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Severstal & McKinsey to Evaluate Production Efficiency of Basic Oxygen Steel

Source: www.gulfoilandgas.com 6/10/2014, Location: Asia

The Cherepovets Steel Mill (“CherMK”), one of world’s largest integrated steel producers and part of the Russian Steel division of OAO Severstal, one of the world’s leading steel and steel-related mining companies, announces the launch of a project in conjunction with McKinsey, the global consultancy, to improve efficiency of basic oxygen steel production.

Sergey Toropov, CEO of Severstal Russian Steel, commented: “Our steelmaking business is where we achieved the greatest cost efficiency progress in 2013; we were able to save more than 2 bln rubles across our steel units, twice as much was achieved in 2012. We are continuing to deliver efficiency enhancements and achieving our goal of being the most efficient steel producer amongst our peers. Severstal is well equipped to achieve this goal having maintained its position as a leader in copper production costs for two consecutive years.”

The company will make a comparative analysis of CherMK’s current basic oxygen steel production performance indicators against industry best practices. The results will highlight areas for improvement and the company will identify key initiatives to enhance its processes.

McKinsey are already processing primary data. Once the results are available, a set of recommendations will be made to improve the efficiency of basic oxygen steel production.

CherMK specialists from different departments including costs, maintenance, quality, power engineering and HR are working on the project alongside McKinsey consultants.

· OAO Severstal has worked with McKinsey for more than 15 years. McKinsey was involved in the development of[Severstal’s procurement optimization programme.

· Severstal saved more than 70.1 mln rubles between 1999 and 2001 following a survey project by McKinsey and a cost reduction programme jointly developed by the two companies. McKinsey’s consultants also contributed to the development of Severstal’s Business System which was launched in 2009.

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