Memo from Moscow

Steel News from Russia, Ukraine and other CIS States

Steel in Byelorussia, August 2009

The Belarus metallurgical sector includes four enterprises, all of which are now part of the BMZ Group. The four plants are:

• The largest mini-mill 'Byelorussian Steel Works'
• The Rechitsky hardware plant
• The Mogilev Metallurgical Plant (a welded pipe producer)
• The Gomel Casting plant – Centrolit.

The total number of workers in metallurgy is ~40,000. The metallurgy of Belarus in terms of the volume of production ranks as number four in the CIS steel sector, after Russia, Ukraine and Kazakhstan.

The Byelorussian Steel Works - BMZ - is a Republican Unitary Enterprise located in Zhlobin, Belarus and accounts for about 95% of total national steel production. The plant was built and erected under a turnkey contract by leading EU steel plant companies, including Voest-Alpine and Danieli. Plant start-up took place on 15 October of 1984. The Zhlobin mini-mill is modern according to EU technological standards.

BMZ consists of four production facilities: steel melting, steel rolling, steel cord and wire production and pipe-rolling. The plant also includes number of auxiliary divisions and an administrative division. The steel melting division includes a scrap preparation shop and two electric melt shops. The rolling production unit consists of a section rolling shop with three rolling mills – two section mills 320/150 and medium section rolling mill 850. Steel cord and wire production is represented by three steel cord and wire shops, a powder metallurgy unit and a die workshop. Pipe production is a separate shop.

At present, BMZ produces more than 2 million tonnes of steel products per year, included billets, long rolled products, rebars, seamless pipe, wire rod, and steel cord for tyres. In Belarus there are a few large machine-building enterprises, as well as heavy truck and automobile firms, and agricultural machine producers that use BZW's steel products. Belarus imports flat products from Russia (Severstal, NLMK, MMK, Urals steel especially) and Ukraine (including Zaporozhstal, Ilyich, Donetsk) at about ~0.8 mt per year. Also, about 440,000 t of long products was imported last year from Russia and Ukraine.

Readers should note that Belarus has ownership of the Okolovsky iron ore deposit. This comprises some 500 mt of iron ore quartzite, but is ~30% Fe content only. There is a plan in a future to organize production of pellets and DRI for supply to BMZ, supplemented with scrap feed.

In the last two years the BMZ Group produced ~2.2 mt steel products per year with annual turnover at about 3 billion Rubles. Profitability was more than 20%. In 2007 crude steel production was ~2.4 mt, with rolled product output at 2.2 mt, steel pipe production of 143 kt, wire rod 150 kt and tyre cord output ~87 kt.

According to the Byelorussian National Statistical Committee Belstat for the first six months of 2009 BMZ decreased production by 2.4% in compare with the same period of 2008 [a markedly smaller production decline than seen in other parts of the CIS]. In June 2009 the value of production was down by ~13.9% in compare with June 2008. For the first half of 2009 BMZ produced 1.330 mt of crude steel (less by 1.3% compared with the first half of 2008). Rolled products production increased for this period by 1.9% up to 1.260 mt, but about 58.6% of monthly production volume was put into inventory. Production of steel wire rod increased by 31.6%, and of steel pipe by 45.7% compared with the same period in 2008. Profitability for this period was about 5-6%, only.

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