Annual Report 2013

Capital Expenditure

Investments in production facilities, mln USD

In 2004, TMK launched the Strategic Investment Programme to upgrade production facilities and improve overall efficiency, with a total of 3 bln USD invested into development projects over 2004–2013.

For 2014–2016, our annual capital expenditures are planned at 300 mln USD to 400 mln USD, with overall three-year investments capped at 1.1 bln USD.

In 2013, we were engaged in:

  • Steel making upgrade

At TAGMET, we installed a new electric arc furnace (AEF-150). This installation, along with a vacuum degasser, ladle furnace and continuous caster in place since 2010, completed the upgrade of TAGMET’s steel making facilities. As part of the project, we worked on the power supply, metal charge preparation, and supply of additional materials; we also had circulation and closed-circuit cooling systems installed. The ceremony of launching EAF-based commercial steel production was participatedby Russian President Vladimir Putin.

The new EAF enabled TAGMET to increase billet production capacity by 350 thous. tonnes p.a. to 950 thous. tonnes p.a., to improve steel quality, to shut down the obsolete open-hearth furnaces, and to reduce emissions (suspended materials, nitrogen dioxides, carbon oxides) by 70%. To support steel production and ensure steady scrap supplies, TMK-RESITA set up a scrap warehouse.

  • Development of seamless pipe production for the Fuel and Energy Sector

At the Seversky Tube Works, the overall pipe-rolling production upgrade, launched in 2011, continued. As part of the project, a Fine Quality Mill (FQM), a retained mandrel mill featuring three-roll stands, is to be constructed and commissioned in 2014, along with the upgrade of the current finishing capacities and construction of a new heat treatment line by 2016.

The FQM will cut on production costs, improve quality and product mix, and increase the high-quality seamless pipe output for the oil and gas industry to 600 thous. tonnes p.a.

To ramp up the manufacturing of high value-added products, production capacity flexibility and cost effectiveness, the following projects were implemented during the reporting year:

  • At the Sinarsky Pipe Plant, we installed and commissioned additional non-destructive testing devices, with a modern hydraulic press and threading equipment to be put into operation in 2014.
  • At TAGMET, we completed the installation of a coupling machine, boosting our annual OCTG coupling capacity by 150 thous. units.
  • TMK Oilfield Services launched an inner coating line, increasing the overall coating capacity of the existing lines to 60 thous. tonnes p.a.
  • TMK IPSCO is running a project to expand finishing and heat treatment capacities and install additional non-destructive testing equipment at the Koppel plant (Pennsylvania). The project is scheduled for completion in 2014.
  • Development of premium connections and oil and gas services businesses

At the Volzhsky Pipe Plant, we continued to develop pipe rolling shop No. 3 to meet the highest quality control requirements of our customers and increase the share of premium connection OCTG. In 2013, we worked on installing non-destructive testing and new threading equipment and upgrading the established threading capacities. The project is to be completed in 2015.

To launch the production of a new product, vacuum insulated tubing, the Sinarsky Pipe Plant rolled out a specialised line with annual capacity of 35–40 thous. metres.

At the Orsky Machine Building Plant, a press for threaded connection hydraulic testing was installed within the production line of casing premium connection pipe, improving the product mix and ramping up sales.

To increase capacities and cut costs, TMK IPSCO completed the consolidation of threading facilities in Midland (Texas, USA).

  • Development of seamless industrial pipe production

To extend the share of products for the power and nuclear industries, as well as energy and transport engineering, we are setting up a line to manufacture long pipe of carbon steel at the Sinarsky Pipe Plant.

At TMK-INOX, a joint venture of TMK and RUSNANO, we completed the upgrade of cold rolling mills, construction of a protective gas furnace and a slitting unit, marking key milestones of launching the production of stainless steel tubular products, including welded pipe, in Kamensk-Uralsky. In addition, TMK-INOX acquired a production facility embracing eight manufacturing lines for 8–76 mm stainless steel welded pipe with annual production capacity of 6 thous. tonnes. As a result, TMK-INOX became Russia’s largest producer of stainless steel and alloy steel tubular products, including welded pipe.

TMK-ARTROM took further steps to increase production capacities and extend the share of high valueadded product sales, launching a project to set up the production of pipe for hydraulic cylinders. The project is to be completed in 2015.

  • Environmental initiatives

At the Volzhsky Pipe Plant, we completed the construction of an industrial waste landfill. The advanced waste isolation technology used rules out the very possibility of negative impact on the soil or underground water.