The Interview Kirill Golubkov Magnitogorsk Iron & S Q
Can you give an overview of Magnitogorsk Iron & Steel Works
(MMK) and its organisational structure?
MMK is one of the world's largest steel producers and a leading Russian metals company. The company's operations in Russia include a large steel producing complex encompassing the entire production chain, from preparation of iron ore to downstream processing of rolled steel. MMK produces a broad range of steel products with a predominant share of higher value added products. In 2011 the company produced 12.2 mln tonnes of crude steel and 11.2 mln tonnes of commercial steel products. MMK Group revenue in 2011 stood at USD 9.306 bn, with EBITDA of USD 1.336 bn.
Organisationally MMK’s Structure includes MMK Managing Company (corporate strategy think-tank) and the following divisions: Steel Products, Sales, Resources, Services, Finance and MMK Resorts (operates a chain of recreational and leisure facilities as part of MMK’s social programme)
Q
What are the main areas of Magnitogorsk Iron & Steel Works
expertise?
MKK’s growth and investment strategy is formulated as ‘getting high returns from high-quality projects’. The company uses equipment from world leading engineering companies, including SMS Siemag, Danieli, Fata Hunter, Fives Stein and others. MMK’s long-term modernization program is aimed at meeting the growing demand and requirements of Russian and international
customers and raising the level of production of value added products.
As a leading Russian steelmaker, MMK has been recently pursuing a number of key strategic goals across car-making, shipbuilding, pipe-making and construction industries.
MMK steel for carmakers Scores of foreign carmakers have opened plants in Russia in the past decade, hoping to cash in on a market that is on track to become Europe's largest. Russia may become the world's sixth-largest auto market by 2020, with annual sales of 4 million vehicles, the Boston Consulting Group said in a 2011 report. The nation is currently the 10th largest, according to the consulting firm. Most carmakers operating in Russia have signed deals with the government, committing to invest heavily in Russia and increasingly localize their production in this country. Among those companies are General Motors, Ford, Volkswagen, Renault-Nissan, Fiat and other global majors.
MMK has committed to use this opportunity by investing about $1.5 bn in construction of a top-notch cold rolling complex with 2 million tons per annum capacity of finished products. It has been designed to primarily produce high-quality cold-rolled and galvanized steel to be used in the production of exterior and interior car parts, as well as for use by home appliance manufacturers and the construction industry. The cold-rolling complex complete with Mill 2000 was commissioned in July 2012. This facility utilizes the most advanced technologies available in the industry today (supplied by the German company SMS Siemag).
In the end 2011, specialists from the Ford Motor Company conducted an independent audit at MMK to evaluate the process of rolled products manufacturing. Upon the completion of the audit, the inspectors noted that MMK is potentially prepared to act as a certified supplier to Ford Motor Company. Among other factors, the auditors have supported the statistical methods of SPC control that are being introduced at MMK to assess the quality of technologies used at the plant’s key production lines.
One of MMK’s strategic goals is to become the leading supplier of steel products to the Russian automotive industry. To this end, the company has developed a sufficient range of steel products for auto applications to offer steel grades unmatched by the company’s domestic peers.
Building the fleet MMK has long been a partner to Russia’s shipbuilders, and is one of the largest suppliers of steel products to the Russian shipbuilding sector. Following the launch of Mill 5000 in 2009, steel plate produced by the mill was certified by the Russian Maritime Register of Shipping, the Russian River Register, as well as Norway’s Det Norske Veritas and Germany’s Germanischer Lloyd.
In November 2011, the Russian United Shipbuilding Corporation (USC) and MMK signed a strategic cooperation memorandum targeting joint scientific and technical projects aimed at developing existing and new types of products for shipbuilding, and optimizing the logistics chains of steel products delivery from MMK to USC production sites.
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