PAO Severstal (SVST)
Severstal announces 2020 capital investment programme
31-Jan-2020 / 11:10 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
Severstal announces 2020 capital investment programme
31 January 2020, Moscow - PAO Severstal ("Severstal"; "the Company"), one of
the world's leading vertically integrated steel and steel-related mining
companies, today announces its capital investment programme for 2020.
Severstal plans to invest approximately 110.5 billion rubles in 2020,
focusing on the key areas of the Company's updated strategy as disclosed
during its Capital Markets Day in November 2019 - providing a superior
client experience, maintaining cost leadership and embracing new
opportunities. However, as previously announced, should the market situation
become less favourable, the Company maintains the flexibility to reduce our
planned capital expenditure by up to 30-40%, by postponing those projects
that are the lowest priority.
Severstal Russian Steel
Severstal will invest approximately 73.4 billion rubles into its Russian
Steel division in 2020, of which 56.4 billion rubles will be allocated to
development projects.
The most significant projects in 2020 will be the construction of the new
Blast Furnace #3 (expected to commence operations in 2020), the Coking
Battery #11 (to be launched at full capacity in 2022, replacing batteries #8
and #9) and the Flat Steel Production Development Programme, aimed at
improving the Company's product mix. All of these projects involve the use
of cutting-edge technologies, which will ensure the Company maintains highly
innovative and efficient production processes as well as best-in-class
environmental performance.
Severstal Russian Steel will invest 17 billion rubles in maintenance,
environmental and health and safety projects in 2020.
Severstal Resources
Severstal will invest approximately 30.9 billion rubles in its Resources
division in 2020, of which 12.7 billion rubles will be invested in asset
development.
One of the main investment areas within Severstal Resources is the
development of the Yakovlevskiy mine, which will receive investment of 6
billion rubles in 2020. This will enable the Company to increase its
production capacity to 5m tonnes by 2023.
Other significant investment projects include restoring production volumes
at Vorkutaugol, where the Company is planning to increase production of
coking coal concentrate to 6 mln tonnes by 2023, the construction of a
conveyor belt for run-of-mine transportation at the Tsentralniy pit, and
increasing pellet quality by introducing lime hydrate at Karelskiy Okatysh.
Alexey Kulichenko, CFO of Severstal, commented:
"Severstal has launched a major corporate transformation programme, which is
already allowing us to be one of the most effective steel companies
globally. Therefore, most of our capital investment programme will fund
development projects focused on achieving a significant long-term cost
advantage in basic steel products, offering our clients unique, complex
solutions, growing our steel volumes, and improving our vertical
integration. Severstal will continue focusing on high return projects
(minimum internal rate of return of 20% for every investment project).
At the same time, taking into account the extreme volatility of today's
markets, we prefer to maintain a flexible approach towards our capital
investments and, should the market situation become less favourable, we
could potentially cut up to 30-40% of our planned CAPEX, postponing our
lower-priority projects to guarantee our financial stability. I would also
like to remind our investors that, in order to maximise investor value,
Severstal will be using Adjusted FCF to calculate dividends during the
intensive stage of our investment programme. Any CAPEX that exceeds the
base-line level of $800m will not be taken into consideration when
determining the level of the dividend payout."
The amounts are subject to adjustments dependent on FX changes. The majority
of the Company's expenditure in 2020 will be in rubles.
For further information please contact:
Investor Relations
Evgeny Belov
T: +7 (495) 926-77-66
evgenii.belov@severstal.com
Public Relations
Anastasia Mishanina
T: +7 (495) 926-77-66
anastasia.mishanina@severstal.com
***
P?? Severstal is one of the world's leading vertically integrated steel and
steel related mining companies, with assets in Russia, Latvia and Poland.
Severstal is listed on RTS and MICEX and the company's GDRs are traded on
the LSE. Severstal reported revenue of $8,157 million and EBITDA of $2,805
million in 2019. Severstal's crude steel production in 2019 reached 11.8
million tonnes.
Severstal is looking for startups and innovative companies. You can get
acquainted with the directions of interest and leave a request on the
website innovations.severstal.com [1].
www.severstal.com [2]
ISIN: US8181503025
Category Code: UPD
TIDM: SVST
LEI Code: 213800OKDPTV6K4ONO53
Sequence No.: 43889
EQS News ID: 965161
End of Announcement EQS News Service
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(END) Dow Jones Newswires
January 31, 2020 03:10 ET (08:10 GMT)
