Investor Presentaiton
Low Cost Vertically Integrated Producer
Key Considerations
Structural cost advantages over major international competitors:
Russia is one of the lowest cost regions for steel production.
Fully vertically integrated seamless pipe production (upstream and
downstream operations) in all divisions.
Almost self-sufficient in steel billets.
Both Russia and North American businesses have benefitted from
significant synergies and complementarily during the past three
years since the acquisition of IPSCO.
Ability to generally pass cost of steel increase to customers albeit
with some time lag.
Vertical Integration in Seamless Business
Raw Materials Costs can Generally be Passed Through to
Customers
Cost of Sales Structure (2012)
Repairs and Other
maintenance
Energy and
utilities
8%
Staff costs
14%
3%
Note: Excluding depreciation and amortisation
Source: TMK IFRS accounts
7%
Raw materials
and
consumables
68%
TMK
Source: TMK
⚫ Preparation scrap
1. Melting
2. Treatment of steel
in ladle furnance
3. Vacuum degassing
(applicable for high grades
of steel)
4. Continuous steel
casting. Production
of billets
5. Cutting of billets
+ Preparation
of deoxidizers,
materials and
ferroalloys
Charging of steel
making furnance
6. Cooling and
marking of billets
7. Billet heating
8. Cross-rolling piercing 9. Hydrodescaling
10. Elongating
11. Stretch.
reducing mill
12. Cooling
13. Batch sawing
in circular furnance
14. Heat treatment
15. Quality control
16. Threading,
17. Coupling screw-on
18. Hydrostatic Testing
thread inspection
and drifting
19. Protectors screw-on
and coating
application
20. Storage
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