OMK Starts Construction of Mill 5000

Vyksa Steel Works (VSW, Nizhni Novgorod Region), part of United Metallurgical Company (OMK), has held a solemn ceremony dedicated to the launch of construction of Mill 5000. The attendees included Russian First Deputy Prime Minister Sergey Ivanov, Presidential Plenipotentiary Envoy to the Volga Federal District Alexander Konovalov, and Governor of the Nizhni Novgorod Region Valery Shantsev.

As of today, May 30, Vyksa Steel Works (VSW, Nizhni Novgorod Region), part of United Metallurgical Company (OMK), has held a solemn ceremony dedicated to the launch of construction of Mill 5000. The attendees included Russian First Deputy Prime Minister Sergey Ivanov, Presidential Plenipotentiary Envoy to the Volga Federal District Alexander Konovalov, and Governor of the Nizhni Novgorod Region Valery Shantsev.

The construction of Mill 5000 will enable Russia to solve by 2010 the import substitution issue for high quality wide sheets, needed for the pipe, nuclear, and shipbuilding industries, as well as the military-industrial sector.

When it commissions Mill 5000, OMK will be able to significantly increase its large-diameter pipes (LDP) production. Such pipes are supplied for the construction of main and subsea gas and oil pipelines. The commissioning of new capacity will increase OMK's LDP production from 850,000 tonnes in 2006 (41% of the Russian market of 1.5 million tonnes) to 2 million tonnes in 2010.

The project investment will exceed 45 billion rubles. The preferred bidder for technology and equipment supply is SMS Demag AG, Germany, whose project involves the most advanced process solutions. The Mill products will meet the demands of leading Russian companies for many decades ahead. The Mill 5000 Project also provides for the creation of modern steelmaking facilities on the base of Chusovoy Metallurgical Works, part of OMK, which will supply slabs for the wide sheet production.

The launch of Mill 5000 will enable the Company to generate additional revenues of about 40 billion rubles a year, with tax contributions to budgets of all levels and extrabudgetary funds to exceed 8 billion rubles a year.

Increasing LDP production is fully in line the OMK overall strategy. "Mill 5000 will produce wide sheets to be used by VSW for the manufacture of new generation pipes for Gazprom, Transneft, and other companies," said Chairman of the OMK Board of Directors Anatoly Sedykh. "Guaranteed supplies of high quality pipes for national pipeline projects will be instrumental in ensuring energy independence for Russia." At present, the VSW LDP production almost entirely depends on imported sheets, whereas the Company's own manufacture would make such imports redundant.

The forthcoming implementation of several major international projects makes self-sufficiency in raw materials all the more important. At present, OMK is the main LDP supplier under projects related to the composition of land-base sections of the Nord Stream gas pipeline, Eastern Siberia-Pacific Ocean Oil Pipeline, etc. In the pipeline are none the less ambitious projects of Gazprom (Nord Stream subsea sections, Shtokman deposit, etc.) and Transneft (ESPO Phase 2). According to Anatoly Sedykh, "It is symbolic that in the year of VSW's anniversary we are completing the construction of one plant, Foundry and Rolling Facility, and embarking on a still larger project, Mill 5000. By 2010, Vyksa will see the creation of unique pipe and metallurgical facilities based on the most advanced technologies, with the annual production of at least 3 million tonnes of pipes.