Russian steelmaker Novolipetsk Steel (NLMK) expects its capital expenditures to exceed $900 million in 2020 with the exact figure to be clear in March, NLMK President Grigory Fedorishin announced on January 23 on the sidelines of the World Economic Forum.
He confirmed the earlier plan of $1 billion in 2019 and about $900 million per year in 2020–2023.
“Another thing is that this money is unevenly distributed over the years. We had large reconstructions and repair works in 2019 – one blast furnace and one converter. This year, it will also be one blast furnace and one converter. We confirm the average level of $900 million. It may be higher in some years. But we will give the details at the investor day in March,” he said.
This year expenditures will be higher than $900 million due to large repairs and an active development phase.
NLMK plans to start construction of a grain-oriented steel plant in India in July-December. The plant should be finished until the end of 2021, its capacity will amount to 65,000 tons, and investment in construction stands at $100-150 million, he said, adding that the plant would be launched in 2022. The plant would sell its products in India and in neighboring states, including the Middle Eastern countries.
The company will reject development of the Usinskoye coalfield due to its low economic efficiency. The field’s return on investment was lower than the cost of capital, and the payback period was 12 years.
“We’ve fulfilled all liabilities under the license agreement. But it was no use, in spite of our investment of 700 million rubles in the feasibility study and design works since 2011. We booked reserves of about 300 million tons into the state register. We did our part, we see no further prospects here,” he said.
NLMK is also considering issuing Eurobonds in 2020.
“We are looking into different instruments like ruble bonds and Eurobonds, including Eurobonds in pure euros and in a U.S. dollar-euro swap. We are choosing an option now, and I think that chances are high that we will appear on the debt market this year,” he said.
He did not disclose the possible amount of the bonds, but said that the company wanted long debt with maturity of 5-7 years. (Prime/Ukrainian metal)