EVRAZ Q4 2013 and FY2013 PRODUCTION REPORT

evrazEVRAZ plc (LSE: EVR) today releases its operational results for the fourth quarter of 2013 and full year of 2013.

FY 2013 OPERATIONAL HIGHLIGHTS:

  • Consolidated crude steel production and gross output of steel products increased by 1% and 2% respectively, despite suspensions in Europe and North America with Russian, Ukrainian and South African operations contributing to the overall growth
  • EVRAZ NTMK implemented the PCI project allowing for the sustainable reduction of operating costs
  • Production at EVRAZ ZSMK rail mill recommenced following the successful completion of the major modernisation project and the Company obtained all necessary approvals for commercial production of head-hardened rails
  • EVRAZ suspended operations at EVRAZ Claymont and EVRAZ Palini e Bertoli as part of the group wide optimisation plan
  • Production of saleable iron ore products decreased by 1% in 2013 as a result of the ongoing restructuring programme within the iron ore business which resulted in the disposal of EVRAZ VGOK and certain mines of Evrazruda
  • The coking coal business of the Group increased the output of of raw coking coal in 2013 by 22% (on a pro-forma basis) with both key assets Yuzhkuzbassugol and the Raspadskaya coal company contributing significantly to the growth
  • EVRAZ commissioned a new coking coal mine – Yerunakovskaya VIII, which will be a large scale and low cost operation
  • EVRAZ continued the integration of the Raspaskaya coal company following its acquisition in January 2013
  • Although underlying demand for most steel product groups in Russia and North America was strong, average selling prices for all key product groups continued to soften over the year in line with global benchmarks

Q4 2013 OPERATIONAL HIGHLIGHTS and RECENT DEVELOPMENTS:

  • Consolidated crude steel production was broadly flat in Q4 2013 vs. Q3 2013
  • Output of gross steel products remained unchanged vs. Q3 2013 supported by export demand for Russian made semi-finished products and a strong order book for tubular products in North America while the output of construction products showed seasonal decline
  • Share of finished steel products decreased to 69% in Q4 2013 vs. 75% in Q3 2013 due to seasonal factors and redistribution of production at the Russian steel mills towards semi-finished products
  • Output of iron ore products decreased by 10% in Q4 2013 as a result of the disposal of EVRAZ VGOK in October 2013
  • Consolidated raw coking coal output grew 5% driven by increased mining volumes at Yuzhkuzbassugol, and despite two of the mines of the Raspadskaya coal company being closed for repositioning of longwalls
  • In October 2013, EVRAZ sold the Gramoteinskaya steam coal mine, which was adjudged to be a non-core operation for EVRAZ’s coking coal business
  • In November 2013, EVRAZ was awarded with a compliance certificate for head-hardened rails with lengths of up to 100 meters, allowing the Company to launch commercial production. The first batch of 10 thousand tonnes of 25-meter head-hardened rails was shipped to the Russian Railways in December 2013
  • In December 2013, EVRAZ announced the completion of construction works and commencement of hot tests at the light-section rolling mill in Kostanay, Kazakhstan, with a nominal capacity of 450 thousand tonnes of construction products, which are currently in strong demand in the Central Asian markets
  • In December 2013, the Raspadskaya coal company launched a new longwall at its flagship Raspadskaya underground mine, being an important milestone in the programme of mining volume growth for 2014
  • In December 2013, EVRAZ announced the sale of a number of Evrazruda’s loss making iron ore assets and utilities companies located in the Republic of Khakassia and the Kemerovo region as part of its iron ore asset portfolio optimisation programme
  • Average selling prices for EVRAZ’s key steel product groups changed responding to global steel and local market demand, changes in product mix and seasonal factors
  • Prices for iron ore products slightly increased in line with global benchmarks
  • Average quarterly prices for Russian-produced coking coal concentrate are more resilient to price movements globally and remained broadly at the level of Q3 2013

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