Group mmk. History of MMK: from the first five-year plans to the present day JSC Magnitogorsk Metallurgical Plant

OJSC "Magnitogorsk Metallurgical Plant" - the largest manufacturer in our country in the field of ferrous metallurgy. The company owns the largest metallurgical plant in Russia, located in the Chelyabinsk region.

The company is controlled by structures close to top management. As of July 1, 2009, 87.26% of shares of OJSC MMK are owned by the nominal holder LLC Investment Company Settlement and Fund Center, 9.71% - CJSC ING BANK (Eurasia), and a little more three percent - in the hands of minority shareholders.

The main production enterprise of the group is the Magnitogorsk Iron and Steel Works, which, together with a number of related companies, provides a full range of operations from the extraction and preparation of iron ores to deep processing of steel and pig iron. Meanwhile, the enterprises of the group are provided with raw materials by the forces of companies that are not part of the Holding. Raw materials are purchased, including from Mechel OJSC.

The group of companies traces its history back to 1932, when the first blast furnace was launched at the plant in Magnitogorsk.

A) enterprises providing the technological process at Magnitogorsk Iron and Steel Works:

LLC NPO Avtomatika;
... LLC "Motor Transport Department";
... LLC "Bakalskoe Ore Management";
... OOO Magnitogorsk Service Center;
... JSC "Magnitogorsk Cement and Refractory Plant";
... CJSC "Mechano-repair complex";
... LLC "Minimax";
... LLC "MMK Trading Stroy";
... LLC "MRK-Repair";
... Ogneupor LLC;
... LLC "Remput";
... JSC "Russian Metallurgical Company";
... CJSC "Construction Complex";
... Shlakservice LLC;
... LLC "Electroremont";

B) enterprises for deep processing of ferrous metals:

JSC "Interkos-IV";
... OJSC "Magnitogorsk hardware and calibration plant" MMK-METIZ ";
... OJSC "MMK-Profile-Moscow";

C) companies providing sales of the holding's products:

JSC "Bashmetalloptorg";
... LLC "Trading House MMK";
... LLC "Trading House MMK-Moscow";
... LLC "Trading House MMK-Ural";

D) financial and investment companies:

LLC "Region";
... LLC "Investment company" RFTs ";
... LTD " Management Company RFTs-Capital.

The main types of products manufactured by the company:

Development strategy OJSC "MMK" aims to increase security manufacturing enterprises the group of its own raw materials through the acquisition of rights to develop new deposits and the construction of mining enterprises, as well as through the acquisition of companies in the mining industry; for the constant introduction of new technologies and the modernization of existing facilities. In 2007, the plant adopted an investment program, according to which, by 2013, it is planned to allocate more than $ 10 billion for the modernization of production. In addition, the MMK Group strives for closer cooperation among the enterprises of the Holding in order to increase efficiency.
In 2008, the gross revenue of the Magnitogorsk Iron and Steel Works group amounted to RUB 225,972.4 million, and pre-tax profit amounted to RUB 15,602,800 thousand. The enterprise produced 12 million tons of steel and 11 million tons of metal products in 2008.

The firstborn of the five-year plans, the country's armor shield, the giant of the Soviet industry, the flagship of the domestic metallurgy, the "trendsetter" in the metallurgical industry - this is all about MMK. His records conquered the whole world: his very appearance from scratch in the shortest possible time became the main achievement.

Reference Information:

• Company name: PJSC "MAGNITOGORSK STEEL WORKS";
• Legal form activities: public joint-stock company from May 26, 2017;
• Kind of activity: production and sale of ferrous metallurgy products;
• Revenue for 2016: $ 5,630 million;
• Beneficiary: Victor Rashnikov, Chairman of the Board of Directors;
• Number of personnel for 2016: 18,077 people;
• The site of the company: http://mmk.ru/

In February of this year, the Magnitogorsk Metallurgical Combine, the city-forming enterprise of Magnitka, one of the most famous, constituting the industrial heritage of the USSR, received congratulations on its anniversary. Exactly 85 years ago, on February 1, 1932, the first blast furnace produced the first cast iron. This day was considered MMK's birthday. There was not a single person in the Soviet Union who did not know about this firstborn of the first five-year plans and the symbol of Soviet industrialization.

The history of MMK (Magnitka is a more familiar name) is a real "phenomenon" in the history of the country. The deaf Ural steppe - and the giant of the Soviet industry, which rose from scratch in record time, solely thanks to the dedication of thousands of first builders. That was incredible. No one in the world believed that this was possible. As they did not believe later, when the combine took only a month to establish the production of armored steel for the country at war with the Nazis.

“Since the launch of the first blast furnace at Magnitka to the present day, MMK has mined over 430 million tonnes of ore, produced more than 700 million tonnes of sinter, 614 million tonnes of pig iron, 791 million tonnes of steel and 633 million tonnes of commercial metal products. If all the steel of Magnitka, smelted over 85 years, is presented in the form of a sheet with a thickness of 0.5 mm, then they could cover an area of \u200b\u200babout 200 thousand square meters. km. This is more than the territory of countries such as Belgium, the Netherlands, Austria and Switzerland combined. "

Metal from Magnitka to this day serves in DneproGES, Baikonur, gas pipelines and oil pipelines. MMK has always remained and remains the flagship of the domestic ferrous metallurgy and is proud of people who have repeatedly demonstrated their unyielding character throughout the history of the plant's existence.

How the Magnetic mountain conquered

Both the city of Magnitogorsk and the plant owe their birth to that mountain (and the name too). The unique accumulation of iron ores in a small area, according to the first estimates of experts, amounted to about half a billion tons of high-grade iron ore with an iron content of up to 70%, and most importantly, it was shallow, and in places came to the surface.

They say that the Magnitnaya fortress, Orenburg governor I.I. Neplyuev founded in 1743 solely for the purpose of protecting the mountain from unauthorized attempts to extract ore. In the vicinity of the mountain, Pugachev fought with the tsarist army, and the fortress itself, by the way, even served as a base for the Pugachev rebels.

When, a century later, the government commission headed by D.I. Mendeleev, surveyed the mountain in 1899 and made the necessary calculations, the estimated ore reserves amounted to 1 billion poods, although a little later, more detailed calculations made it possible to triple this value.

The same Dmitry Ivanovich repeatedly pointed out that it is much more expedient to organize the production of pig iron using coal as the main fuel for metallurgical production. He said that it was very important to build large blast furnaces capable of smelting pig iron much cheaper using mineral fuel delivered from Western Siberia, where deposits were discovered. coal... The Siberian railway was very close. For the iron business in the Urals, this could become a real impetus.

Only the ineradicable Russian bureaucracy did not allow this idea to be implemented. Until the October Revolution itself, it was not possible to combine Siberian coal and Ural iron ore.

In May 1925, in Sverdlovsk, they began designing the Magnitogorsk plant near Magnitnaya Mountain, which, according to the plans of the young Soviet government, was destined to become the country's largest metallurgical plant. Construction began on the territory of the Chelyabinsk Region four years later.

Even the most difficult conditions in which the first builders of Magnitka had to work did not prevent them from starting ore mining already in August 1929. Ore from the Magnitnaya Mountain was sent to the Ural factories.

By the beginning of 1931, the blast-furnace, open-hearth and rolling shops had already been erected, a little later a refractory shop was put into operation, the 1st blast furnace was put into operation, the first current was supplied by the central power plant, and on February 1, 1931, Magnitka produced the first cast iron. Her birth took place. Blast furnace # 2 produced pig iron in the summer.

The plant developed rapidly. Only one year has passed, and two more blast furnaces, four open-hearth furnaces have already been launched. Steel is smelted at Magnitogorsk. And with the launch of the 500 section rolling mill in 1934, the plant became an enterprise with a complete metallurgical cycle.

World history has never known examples of the construction of such a grandiose industrial facility in such a short time, when the technical capabilities are minimal.

This largest domestic metallurgical enterprise was destined to become a real armor shield during the Great patriotic war... Geographic remoteness from hostilities also contributed to this.

From the first days of the war, MMK lived and worked for the front, for victory.

To carry out complex military orders, it took a radical restructuring of production. The metallurgists had to adapt the furnaces for smelting armor steel. All over the world, this was done in low-tonnage open-hearth furnaces with a "sour hearth", so this technology was now urgently mastered at MMK. A month after the start of the war, they were able to obtain the first armor steel. Moreover, the residents of Magnitogorsk created a new technology for its smelting in large open-hearth furnaces with a main hearth, which literally made a revolution in the metallurgy of high-quality steel.

The shop for the heat treatment of armor was also erected at an accelerated pace; it received the first armor plates already in September 41st.

Magnitka became the country's military arsenal, also producing shells, hand grenades, parts for rockets and other defense products.

New production units were built and commissioned:

• open-hearth furnace No. 19;
• mill "2350" from Zaporozhye;
• coke oven battery;
• blast furnaces No. 5 and No. 6.

We can safely say that over the years, a whole plant with a complete metallurgical cycle has been built and mastered at Magnitka. During the war years, every third shell was produced from Magnitogorsk steel, the armor of every second Soviet tank.

And in the post-war years ... the "trendsetter" in the iron and steel industry

Steel production continued to grow at a rapid pace. During the first twenty post-war years, MMK put into operation 14 open-hearth and 4 blast furnaces, 6 rolling shops and the same number of coke oven batteries.

Magnitka was even in many ways a "trendsetter" in the industry:

In the mid-1970s, the plant produced 15 million tons of steel and 12 million tons of finished rolled products per year. Production remained at about the same level for several more years. And in 1989, Magnitka reached a record figure of 16 million tons of steel per year.

Into a market economy

The collapse of the Union, entering the market for the plant could not but have negative consequences. In 1992, the Magnitogorsk Combine becomes a joint stock company. the main objectivewhat stands before him is the reconstruction and modernization of production. There is no other way. Fixed assets are worn out, technologies are already outdated by that time. The converter complex alone fully met the requirements of modern metallurgical technologies. And all the same, the production volumes by the mid-90s were far from record-breaking. Why MMK, there is an economic recession throughout the country, and most of the large consumers of metal are on the verge of stopping. First of all, this concerned the machine-building and defense complexes.

In the late nineties, MMK began a grandiose recovery.

1. A large-scale investment program aimed at technical re-equipment was developed.

   It took a whole fifteen years for the plant to start operating modern production facilities, which make it possible to produce products that can compete in the domestic and foreign markets.

   During this time, metallurgists abandoned the open-hearth method of steelmaking, all steelmaking capacities were renewed, the section rolling production was completely reconstructed, galvanized steel and polymer-coated steel are produced on high-performance modern units.

   The measures taken have significantly improved the environmental situation in the city.

   1997 was a turning point for Magnitogorsk. The plant achieved an increase in steel production, and in the following years, the volume of production gradually increased.

2. The implementation of the integration policy became another direction in which the plant developed. Since 2002, MMK has owned controlling stakes in the calibration and hardware and metallurgical plants in Magnitogorsk. Due to their merger, the country's hardware industry acquired a large OJSC “Magnitogorsk hardware and calibration plant“ MMK-METIZ ”.

MMK does not stop expanding and creating its own resource base due to the entry into the Group of the Belon coal company and Profit, a company specializing in the supply of scrap metal.

In addition, the plant is implementing some of its projects outside of Magnitka. A stamped auto components plant was built in Kolpino, and a metallurgical complex MMK Metalurji was built in the Turkish Republic.

Any of the projects implemented by MMK is another step towards strengthening competitiveness and sustainable development.

"In accordance with new edition Of the Charter from June 5, 2017 complete company name MMK in Russian is the Public Joint Stock Company Magnitogorsk Iron and Steel Works, the abbreviated corporate name is PJSC MMK; the full corporate name of the joint stock company in English is Public Joint Stock Company Magnitogorsk Iron & Steel Works, the abbreviated corporate name is PJSC MMK. "

MMK Group is a highly efficient Russian metallurgical company, which occupies a leading position among the enterprises of the industry. It is one of the thirty largest steel producers in the world, ensuring compliance with high environmental and health and safety standards. MMK does not give up its positions in the domestic market of rolled metal producers either, having consistently remained in the top three in recent years with a production volume of 17.5% in the company with NMLK (17.5) and Severstal (15.3). It is the only manufacturer of tinplate in the country.

OJSC "Magnitogorsk Metallurgical Plant" is a modern highly profitable enterprise, one of the 20 largest steel companies in the world. It is the largest metallurgical complex in Russia with a full production cycle. OJSC MMK produces the widest range of metal products among enterprises Russian Federation and CIS countries. Magnitka is the only Russian manufacturer of high-quality cold-rolled strip and tinplate. In terms of sales volumes, OJSC MMK has the best performance among metallurgical enterprises in Russia. OJSC MMK is located in the very center of Russia, which determines the geography of sales to both the domestic and foreign markets. Magnitogorsk Iron and Steel Works exports about 60% of its products. The export geography includes the states of Southeast Asia, the Middle East, Africa, Eastern Europe and the CIS (the largest consumers of MMK metal in the near abroad are Belarus, Ukraine and Kazakhstan). Long-standing partnerships link OJSC MMK with enterprises and companies from the USA, Canada, Finland and Italy.

2002 was a special year for the metallurgists of Magnitka - an anniversary year. And he, like the previous ones, was marked by hard work at all redistributions of the metallurgical cycle and decent results. The company continued its dynamic development. Over the year, production growth averaged 7%. The final products - finished rolled products - were produced 9.7 million tons, 11 million tons of steel were smelted, cast iron - 9.3 million tons, 5.3 million tons of coke, 9.5 million tons of sinter were produced. The products sold for 60 billion rubles against 47 billion in 2001. The profit was about 12 billion rubles against 8 billion in the previous year.

The total number of employees in the existing metallurgical holding as of December 2002 amounted to 68189 people (including their family members, about 200 thousand people, that is, almost half of the city's residents), of which 35102 people are employees of OJSC MMK, 4426 people work at the gauge, 43,921 people - at hardware and metallurgical plants, 24,279 people - in other subsidiaries and institutions (1).

As a result, both domestic and foreign specialists are unanimous in the opinion: Magnitogorsk Iron and Steel Works today is the leading enterprise in domestic metallurgy. Magnitka's total tax deductions last year amounted to almost four billion rubles. The plant has no tax arrears. It is quite natural that the tax authorities issued a certificate of trust to the company.

The success of recent years in the labor collective of the Magnitogorsk Iron and Steel Works is associated with the arrival in 1996 of a new team of managers headed by Viktor Filippovich Rashnikov, who passed his work way at the plant from worker to general director. Today cEO OJSC MMK also holds the post of president of the club of the best managers of Russia, which is a confirmation of his managerial skills.

According to the directors and members of management teams, the plant has undergone major changes in the organizational and structural plan. The most dramatic changes have affected sales, marketing, supplier services, financial and economic services.

In management such a large company, as OJSC MMK, it is worth highlighting:

Manufacturing control;

Financial and economic management;

Management of commercial matters;

Investment and strategic management;

General Issues Management;

Personnel Management;

Construction management.

Each block is headed by a director or deputy general director. However, for all the importance and necessity of structural changes essential condition MMK's success is based on the professionalism of its managers and competent personnel policy.

Personnel policy is an integral part overall strategy development of OJSC MMK. It is in line with its corporate ideology, culture and is aimed at ensuring the long-term competitiveness of OJSC MMK in the global steel market.

The leaders at all levels of the management hierarchy act as ideologists and guides of personnel policy. Direction directors, heads of departments, chief specialists, managers structural units together with the Human Resources Department, they participate in the selection, assessment and training of the management personnel reserve.

The personnel policy of the enterprise is built in accordance with the following priorities.

Achievement of international standards in all areas of activity.

Staffing for the production and social development of the enterprise at all levels with highly qualified personnel.

Application of new technologies in personnel development and work with personnel.

Advance development of the personnel potential of OJSC MMK in accordance with the modernization of production and improvement of the management system.

Investing personnel in line with the increasing requirements for skills, workplace and production.

Focus on social protection of OJSC MMK personnel and pensioners, their interests and health.

This personnel policy has paid off. Magnitogorsk Iron and Steel Works won the 2002 competition " Russian organization high social efficiency "in the nomination" Personnel qualifications, the system of their training and retraining. " On this occasion, Deputy Prime Minister of the Russian Federation, Valentina Matvienko, said: “The fact that Magnitka was awarded a first degree diploma in this competition suggests that you are keeping up with the times. Today, enterprises investing in the main thing - in human capital, in the education and professional development of workers, the creation of working conditions, social protection systems, as a rule, receive a double return from production, because social investments have a very serious impact on the economic efficiency of the enterprise. Today it is obvious that the government alone cannot cope with the accumulated heap of social problems. Experience shows that they can only be solved with the cooperation of the authorities, business and society through the creation of a so-called system of social partnership. Without it, we will never build a welfare-oriented market economy. Therefore, I welcome the efforts that the Magnitogorsk Iron and Steel Works is making to improve the social climate at the enterprise, taking care of veterans and youth. I believe that thus the management of the plant looks at the future of its enterprise, not trying to make a profit at any cost, not dooming the enterprise to stagnation in the future ”(2).

The position of the management of the metallurgical giant remains unchanged: “Time has changed, and life itself has changed with it,” says V. Rashnikov, General Director of OJSC MMK. - But the plant and the city continue to remain a single whole, despite the predictions of skeptics and all kinds of critics. The work of the plant is unthinkable without people rushing to its shops every day. But even its best results lose all meaning if they are achieved for the sake of an abstract benefit that does not benefit people. The construction of hospitals, schools, roads and housing, the maintenance of Palaces of culture, sanatoriums and children's health camps, the creation of a whole system of events designed to improve the lives of Magnitogorsk residents - the capital invested in all this, the capital that works for people and for the sake of people cannot but pay off handsomely ... For the plant there are no “friends” and “aliens” in Magnitogorsk, because today there is no family in it, whose history in one way or another would not be involved in the history of the achievements and victories of MMK ”(16).

OJSC "Magnitogorsk Iron and Steel Works" is a city-forming and socially oriented enterprise.

The social policy of the Magnitogorsk Metallurgical Combine is a vast layer, a huge field of application of forces. It includes several areas of activity at once. This is the creation of conditions for employees and members of their families to address all issues of life, and targeted social support for veterans, disabled people, large families and other low-income categories, and the provision of facilities social sphere OJSC MMK provides services to residents of the city and surrounding areas, and sponsorship, and charitable assistance to public associations, various organizations of education, health care, culture, sports and other spheres of public life, and participation in the development of the environment.

Until recently, Magnitogorsk was one of the cities with the most unfavorable ecology. But now a lot has changed. This happened primarily because the plant realized in time: the only and most effective way to improve the environment is the technical re-equipment of the enterprise with the replacement of existing production processes on low-waste and non-waste technologies, the introduction of new, modern treatment plants and the reconstruction of existing ones. The commissioning of the oxygen-converter shop made it possible to close most of the open-hearth furnaces, which are the most harmful to the environment. Many blast furnaces, sinter plants, coke oven batteries were shut down or modernized.

A special role was played by the construction of Europe's largest complex coke oven gas treatment plant, due to which the amount of harmful emissions immediately decreased by 20 thousand tons per year. Moreover, the emission of the most harmful substances that cause cancer was reduced by 7090. The construction of the workshop cost $ 200 million. In general, MMK's environmental expenditures amount to over RUB 800 million annually. All this did not take long to affect ecological situation in Magnitogorsk. The amount of harmful emissions in recent years has decreased by 4 times.

The social policy of OJSC MMK is based on the following principles and directions:

Creation of conditions for employees and members of their families to resolve all issues of life, including improving housing conditions, treatment and medical care, health improvement and recreation, cultural services with festive events, mass sports and physical education, funeral services, providing the opportunity to purchase high-quality food products and the whole range of consumer goods using cashless payments in trading network cities on "credit" plastic cards;

“Targeted” social support for veterans, disabled people, large families and other low-income categories through the Metallurg charitable public fund created by OJSC MMK and using social facilities financed by OJSC MMK;

Provision of services by the facilities of the social sphere of OJSC MMK to residents of the city and neighboring districts of the Chelyabinsk region and the Republic of Bashkortostan;

Support and charitable assistance to public associations working with disabled people, children and various categories of the poor, with other segments of the city's population;

Charitable assistance and sponsorship to various organizations of education, health care, culture, sports and other spheres of public life in holding various cultural and sports festivals and memorials.

Social policy at OJSC MMK is implemented by the department of social programs, the trade union committee, the Klyuch housing and investment fund, the Union of Young Metallurgists, the Council of Veterans, the Metallurg Foundation and other public organizations and movements. Each organization has specific tasks and its own field of activity. But, often carrying out different projects, associations work together, corporately. This clearly demonstrates the implementation of the youth program developed at OJSC MMK, which is carried out by the trade union committee, personnel management, the public association “Union of Young Metallurgists”, the Council of Young Specialists and the Council of the Combine Veterans. Financing of the program "Youth of OJSC MMK" is carried out by the trade union committee and the administration of the plant. And one more example - the department of social programs is one of the main management services of the plant, which prepares the text collective agreement for each year and, together with the trade union committee, the development regulatory documents on the implementation of the provisions of the collective agreement and control over its implementation during the entire period of validity.

The trade union committee sums up the results of the implementation of the collective agreement of OJSC MMK. This document contains the commitment of the enterprise administration to increase the average wage. MMK's management fulfills this obligation. If in January 2002 the average salary at OJSC MMK was 7124 rubles, then in August it was 9420 rubles. An increase in wages is also noted at the subsidiaries of the plant: from 6640 rubles in January to 8500 rubles in the middle of the year. At the same time, the growth of wages is ahead of the rate of inflation, and the real incomes of workers are 1.5 times higher than the average consumer budget. Salaries are paid on time and in full.

With the support of the trade union committee, the workshops operate a system of elected OSH commissioners who regularly undergo training and certification. Every year, a review competition on labor safety and reduction of industrial injuries for the title of "Best Safety Commissioner" is held. All this leads to a decrease in industrial injuries. Since 1998, the number of injuries at the plant has almost halved.

Also priority areas in the work of the trade union committee are:

Social support for families with many children, families with disabled children, parents of soldiers who have suffered in "hot spots";

Youth work carried out jointly with the Union of Young Metallurgists;

Recreation and recreation of metallurgists and their families;

Mass sports, work;

Carrying out cultural events;

Support for horticultural associations.

Under the control of the trade union committee, the mutual assistance fund operates. Employees of the plant, its subsidiaries and institutions have the opportunity to receive repayable loans in it.

The MMK trade union organization was established on June 26, 1931. Then it numbered 5,000 people, and today it has more than 90,000 employees. The trade union committee of OJSC MMK is one of the largest trade union committees in the region.

The department of social programs, which was created in 1993, coordinates the work of all services of the plant for the implementation of social programs within the framework of social policy OJSC MMK. It is entrusted with the functions of developing, developing and maintaining social programs. At present, it is headed by Alexander Mastruev, who believes: “Magnitka is famous not only for the colossal amount and high quality of the metal produced, which, as you know, is the bread of the industry. It is of no less importance for today's Russia with its market changes as a model of a pronounced social orientation of the economy ”.

The tasks of the department of social programs include:

Creation of conditions allowing to soften and facilitate the adaptation of workers of the plant, non-working pensioners to life in market conditions with insufficient social guarantees and support at the state level;

A gradual restructuring of the psychology of workers from beneficiaries of benefits and allowances to earning funds to meet their vital needs with the creation of conditions for choosing priorities by the employer through measures to support socially significant areas of life for the work collective and individual employee;

Development and implementation of measures for working with the labor collective by its representatives represented by the trade union organization on the principles of social partnership, the formation of a corporate ideology.

Since the mid-90s, Magnitogorsk has practically stopped housing construction and city development due to lack of funds industrial enterprises, city administration and residents.

Anticipating this situation, OJSC MMK created the Klyuch housing and investment fund. Reducing the ability of the plant to invest from profits in housing construction and the provision of free housing to workers forced to look for schemes that are affordable for workers and less burdensome for the joint stock company to solve the housing problem. The Social Programs Division was actively involved in the development of the housing program.

From 1996 to 2001 built 215718 square meters housing, which made it possible to improve the living conditions of more than 2500 families of workers of the plant and subsidiaries. During this period, the following scheme was used: ZhIF "Klyuch" accumulates funds of developers in the form of their cash and borrowed funds provided to them by the plant on an interest-free basis, and directs them to the construction of housing. The amount of borrowed funds and repayment terms (from 3 to 10 years) are determined depending on the degree of the employee's need for improving housing conditions and on the employee's income level. During this period, borrowed funds were provided to employees in the amount of over 280 million rubles. For the plant and for workers in the transition period from free housing, such a scheme was optimal, but the large diversion of working capital for the plant became quite burdensome. Changes in legislation have led to a decrease in the profitability of using borrowed funds on preferential terms. Therefore, the search for new forms, sources and schemes for solving the housing problem continued. At present, a transition has been made to the use of bank credit resources under the guarantee of OJSC MMK. Employees acquire apartments under equity participation agreements in housing construction with payment in installments of up to 9 years. In parallel, a program of mortgage lending for employees is being developed using MMK's short-term guarantee.

Currently, the development of a program for the creation of a credit and consumer cooperative of citizens from among the workers of the plant is being completed in order to create monetary resources through the accumulation of funds to improve housing conditions and, due to this, provide targeted loans to members of the cooperative. As the cooperative develops, it is planned to create an association of such cooperatives, which will be able to build new houses and even housing complexes.

Public corporation " Magnitogorsk Iron and Steel Works»Is the largest ferrous metallurgy enterprise in Russia, its share in the volume of metal products sold in the domestic market of the country is about 20%. The enterprise is a large metallurgical complex with a full production cycle, from the preparation of iron ore raw materials to the deep processing of ferrous metals. MMK produces the widest range of metal products among enterprises in the Russian Federation and the CIS countries. About 40% of OJSC MMK's products are exported to various countries of the world.

Magnitogorsk Iron and Steel Works is a large metallurgical complex with a full production cycle, from the preparation of iron ore raw materials to the deep processing of ferrous metals. MMK has the largest share of high value-added products among Russian companies. Fully supplied with its own electricity, the plant is the only large ferrous metallurgy enterprise in Russia that does not have its own raw material base.

The company has almost completely abandoned the sale of slabs, and is constantly increasing the volume of production of high value added products (galvanized steel, polymer coated steel, sheet metal). Also MMK is the largest russian manufacturer sheet products. The construction of Mill 5000 will enable MMK to enter the fast-growing large-diameter pipe market. The accelerated development of such industries as pipe, machine building, automotive, construction guarantees a high demand for the plant's products.

Traditionally, the main supplier of sinter and pellets to MMK is Sokolovsko-Sarbaiskoe GPO (SSGPO, Kazakhstan), which supplies the plant with raw materials by 70-80%. In 2005, the plant underwent a blockade of raw materials, when the ore supplies were simultaneously refused by the GOKs of the current Gazmetall and SSGPO. But Magnitka was able to close the gap in its own raw material security. In early 2007, MMK and Sokolovo-Sarbaisky GOK (Kazakhstan) signed a 10-year contract for the supply of iron ore, according to which the Kazakh company will annually supply more than 12 million tons of ore to MMK. The raw material supply price under this contract will be reviewed annually and will be calculated based on the sales price of the world's largest iron ore producers - CVRD, BHP Billiton and Rio Tinto. MMK is also actively developing its own resource base... In early November 2006, MMK won an auction for the right to develop the Prioskolskoye field in the Belgorod Region. In the next ten years, MMK will have to invest from $ 1 to $ 1.5 billion in the Prioskolskoye field.

MMK manufactures the widest range of metal products among enterprises in the Russian Federation and the CIS countries. About half of OJSC MMK's products are exported to various countries of the world. Until recently, more than a quarter of products were exported to the countries of Asia and the Middle East, where Chinese manufacturers have been actively increasing their presence lately. MMK is now leaving its traditional Asian sales market for Turkey, India, Morocco, Iran, and Greece.

Mergers and acquisitions

On October 4, 2007 the company announced the acquisition of a 10.75% stake in Belon OJSC from its main owner, Andrey Dobrov. In March 2008, MMK's share in the coal company was increased to 41.3%.
Until recently, MMK was the only Russian steel holding that had no assets abroad. The reason for this passive strategy is that the owners of the plant could not direct free cash flows to purchase assets, since property problems have been resolved relatively recently. Only at the end of 2004 was the state-owned stake (17.8%) of MMK's shares purchased and 15.9% of the shares were acquired from the Mechel group. After these transactions, MMK's management, headed by Viktor Rashnikov, gained control over 98% of the company's voting shares. In the next few years, the management was forced to use all available funds to pay off the loan, which was taken to buy these shares. In Russia, MMK has not yet shown much activity in the M&A market. MMK rejected the offer of Metalloinvest (Gazmetal) to merge, despite the apparent synergistic effect - MMK lacks its own raw materials, Metalloinvest has a surplus.

In March 2006, in a consortium with two companies from Saudi Arabia and Pakistan MMK won the auction for the sale of a 75% stake in Pakistan Steel, a Pakistani metallurgical company, offering $ 362 million for a stake. MMK got 40% in the consortium.

Nevertheless, MMK's international expansion remained only an attempt, together with its partners - Al-Tuwairqi and Arif Habib Group - to buy 75% of Pakistan Steel in early 2006. Magnitka emerged victorious, but the Pakistani authorities later canceled the auction results. And at the end of 2006, Magnitka was finally able to make large-scale investments abroad, having bought about 4% of the shares of the Australian mining company Fortescue Metals. In addition, by 2009 MMK intends to build a steel plant in Turkey with a capacity of 2.6 million tons of steel per year in cooperation with Turkish Atakas.

In August 2007, the company bought 37.5% of the shares in the automotive components manufacturer CJSC Interkos-IV from the European Bank for Reconstruction and Development. Also in August 2007, the management of the company confirmed information about the ownership of 5.37% of the shares of Fortescue Metals.

Owners and management

As of the beginning of 2006, 8,858,000 shares were issued, of which 75% are ordinary, 25% are preferred. Of these, 62.3% are owned by Russian private shareholders, 23.8% - by the state, 13.6% - by foreign individuals.

42.44% of MMK shares are owned by Mintha Holding Limited, another 43.11% - by Fulnek Enterprises Ltd. These companies are 100% owned by Steelnet Ltd. 7.37% for U.F.G. Structured Holdings Ltd. In fact, the plant is controlled by structures related to management, headed by the chairman of the board of directors Viktor Rashnikov. As of June 2007, 98% of the voting shares of the enterprise are controlled by MMK's management, the largest share belongs to Viktor Rashnikov (87%)

At the end of December 2006, it was reported that the owner of the world's largest metallurgical company Mittal Steel, Lakshmi Mittal, made an offer to the owners of MMK to buy a controlling stake in the company. According to unofficial data, this proposal was rejected by the owners of MMK and did not receive approval from the presidential administration of the Russian Federation.

On April 23, 2007 MMK carried out an IPO, selling 8.9% of the share capital on Londonskaya stock exchange, and raised $ 1 billion. The placement price was $ 0.96 per share. The entire company was valued at $ 11.2 billion at the placement price. The order book was oversubscribed 2.1 times. The organizers were large investment banks - Renaissance Capital, ABN Amro Rotschild, Morgan Stanley.
Capitalization on the London Stock Exchange as of July 6, 2007 - $ 11.856 billion

MMK Group

OJSC MMK Group (Group) is a set of combined unified system management and control of organizations whose activities are aimed at achieving a single strategic goal - maintaining long-term competitiveness and sustainable development.

History of the Group's formation
Since 1990, OJSC MMK has undergone a full-scale restructuring, which solved the following tasks:

• preservation of jobs;
• intensification of funds for technical re-equipment;
• increasing the interest of managers in the results of financial and economic activities;
• reduction of costs for non-core production by minimizing costs within the established subsidiaries;
• market research and product range expansion.

The maximum activity of this process was achieved in 1997 - 58 companies were created with the participation of the capital of OJSC MMK by separating structural units from OJSC MMK.
In subsequent years, MMK acquired new assets in the market, creating a vertically integrated structure, and restructured its existing long-term financial investments.
As of June 30, 2008, the OJSC MMK Group includes 56 companies.

Relationship policy in the OJSC MMK Group
The strategic goal of the OJSC MMK Group is to maintain long-term competitiveness and sustainable development.
In developing and implementing the strategy, the members of the OJSC MMK Group are guided by the following principles of business organization:

• concentration and efficient use of the resources of the OJSC MMK Group;
• uniform approaches to the implementation of investment, marketing, production and technology, social and accounting policies;
• priority placement of orders within the OJSC MMK Group;
• a unified comprehensive approach to the formation and implementation of the plans of the OJSC MMK Group;
• unified corporate culture and social responsibility business;
• optimization of activities in the OJSC MMK Group;
• continuous improvement and innovation;
• comprehensive security and risk management.

The objectives of the OJSC MMK Group, the solution of which contributes to the achievement of the strategic goal:

• implementation strategic planning development of the OJSC MMK Group;
• development of uniform corporate standards governing the activities of the OJSC MMK Group;
• improving quality and introducing new technologies;
• ensuring effective performance;
• provision of a single information space, development and integration of information technologies;
• placing orders within the OJSC MMK Group on the basis of optimal market prices and uniform quality requirements;
• expanding market presence;
• maintaining and developing common corporate values;
• legal assistance to organizations that are part of the OJSC MMK Group.

Financial performance

Growth in production and good pricing conditions on the domestic market allowed Magnitogorsk Iron and Steel Works to increase key financial indicators in 2007. The revenue of the MMK group of companies in 2007 increased by 27.6% compared to the previous year and amounted to USD 8,197 million. Operating income amounted to USD 2,079 million, or 25.4% of revenue (an increase of 17.8% compared to 2006). Consolidated net profit of the company for 12 months of 2007 increased by 24.3% compared to the same period last year and amounted to USD 1,772 million, the share of net profit in the revenue was 21.6%. EBITDA for 12 months of 2007 amounted to USD 2,342 million or 28.6% of the total revenue. Compared to 12 months of 2006, the company's EBITDA increased by USD 337 million, or 16.8%.

The main strategic goal of OJSC MMK:

Maintaining long-term competitiveness in the global market rolled metal .

The main strategic goal is achieved by achieving the following strategic goals:

1. Encouraging all employees to achieve goals based on professional development, involvement in the quality management process, satisfaction with work results and social guarantees.
2. Providing guarantees of efficiency, reliability and liquidity for investors;
3. Reducing harmful effects on the environment.

Development strategy

Mission of OJSC MMK:
"Manufacturing and marketing high quality steel products that meet the needs of our customers, in order to generate sufficient profit to develop the enterprise to the level of a leading global company and pursue a sound social policy."
Following the mission of OJSC MMK is possible only if there is a long-term opportunity to produce and sell metal products. Therefore, the main goal of OJSC MMK is to maintain long-term competitiveness in the global rolled metal market.
The main strategic goal is achieved through:

• Conquering leading positions in the development and implementation of new technologies;
• Improving the quality of metal products and mastering new types of products to meet current and future demands and expectations of consumers;
• Preservation and expansion of sales and supply markets;
• Improving production efficiency;
• Reducing harmful effects on the environment;
• Involvement of all employees in the quality management process;
• Stimulating all employees to achieve goals;
• Ensuring social security for the employees of OJSC MMK.

The strategy developed by OJSC MMK to achieve the set goals is being implemented in the following areas of activity:

• Continuous comprehensive development of the company, providing for the replacement of outdated technologies and equipment, the use of existing and newly commissioned modern high-tech, environmentally friendly production facilities with maximum load;
• Achieving higher efficiency in the production of pig iron, steel, rolled products, high value added products;
• Strengthening the market position by improving product quality, conducting marketing research and developing a market strategy;
• Maintaining in the long term the versatility of the assortment (sheet and grade), with the primary focus of the company on the production of sheet products with high added value;
• Creation of comprehensive guarantees for the reliable operation of OJSC MMK;
• Increased production of high-quality cold-rolled sheet, coated sheet, high-grade (IV and V) processed products;
• Introduction of energy-saving technologies and expansion of its own energy base;
• Implementation of an environmental management system in accordance with the international standard ISO 14001-96;
• Improvement of the social climate due to higher wages and the availability of an effective package of social programs and guarantees;
• Creation of an integrated financial and industrial structure with the participation of OJSC MMK;
• Acquisition of enterprises that process in significant volumes the products of OJSC MMK or supply raw materials and materials to OJSC MMK;
• Increase of enterprise manageability and informational openness for investors and shareholders.

The investment program of the Magnitogorsk Iron and Steel Works is designed for seven years starting from 2007 and provides for investments in the amount of more than $ 5 billion. Among the main areas of development:

• construction of rolling mill-5000 (completion is expected by 2009, the project cost is about $ 1.5 billion);
• construction of new units for hot-dip galvanizing and polymer coatings;
• construction of a convector with a capacity of 2 million tons, a new coke oven battery;
• construction of a new universal cold-rolling mill for the production of high-quality auto sheet (with a capacity of about 2 million tons of sheet per year) and rolled products for rolled products with coatings (commissioning approximately by 2010, the project cost is about $ 1 billion);
• construction in St. Petersburg (Kolpino) of a plant for the production of stamped parts with a capacity of about 300,000 tons of stamped parts per year (estimated cost - about $ 100 million)

The central link of the strategy is the reconstruction of production facilities. In accordance with investment programdeveloped before 2013, the volume of investments in the modernization of production is more than 1 billion US dollars.

Website
www.mmk.ru

Buffett's score : 7,56 out of 10