Metalloinvest
Annual Report 2019

Quality and customer focus

Consumers of Metalloinvest’s products are the world’s largest metals and mining enterprises from Russia, Europe, Asia, North America, the Middle East and North Africa.

Metalloinvest’s steel is used to produce pipes, railway cars, rails, vehicles, bridges, buildings, stadiums, and ships.

Metalloinvest pays special attention to the quality of its products. Many years of partnerships with consumers around the world prove the Company’s reputation as a reliable supplier of high-quality iron ore, metallised and steel products. Aimed at keeping the existing positions, the Company’s initiatives also focus on new market segments through the introduction of effective technical, technological and operational solutions that ensure high quality and customisation of products in accordance with customer requirements.

PRODUCTION DEVELOPMENT PROGRAMMES

Metalloinvest’s strategy provides for the implementation of comprehensive development programmes for the Company’s enterprises aimed at improving product quality, increasing customer focus, ensuring efficient and rational use of subsurface resources and reducing environmental impact. Development programmes are created to ensure an end-to-end positive effect throughout the entire production chain of the Company.

Development programmes include both technical and technological aspects, as well as organisational components. The introduction of flexible technologies and business processes allows the Company to produce high quality products with the characteristics required by the customer.

LGOK
  • Premium product development programme:
  • Introduction of the flotation technology;
  • Reconstruction of roasting machines;
  • Improving the performance of HBI plants.
  • Benefit of the implementation for the Company:
  • Manufacturing of premium quality products;
  • An opportunity to become a world’s top 3 leader in terms of pellets quality;
  • 10% reduction in gas and electricity costs;
  • 55% reduction in dust emissions;
  • 35% reduction in waste generation and storage (overburden);
  • To cut the content of harmful impurities and waste rock in half.
  • Benefit of the implementation for the consumers:
  • World-class products of LeGOK with high iron content and low content of harmful impurities (decrease by 2);
  • Reduction of greenhouse gas emissions;
  • Reduced slag generation.
MGOK
  • A comprehensive product quality improvement programme:
  • Introduction of a thin screening technology;
  • Construction of the beneficiation plant;
  • Reconstruction of roasting machines.
  • Benefit of the implementation for the Company:
  • A significant improvement in the quality of concentrate and pellets;
  • Increased productivity and efficiency of ore beneficiation;
  • Reducing the energy consumption of the pellet production;
  • 5% reduction in waste generation and storage (overburden).
  • Benefit of the implementation for the consumers:
  • High quality concentrate and pellets of MGOK;
  • Reduced consumption of coke and lime;
  • Reduced greenhouse gas emissions
OEMK
  • A comprehensive customer focus and product quality improvement programme:
  • Reconstruction of the continuous casting machine;
  • Building of a heat treatment section for hot-rolled steel.
  • Benefit of the implementation for the Company:
  • Modernisation of production;
  • Expanding the ability to produce SBQ products;
  • Improving SBQ quality;
  • Improving steelmaking efficiency (use of LGOK products);
  • Reduced consumption of lime, electrodes, refractories;
  • Reduced consumption of electric power.
  • Benefit of the implementation for the consumers:
  • OEMK products are customised.
URAL STEEL
  • Comprehensive production reorganisation programme:
  • Modernisation of blast furnaces;
  • Modernisation of the electric smelting workshop.
  • Benefit of the implementation for the Company:
  • Introduction of new technologies and improved efficiency of blast furnaces;
  • Reduced electric power costs;
  • Reduced cost of production;
  • Reduced consumption of coke;
  • Reduction of greenhouse gas emissions.
  • Benefit of the implementation for the consumers:
  • High quality products of Ural Steel at best prices.

SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT SYSTEM

Metalloinvest’s supply chain management system reflects the flow of materials and products in the Company’s production processes and includes the procurement of materials, their use in production, product development, marketing and logistics.

The supply chain management system is based on the Company’s policies, management systems, standards, procedures and processes that control and monitor the flow of inventory.

The Company effectively manages business processes and issues of environmental protection, social development and human rights, industrial safety and labour protection and introduces corporate principles of responsible business in the system of relations with suppliers, contractors and consumers.

Supply chain management

PROCUREMENT MANAGEMENT

Procurement is a strategic element of Metalloinvest’s supply chain management system. The company performs centralised procurement and introduces category procurement management. Metalloinvest has category strategies for all procured inventory, and in 2019 the Company started working on the development of strategies and procurement of services.

The Procurement department is responsible for procurement management. At the end of 2018, the Company switched to a new operating model, dividing the procurement activity into three main functions: front office, middle office, back office. During 2019, the transition to a new organisational structure was fully implemented:

  • Front office. The key tasks of the front office include category procurement management, including the development and implementation of categorical strategies, strategic management, providing specific groups of inventories, and the selection of partners for entering into long-term contracts.
  • Middle office. The middle office is responsible for operational procurement. The middle office employees process the current procurement needs of the Company, identify the optimal procurement channels and the selection of the source of supply both under categorical strategies and operations.
  • Back office. The back office performs a support function preparing agreements and contracts, performing monitoring and control of transactions.

In addition to the procurement specialists, the front-, middle- and back-offices involve special cross-functional teams consisting of employees from departments engaged in the determination of corporate requirements for the inventory.

In 2019, a procurement support department was created based on the multifunctional shared service centre (SSC) of Metalloinvest to provide pilot support for several inventory procurement groups. In 2020, the Company intends to implement a support function centralisation programme providing for the transfer of employees from support services to the shared service centre. A single support for all centrally procured inventory and services.

Metalloinvest plans to increase the share of centralised procurement from 85% to 90%, including by means of procurement of multi-item low-cost inventory by catalogues. To strengthen this position, the Automated Procurement department is created as part of the Procurement department.

Procurement operational model