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20 April 2011

New growth strategy for Duferco-NLMK JV’s industrial activities

During the past months, the SIF (Steel Invest & Finance) management team have been working on a strategic plan for the future. Today, the shareholders presented their new plan. NLMK and Duferco will each take over the facilities associated with their area of development. This decision presents businesses within exciting prospects for progress.

At the end of 2006, NLMK and Duferco became partners in SIF. Their goal was to implement an industrial strategy based on developing production capacity and increasing the proportion of high added-value products.

To achieve this, the shareholders implemented an extensive strategic investment programme. More than €1 billion were invested by NLMK and Duferco between January 2007 and December 2010, despite the 2008 financial crisis:

- €440 million for major investment in the future of the industrial facilities.

- €560 million to safeguard the organisation’s financial liquidity, which was badly hit by the slump in the market.

By injecting such large amounts of money, in the midst of a financial crisis, the shareholders demonstrated their confidence in the industrial facilities of the Joint Venture (JV), as well as their desire to implement a longterm strategy. As circumstances have continued to be difficult, the shareholders have decided to completely review SIF’s organisation to consolidate the position of its businesses.

Focus on core business to safeguard the future When the JV was created, the European and American markets were working at full capacity. Four years later, the global steel landscape has changed considerably : these markets are now working at around 75% capacity.

In this context, the JV partners have decided to divide their activities in line with their individual strategies.

Duferco is a family owned Company, well known in the long product market, boasting a flexible, responsible approach to business. Duferco is first and foremost a trader with extensive experience in buying and selling steel and raw materials.

NLMK specialises in flat products, a high volume market. The Group is one of the most successful steel companies in the world. NLMK manufacture slabs at a low cost, and its integrated supply chain includes raw materials, in logistics and transport.

NLMK and Duferco are consolidating their individual development by integrating activities with potential synergies within their respective Groups. This new industrial plan boasts a number of advantages to help the Groups develop their markets and offer a great deal of potential for progress at each production site.