PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world’s leading vertically integrated steel and steel-related mining companies, today announces its operational results for Q2 & H1 2020.

Q2 2020 GROUP HIGHLIGHTS

Hot metal output decreased 3% q/q to 2.33 mln tonnes in Q2 2020 (Q1 2020: 2.41 mln tonnes) due to maintenance works at BF#1, #4 and #5.

Crude steel production decreased 2% q/q to 2.81 mln tonnes in Q2 2020 (Q1 2020: 2.85 mln tonnes) as a result of the decline in hot metal output.

Consolidated steel product sales decreased 7% q/q to 2.55 mln tonnes in Q2 2020 (Q1 2020: 2.75 mln tonnes) reflecting lower crude steel production and a higher portion of export sales, which have a longer realisation period. In addition the Company increased stock of finished goods at the end of the quarter.

The share of steel export shipments remained high at 44% (Q1 2020: 45%) in response to a slowdown in domestic demand caused by lockdown measures implemented in Russia.

The share of high value-added (HVA) products within the sales portfolio amounted to 43% in Q2 2020 (Q1 2020: 42%), reflecting a higher level of colour coated shipments and lower sales of semi-finished products and hot rolled coil.

Coking coal concentrate sales volumes from Vorkutaugol increased 34% q/q to 1.28 mln tonnes in Q2 2020 as a result of planned production growth.

Iron ore pellet sales decreased 15% to 2.53 mln tonnes (Q1 2020: 2.97 mln tonnes). In response to weaker pricing dynamics for pellets in Q2 2020, Karelsky Okatysh reallocated a portion of its volumes into iron ore concentrate, achieving a higher rate of end-to-end efficiency of internal consumption at CherMK.

Iron ore concentrate sales volumes increased 30% q/q to 1.90 mln tonnes (Q1 2020: 1.47 mln tonnes) driven by production growth at Karelsky Okatysh, and a recovery in production levels following a planned decline in Q1 at Olcon.

H1 2020 GROUP HIGHLIGHTS

Hot metal output increased 2% y/y in H1 2020 to 4.74 mln tonnes (H1 2019: 4.67 mln tonnes) driven by reduced maintenance downtime and higher energy efficiency rates. Crude steel production decreased to 5.66 mln tonnes (H1 2019: 6.10 mln tonnes) following the sale of the Balakovo mini-mill in 2019.

Iron ore concentrate sales volumes increased 24% y/y to 3.37 mln tonnes (H1 2019: 2.73 mln tonnes) primarily reflecting the ramp-up of the Yakovlevskiy mine and higher production levels at Karelsky Okatysh.

Coking coal concentrate sales volumes from Vorkutaugol increased 12% y/y driven by planned production growth.

The share of HVA products in the sales mix declined 2 ppts to 43% in H1 2020 reflecting higher sales volumes of semi-finished products and hot rolled coil.

The average steel selling prices for H1 2020 declined from 9% to 23% across the product range reflecting global benchmark dynamics.

SUMMARY OF KEY PRODUCTION, SALES VOLUMES

SEVERSTAL’S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)

Q2 & H1 2020 ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) HIGHLIGHTS

During the COVID-19 pandemic, minimising health risks to our employees is Severstal’s key priority. Our preventive and protective measures include remote working where possible, limiting movement around sites, sanitation and disinfection, and temperature checking on arrival at work. We are continuing to purchase and distribute personal protective equipment, i.e. masks, respirators, safety glasses, hand sanitisers.

The LTIFR for H1 2020 increased by 20% y/y to 0.85 (H1 2019: 0.71). At the same time, the number of incidents with contractors decreased to 16 in H1 2020 from 22 in H1 2019.

Tragically, there were four fatal incidents in Q1 2020: three of our staff members and one contractor. In Q2 2020 there were no fatalities. Two of our employees died when methane was emitted during degassing activity at the Vorkutinskaya mine. We are investigating each of these cases in detail and taking preventative measures to ensure that similar incidents do not take place in the future.

At Severstal Russian Steel, total emissions of air pollutants remained almost unchanged in H1 2020 at 142,700 tonnes (H1 2019: 142,500 tonnes). This reflected a 2.8 times increase in the sulphur content of Olenegorsk iron ore concentrate but also the sale of Mini-Mill Balakovo in 2019. Air pollutant emissions per tonne of steel products increased in H1 2020 by 8% y/y to 24.9 kg per tonne of steel.

At Severstal Resources, total emissions of air pollutants fell by 1% y/y in H1 2020 to 99,500 tonnes (H1 2019: 100,400 tonnes).