OMZ Announces Large Scale Investments into Its Metallurgical Business

OMZ is currently developing its strategy for the development of the company’s metallurgical business to 2011. The strategy provides for a doubling of sales, by US$1 billion, technical modernization and implementation of the latest technologies. The OMZ metallurgical division, which includes OMZ-SpecStal LLC, Liteinoye Proizvodstvo LLC and Pilsen Steel (Czech Republic), is considered one of the company’s core businesses and is a basis for the development of other OMZ businesses.

OMZ plans to focus on the most competitive types of metallurgical products. Among them are:

- large and extra large shells the for nuclear industry and petrochemical sector

- large and extra large rotors and shafts for turbines and generators

- casting products made from special high-alloy steels for the mining sector, energy industry and shipbuilding.

OMZ-SpecStal’s development and technical modernization program provides for increased production of large and extra large forgings, by 80,000–85,000 tons per year within two-three years. This will allow the company to become one of the largest global suppliers of these types of product.

OMZ plans to invest US$250-$280 million into its special steels business, and around US$80 million into the casting business. The company plans to finance this step by step out of own funds. Investments will be made into:

- modernization of steel smelting facilities, including construction of a next-generation DSP-120 heavy-duty electric steelmaking furnace (construction has already been started; the furnace will be put into operation in 2009)

- construction of a unique ring rolling unit for production of large size shells

- doubling the size of a mechanical processing equipment park

- modernization of a forge-and-press complex with presses of 12,000- and 6,000-ton capacities

- complex reconstruction of extra furnace processing units and replacement of thermal furnaces

- full re-equipment of steel smelting facilities at the casting complex.

In July 2007, a new company, Uralmash Machine Building Corporation CJSC, was registered. This is a joint venture between OMZ and the Metalloinvest Managing Company. This alliance offers new opportunities for development and expands the metallurgical businesses of both companies. This is very important development is occurring just as Russian metallurgical companies set out to fulfill plans for re-equipment and the construction of new production facilities, and invest into the production of new large rolling mills, incorporating the latest steelmaking furnaces, extra furnace processing units and continuous casting machines.