Fig. 1.

Sintering plant includes 6 sintering machines (the caking area is 62.5 m2 for
each) with the total capacity of ХХ million tons per year of sinter. Practically all
processes are completely automated. Iron ore resources are supplied by mining-
concentrating combines (GOK) of the Krivorozhsky basin.
The sinter base-to-acid ratio is 1.35. The average iron content in the sinter is
54.4%, in concentrate - 63.7%, and in sinter-ore 60.52%.
Currently, the shop is being renovated with replacement of all sinter machines.
In 2012-2013 the sinter machine #1 was reconstructed with the erection of a new
efficient gas cleaning unit (launched in May 2013). In 2014 the reconstruction of the
gas cleaning unit of the sinter machine #2 is being performed.

Blast furnace (BF) plant includes 4 furnaces (##2, 3, 4, 5) with a useful

volume of 1,513 m3 each) with the total capacity of 3.1 million tons per year.
Currently 3 blast furnaces are in operation, with the total capacity of ХХ million tons
per year. In 2010-2014, BF-4 was stopped for renovation (overhaul) to increase its
performance from ХХ to ХХ thousand tons of pig iron per year.
Most of the iron goes to open-hearth furnaces for steel smeling and partly
poured into ingots for sale on the domestic and foreign markets.
A feature of Zaporizhstal iron is a low content of sulfur and phosphorus that
allows to use it in smelting high-grade steels and for casting parts of machines of
crucial importance.
The enterprise produces mainly the iron for steelmaking, the release of cast
iron is small.

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 JSC “Zaporizhstal” (company business profile)

Unlike a number of other Ukrainian metallurgical enterprises, in blast furnaces

of MK “Zaporizhstal” the process is carried out with the blast-air temperature above
1100oC and a top gas pressure of more than 1 atm.
Until recently, the production of pig iron at the plant was carried out with the
use of substantial quantities of natural gas, with the specific coke consumption being
below the average for Ukraine. In 2011, the plant has implemented the technology of
pulverized coal injection (PCI), which allowed to completely eliminate the use of
natural gas in blast furnaces.
Thanks to the use of pulverized coal in 2013 the blast furnace shop achieved a
record low coke consumption - 376 kg/ton of pig iron, prior to the introduction of the
pulverized coal injection technology the coke consumption was 496 kg/ton of pig
iron.

Steelmaking production includes ХХ one-bath and one twin-bath open-hearth

furnaces with tonnage ranged 250-500 tons, and one 12-t FLTs furnace. Besides, the
enterprise has one electric induction furnace #1 with the nominal capacity of 2.5-tons
and with a transformer power of 1.15 MW.
The total capacity of the enterprise for the production of steel is ХХ million
tons per year, including ХХ million tons of the open hearth steel. The design capacity
of the mold yard is ХХ thousand tons/year.
Steel is produced by the scrap-ore process with liquid iron. The open-hearth
furnaces consume natural gas for heating. To intensify the steelmaking process
oxygen is applied in all furnaces. The blow of steel with argon is also used.
The specific natural gas consumption in the open-hearth process is below the
average Ukrainian figure.
In the production of open-hearth steel MK “Zaporizhstal” uses as the steel
charge hot metal, scrap, iron ore, and deoxidizing and alloying agents.
The steel making production made considerable progress on all key process
parameters. The consumption of metal stock in the open-hearth shop decreased by
6% - from 1,162.61 kg/ton in the I half of 2012 to 1098.02 kg/ton of steel in the first
4 months of 2014.
In September 2014 the natural gas consumption in the steel production at the
plant has reached historic lows - 21.4 m³/ton of steel (in September 2013 - 31.3
m³/ton of steel).
The produced steel - mild structural and of commercial quality - is poured into
ingots weighing up to 20 tons and used to produce flat products. Also stainless
electric steel is released for casting in small volumes.

Rolling production includes 5 rolling shops, designed for production of HR

and CR sheet, strip, tin-plate, PVC-coated sheet, cold-drawn sections. The production
structure includes:
Blooming shop (Slabbing mill “1150”) with the capacity around ХХ million
tons per year for rolling carbon and low-alloyed slabs from own open-hearth plant
(the slabs 100-200 mm thick, 850-1520 mm wide, 1800-4800 mm long). Slabs,

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 JSC “Zaporizhstal” (company business profile)

designated for rolling to sheet, are transferred to HR (hot-rolling) wide strip mill in
the hot state.
Hot-rolling sheet shop with the capacity of ХХ million tons per year sheet
and coils: the 1680 mm continuous hot-rolling sheet mill produces wide strip in coils
(2-8 mm thick, 860-1500 mm wide, mass of a coil up to 16 tonsons) sheet. 3 roll-
forming section facilities of the total capacity of ХХ thousand tons per year produce
above 500 types of cold-bent shapes of the carbon, and low-alloyed steel with the
wall section in a range of 1-8 mm and with a flange up to 1440 mm.

Cold-rolling (CR) shop #1:

a 1680 mm 4-stand continuous CR mill,
reversing 1-stand 1200 mm and 1680 mm CR mills,
a 1700mm 20-rolls mill,
skin rolling mills: the tinplate production - 2 continuous narrow-strip mills 450
mm and 650 mm and 4 continuous etching lines,
a plastic-coated metal section.
The shop is also equipped with facilities for dressing and cutting (slitting and
cross-cutting), allowing to obtain CR sheet 0.5-2 mm thick, 850-1500 mm wide and
up to 4000 mm long, as well as coils of weight of up to 16 tons, as well as a cold-
rolled strip of the thickness from 0.2 to 2.0 mm. Besides, there is an etching
department, consisting of 3-continuous pickling lines and a thermal section.

Tin-plate section with the capacity of ХХ tons per year of hop-dipped tin-
plate coil, with a shop of metal-base laminate (the capacity of ХХ tons per year).

Cold-rolling shop #3 for rolling alloyed steel: a 2800 mm sheet mill, with a
complex of heat-treatment and finishing equipment of capacity of ХХ thousand tons
per year sheet, and a shop of polished stainless strip (in coil) and sheet with capacity
of ХХ thousand tons per year. The plant yields large-size CR sheet 1.5-5.5 mm thick,
1000-2500 mm wide and up to 4500 mm long of the carbon, alloyed and stainless
steels.

In 2013 the mill launched a new shop - a metalware shop (TsMI), whose main
task is to increase the release of products of deep processing. Production capacity of
the new plant reach ХХ thousand tons of expanded steel sheet (a thickness from 2 to
6 mm), ХХ thousand tons of bent sections and ХХ thousand tons of hot-rolled and
cold-rold dimensional sheet (a thickness from 0.8 to 8 mm).

The Works produces the following products:

- steelmaking iron and cast iron (15-18-kg pigs),
- slabs from carbon, low-alloyed and alloyed steels,
- hot-rolled sheet and cold-rolled sheet of the carbon, low-alloyed and
alloyed steel products 0.5 to 8.0 mm thick in sheets and coils,
- roll-formed sections,
- white and black tinplate,
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