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Rustavi Metallurgical Plant to Expand with USD 250,000,000 Modernization Plan

Published: October 2, 2012 | 7:28 pm
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The COMMERCIAL magazine

Rustavi Metallurgical Plant, previously one of Georgia’s largest industrial enterprises, plans to invest USD 250,000,000 over the next three years in a major modernization plan. In January 2012 the Rustavi Metallurgical Plant came under the ownership and management of Rustavi Steel LLC, a new legal entity set up to revive the long and proud traditions of steel making at Rustavi, which dates back to 1948. The new management team at Rustavi Steel is steering a course of major reconstruction and development to create a modern steel plant producing high quality products for their esteemed customers in Georgia and worldwide. The COMMERCIAL magazine interviewed Dr. Farooq Siddiqui, General Director of Rustavi Steel LLC, who previously served as the Vice-President of ISTIL Ukraine, regarding the company’s expansion strategy.

- Rustavi Metallurgical Plant was founded in 1948 as the first and the only full cycle metallurgical complex in the South Caucasus. Not long ago the company started a re-branding campaign. What is the main task of the plant’s new management and owners?

-The Rustavi Metallurgical Plant produces steel, hot-rolled seamless pipes, rebar and various by-products, castings and spare parts. The plant used to produce about 1,500,000 tonnes of steel annually and was the biggest steel plant in the Caucasus region, with a long history and well established reputation. After the breakup of the Soviet Union, the plant’s raw material supply lines and end user markets were severely disrupted and the plant ceased operations in 1991, and remained effectively idle for the next 20 years.  

The shareholders have started the modernization process to upgrade the plant, and have already invested several million US dollars over the past 12 months. I was appointed the General Director of Rustavi Steel in January 2012. We have already increased steel production from 3,500 tonnes per month to 6,000 tonnes per month (72,000tonnes p.a). These are small volumes and in the next few months we will start a medium term plan to increase production to 200,000 tonnes per annum early 2014. Half of this production will be used for the production of re-bars and the other half for the production of small diameter seamless pipes.

-What are the main projects to be implemented in the coming years?

-Our long terms plans includes two large scale projects.

The first project is the construction of a new 300,000 tonne p.a. steel melting shop based on a 40 tonne Electric Arc Furnace (EAF), Ladle Furnace, Vacuum Degasser, Continuous Casting Machine and allied infrastructure to produce large diameter  round billets for use in our own large diameter seamless pipe mill. This project represents an investment of over USD 100,000,000.

I would like to mention here that the Rustavi Metallurgical Plant has two seamless pipe mills.

One is a large-diameter seamless pipe mill (PRM-400), which has started working this year at 10% capacity rolling large diameter round billets imported from Ukraine. At the moment it is geared up to produce 5,000 tonnes per month and our goal is to reach 30,000 tonnes per month, or 360,000 tonnes per annum, utilizing this pipe mill’s full capacity within 2 years, in tandem with the commissioning of our new EAF shop. This will allow us to roll our own large diameter round billets, substituting current imported billets, and greatly improving the mill’s economics.

The second is a small-diameter seamless pipe mill (PRM-140). As already mentioned, we plan to produce round billets for this mill already in 2013 with the upgrade of our current steel melting shop. The PRM-140 has a capacity to produce 120,000 tonnes of seamless pipes per annum.

Approximately USD 50,000,000 will be invested in upgrading the company’s infrastructure, modernization of the seamless pipe mills and other related facilities.

The second long term project is  the re-start of the Sinter Plant and Blast Furnace Complex to produce 750,000 tonnes of pig iron p.a. The facilities need major repairs, modernization and reconstruction, having been idle for 20 years.

Our management is in discussions with an Azerbaijani iron ore producer, and is confident that the supply of iron ore concentrate from the Dashkesan mine in Azerbaijan can be revived . Pig iron is an easily marketable commodity, which is traded worldwide. We can sell it on the Black Sea market or in Azerbaijan. We will also be using liquid pig iron as a feedstock for our own Electric Arc Furnace. The Ukrainian design bureau “Ukrgipromez” has been contracted to prepare a feasibility study. This project will require investment of USD 100,000,000 and could be implemented over two years.

In total over the next three years period, Rustavi Metallurgical Plant plans to invest USD 250,000,000 in all its modernization projects.

-What are the main export markets for the company? What is your share of the local market?

-Our seamless pipes are currently exported to the European, US and CIS markets. In future we would strive to expand into Middle Eastern, Asian, African and South American markets.

Re-bar is generally sold in the local market or in Azerbaijan and Armenia. We are not very keen on exporting it via the Black Sea because then we have to compete with the Ukrainian mega-producers. In about 18 months from now we plan to start exporting up to 10,000 tonnes of square billets per month, depending upon excess availability.

We also produce 1,000 tonnes of pig iron monthly, extracted from the plant’s slag dumps (waste material from previous steel production). This is also exported, but recently we started selling it to another local steel producers for re-melting.

We process steel enriched slag, extracted from the slag dumps, which is also exported and sold in the local market.

-Job creation is one of the most important issues at big plants like yours. How many employees do you have? Are they all locals?

-We had 1,700 employees a year ago and this has now grown to 1,800.  With the increase of production, I believe, we’ll add some 200 people in the next 12 months. Except for two Ukrainians and myself, all our employees are Georgians. They are well-trained and disciplined. The average salary today is GEL 750 and the average age of our employees is 45 years. Since the plant was not fully operational for a very long time we need to continually hire new people and make considerable investments in training.

We pay great attention to the development of our employees’ professional knowledge and skills. It should be noted that experienced employees of the plant are involved in the training and professional development of the younger personnel. The youngest employee in the plant is 19 years old and the eldest, the most qualified employee who works in the plant since its establishment, is 85 years old. Metallurgy has many professions which have by now fallen into disuse and been forgotten, and the main priority of the Plant’s human resources policy is to revive such professions and ensure knowledge is passed on to the next generation. We are able to achieve this thanks to the experience and qualifications of our staff.

Compliance with health and safety standards is a top priority. With this in mind, production processes are carried out according to strict health and safety standards and norms. The safety of employees, the provision of healthy working conditions and workplace safety standards and norms are met during the production processes. Measures for the prevention of trauma and professional illness are carried out daily, as are programmes for teaching employees health and safety standards and for monitoring compliance with the latter.

The Plant’s management has introduced a new employee health insurance programme which covers every member of staff. A new medical centre has been opened in the Plant where all its employees can benefit from health insurance coverage and from high-quality medical treatment and consultation.

-How active is Rustavi Metallurgical Plant in fulfilling it Corporate Social Responsibilities?

-We are strongly committed to fulfilling our Corporate Social Responsibilities. We support a local hospital. Our football team “Rustavi Metallurg” is one of the top clubs in Georgia, with a modern stadium and training ground, and a dedicated local fan club. We are working hard to restore the prestige of previous times and to support a proud workforce whose honor and dedication is the foundation of our future success.

-Do the plant’s products meet international quality standards?

-Rustavi Metallurgical Plant operates according to the international standards and is certified by authorised international organizations. The Plant’s strategy for quality control is oriented towards satisfying its customers’ requirements and establishing trust in the Plant’s products.

The plant is certified according to ISO 9001 standards and has API (American Petrolium Institute) certification for the production of seamless pipes. Certification for the European Market, CE (Conformite Europeenne),has also been received from TUV NORD. Also, the plant has GOST 632, GOST 633 and  GOST 8731 certification, for the production of seamless pipes and rebar according to Russian standards, and it has DSTU 3760:2006 certification, for the production of rebar according to Ukrainian standards.

The plant has its own central laboratory which is responsible for all analysis and testing and ensures that production is in accordance with the requirements of established international and local quality standards.

-What’s the philosophy of the Rustavi Metallurgical Plant in respect to local market competition?

- This is a small country, but the market for re-bar here is very good at the moment and demand is expected to increase because of continued infrastructure development, such as road building, bridges, tunnels, and hydro-electric dams. I believe we will remain competitive on the local market. Our philosophy is to produce top quality products and provide excellent service to our clients.




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