OREANDA-NEWS. February 10, 2014. Metinvest B.V., the parent company of a vertically integrated group of steel and mining companies (jointly referred to as “Metinvest” or “the Group”), today announces its operational results for the fourth quarter and 12 months ended 31 December 2013.

METALLURGICAL DIVISION
In 4Q 2013, Metinvest’s output of hot metal fell by 4% q-o-q, mainly due to production at Azovstal Iron and Steel Works ("Azovstal") declining by 107 thousand tonnes because of a major overhaul on blast furnace no. 2 in December. The Group’s output of crude steel decreased by 8% q-o-q, amid lower production at all of its steelmaking enterprises.

In 2013, however, Metinvest’s output of hot metal rose by 4% y-o-y, driven by a rise in production of 543 thousand tonnes at Ilyich Iron and Steel Works ("Ilyich Steel") and 124 thousand tonnes at Yenakiieve Iron and Steel Works ("Yenakiieve Steel"). The greater production of hot metal at Ilyich Steel was due to increased throughput capacity at all blast furnaces. Despite the y-o-y rise in hot metal output, the Group’s output of crude steel dipped by 1%, mainly due to Ilyich Steel boosting production of merchant pig iron by 438 thousand tonnes and a shortage of scrap metal on the market, which increased internal consumption of pig iron. Output of crude steel at Yenakiieve Steel rose by 156 thousand tonnes due to greater production of hot metal and increased throughput capacity of its continuous casting machines.

Production of hot metal
In 4Q 2013, output of semi-finished goods fell by 6% q-o-q amid an overall decrease of 112 thousand tonnes in output of slabs and square billets, partly offset by the greater production of merchant pig iron at Ilyich Steel.

In 2013, production of merchant semi-finished goods rose by 14% y-o-y, as output of merchant pig iron increased by 229 thousand tonnes and merchant slabs by 187 thousand tonnes. The former was due to Ilyich Steel boosting output by 438 thousand tonnes, and the latter to crude steel being re-directed for slab production as loads were reduced at Azovstal’s plate rolling shop.

Output of metal products
In 4Q 2013, production of finished goods totalled 2,055 thousand tonnes, down 17% q-o-q. This was due a fall in output of:

plate by 133 thousand tonnes at Ilyich Steel and 56 thousand tonnes at Azovstal;

coil by 85 thousand tonnes at Ilyich Steel, partly offset by a rise of 19 thousand tonnes at the Group’s European enterprises;

long products by 46 thousand tonnes overall at Azovstal, Yenakiieve Steel and Promet Steel;

rail products by 62 thousand tonnes at Azovstal and tubular products by 58 thousand tonnes at Khartsyzk Pipe.

In 2013, output of finished goods equalled 9,021 thousand tonnes, unchanged y-o-y, as:

production of flat goods rose by 31 thousand tonnes;

output of long products increased by 144 thousand tonnes, as Promet Steel boosted production in response to stronger demand in Bulgaria;

output of rail products declined by 70 thousand tonnes amid a reduction in orders from Ukrainian railway operator “Ukrzaliznytsya”, due to less financing for railway repairs, as well as from companies in the CIS (primarily Kazakhstan), caused by fiercer competition from Russian producers;

production of large-diameter pipes declined by 129 thousand tonnes due to the completion of major projects in 2012.

MINING DIVISION
In 4Q 2013, overall production of iron ore concentrate grew by 1% q-o-q, while the volume of merchant concentrate rose by 15% (419 thousand tonnes), as:

intra-Group consumption declined due to the situation on the market for metal products, resulting in an additional 145 thousand tonnes of merchant concentrate;

Northern GOK boosted output by 186 thousand tonnes by changing the merchant product mix in favour of concentrate;

Central GOK increased production by 35 thousand tonnes following the end of a six-month overhaul of roasting machine ОК-324 in October, which reduced pellet output and increased the volume of merchant concentrate;

Ingulets GOK ramped up output by 53 thousand tonnes due to more efficient use of equipment (increased hourly productivity) and mining of iron ore with a higher Fe content.

In 2013, overall production of iron ore concentrate rose by 2% y-o-y, mainly due to comprehensive operational improvements. The volume of merchant concentrate was down 9%, as the Group increased its internal consumption by 921 thousand tonnes and changed production volumes, reducing sales to third parties by 1,205 thousand tonnes. This decrease was due to:

a drop in iron ore concentrate output by 489 thousand tonnes at Northern GOK following a shift in the merchant product mix towards pellets;

a climb in iron ore concentrate production at Central GOK by 175 thousand tonnes and Ingulets GOK by 30 thousand tonnes, amid a rise in overall volumes.

At the same time, production of merchant pellets increased by 25% y-o-y, driven by:

a fall in internal consumption of 836 thousand tonnes;

a rise in production volumes of 883 thousand tonnes, including 881 thousand tonnes at Northern GOK, driven by a shift in the merchant product mix towards pellets and greater total iron ore concentrate production of 442 thousand tonnes as well as changes in the roasting machine maintenance schedule.

Coal mining and output of coal products
In 4Q 2013, the volume of coking coal mined by the Group fell by 16% q-o-q, partly due to a decline in output of 499 thousand tonnes at Affinity mine in the US. The asset was idle throughout the quarter, as a high-strength tunnel seal was installed to improve safety. At the same time, output at the Ukrainian coal assets of Krasnodon Coal Company (“Krasnodon Coal”) increased by 34 thousand tonnes, following the commissioning of northeastern longwall face no. 2 at the Barakova mine in October. It has a capacity of 1,255 tonnes a day and replaced the decommissioned northern longwall face no. 4.

In 2013, the volume of coking coal mined dipped by 2% y-o-y, as output declined by 297 thousand tonnes at Affinity, which was idle in the fourth quarter. At the same time, output at Krasnodon Coal in Ukraine rose by 67 thousand tonnes, as six new longwall faces were commissioned at the Molodogvardeyskaya, Barakova and Samsonovskaya-Zapadnaya mines over the year.

United Coal did not mine any steam coal in 2013 due to low demand on the US market.