Russia: signature of a new major contract with Severstal

Metallurgy is one of the main industrial sectors of Russia contributing significantely to the country’s economy. After a slowdown at the end of 2008 and at the beginning of 2009, an average of 6% per year growth in volume is expected over the next 4 years to exceed 80 million tonnes of steel production output in 2014.

In this context, after the successful start-up in 2007 of the largest Air Separation Unit in Russia at Severstal integrated steel mill in Cherepovets, the Air Liquide Group announces the expansion of its partnership with the Russian steel major through the signature of a new contract for outsourcing of industrial gases in Cherepovets.

The production capacity of the new unit, which is scheduled to start-up at the end of 2012, will reach 2,000 tonnes per day of gaseous oxygen. It will also produce nitrogen, argon and rare gases. The new state-of-the-art Air Separation Unit, designed by Air Liquide, will be built and operated by Air Liquide Severstal (ALS), the joint venture created in 2005 in which Air Liquide holds 75% and Severstal 25%. This new unit, based at Cherevopets, will bring the total production capacity of ALS on this site to 5,000 tonnes per day.

The global investments will amount to €50 million.

Guy Salzgeber, member of the Air Liquide Group Executive Committee, Vice-President North and Central Europe, declared: “We are very pleased to see that, after more than two years of operation in Cherepovets, the cooperation based on mutual long-term trust between our two companies is now being reinforced. This new contract is symbolic of our development potential in this expanding area.”

Anatoly Kruchinin, a member of the JSC Severstal Administration Board and Managing Director of the Cherepovets steelwork company Severstal, commented: “We continue our partnership within the frame of current activities of joint venture ALS. After a successful experience of the first project, we are confident that Air Liquide is a responsible and reliable partner with whom we have efficient collaboration. The new project will allow us to implement sequentially converter steel production development program. ALS applies the latest technologies for gas production, paying close attention to the environment and industrial safety. That makes this project even more significant”.

OAO Severstal is an international metals and mining company, with a listing on the Russian Trading System, Moscow Interbank Currency Exchange and the London Stock Exchange. Incorporated in 1993, the company focuses on high value added and unique niche products and has a track record of acquiring and operating high-quality assets in North America and Europe. Severstal owns mining assets in Russia and in the US, thus securing its supplies of raw materials. Its enterprises are located in Russia, Ukraine, Kazakhstan, United Kingdom, France, Italy, United States and Africa. In 2009, Severstal produced 16.7 million tones of steel. Revenues were $13.05 billion and EBITDA was $844 million.