Mon, 27/01/2020 - 09:53
Current Issue 34
Metinvest is striving to become Europe’s leading vertically integrated steel producer, the organisation investing intuitively in equipment, technologies, employee empowerment and CSR in pursuit of this goal
Writer: Jonathan Dyble | Project Manager: Thomas Arnold
I can recall an instance in my family, when my father was choosing his future profession.
“He asked my grandfather for advice as he wanted to become a metallurgist, but at that time plastics were emerging and consolidating, and people were saying that composite materials would soon replace steel.
“My grandfather was a wise man – he said to my father: I think there will be enough steel for you, your children and even your grandchildren, so choose metallurgy.
“Since that conversation, global steel production has tripled. It remains one of the world’s most universal products – it can be strong or soft, ductile or elastic – and is able to embody practically any physical property necessary for downstream production.
“If you ask me, steel will continue to be a key commodity within the global ecosystem for many years to come.”
Mining and metals is in the blood of Yuriy Ryzhenkov.
Coming from a family of engineers, his mother, aunt, uncle and grandmother having also pursued a similar profession to that of his father and grandfather, the industry became a part of his life from near enough the day he was born.
“Living and studying in Donestk, it is difficult not be associated with metallurgy,” he muses, divulging that his first visit to a steelmaking plant occurred when he was just three years of age.
“When it came to choosing a career path, I thought I would become an IT specialist and so undertook studies in software. But Ukraine’s steel industry was privatised in the late 1990s and, owing to the wave of opportunities that paved the way for, I came to a steel plant Donetsk.
“Although I had a degree in IT, I ended up in the steel industry anyway, albeit in the sphere of economics and finance.”
Seemingly destined to find his way into the sector one way or another, Ryzhenkov hasn’t looked back since.
Today he stands as the Chief Executive Officer of Metinvest – a vertically integrated group of steel and mining companies managing every link of the value chain, from mining and processing iron ore and coal to making and selling finished steel products.
One of three major players in Ukraine, it is renowned locally, having captured a substantial share of the domestic market. Yet in order to comprehend the company’s true stature, it is necessary to look beyond these borders.
“Metinvest’s products can be found in more than 100 countries across the globe,” Ryzhenkov states.
“Our key markets include Ukraine’s neighbouring territories as well as countries in the Black Sea and Mediterranean Sea Basin, the Persian Gulf, North Africa, the Middle East, Southern Europe, Russia, Belarus, the Baltics and Poland. We also operate in France, Belgium, the Netherlands, the United Kingdom, the US, Mexico, Brazil – I could go on.
“We are unique in this respect. I’m not sure if there is another steelmaking business in the world that sells less than 20 percent of its products on the domestic market and more than 80 percent in external markets. Players in this industry tend to have rather large and strong local markets, even in large steel exporting countries, but not us.”
Different though it might be, the CEO highlights this structure as key to Metinvest’s success for the role that it has played in developing an equally unique operating environment.
“The need for cooperation, cohesion, and a willingness and ability to help each other is the interesting dynamic that this has created,” he states. “It is what defines us as a company today.”
Talk of teamwork quickly turns attentions to an asset considered to be crucial to the company – the Metinvest workforce.
Here, Ryzhenkov emphasises that the contributions of each and every employee are both valued and encouraged, the firm providing a platform from which its staff can help to generate new ideas, test new solutions, design new products and ultimately have an impact on strategic direction and development.
“We try to give the freedom of thought and action wherever possible,” he explains.
“We regularly set up cross-functional groups at our enterprises, focusing on operational improvements and delivering new projects that have the potential to contribute towards our Technological Strategy 2030.”
That said, there is no getting away from the fact that Metinvest’s staff often operate in dangerous production environments, and striking a balance between this culture of innovation and instilling non-negotiable safety principles is considered critical.
“It is very important that we do not mix these areas,” Ryzhenkov expresses. “You can be creative and free in what you want to do, but once all the risks have been assessed and the process has been accepted and integrated, you must observe discipline and adhere to the guidelines.”
Considering the pace of progress at Metinvest, best highlighted by a plethora of equipment and machinery investments across some of the company’s flagship facilities, the need for everyone to be on the same page becomes even more apparent.
Take the Ilyich Steel plant in Mariupol as an example.
Here, $110 million has been earmarked for a complete revamp of the plant which will see a new continuous casting machine and 1700 hot strip mill installed, in turn expanding the organisation’s product range to include premium quality steel coils.
“I’m quite proud of this project,” Ryzhenkov expresses. “I think it will breathe new life into the Ilyich plant, taking it to a new level and making it
a market leader once again.
“These projects will pre-determine the company’s investment focus for the short term. When you have a foundation, you can build on it, and the foundations created here will make it possible to further develop production.”
Looking at the longer term, technologies are likewise expected to emerge as a new focal point for investment.
The idea of digital transformation has reverberated throughout the group, Metinvest already homing in on specific areas deemed to have the greatest potential in facilitating operational improvement.
“Given my education, digital transformation is a trend that is close to me,” the Chief Exec states. “The group has many projects related to this – some subsidiaries are more involved than others, of course, but in general our enterprises want to move in the same direction.”
These efforts have so far included the computerisation of business processes and the ongoing development of a database to better harness the power of big data. Beyond this, however, the organisation is planning to move into other new and exciting areas.
“On the one hand, steelmaking is a traditional industry, where basic things are clear from the standpoint of automation, digitalisation and IT,” Ryzhenkov reveals. “You can implement changes in a relatively seamless manner, defining automation standards and following them, which we’ve been doing as part of our Technological Strategy 2030.
“On the other hand, there are ideas associated with emerging technologies. We’re newly able to assess ore stocks using drones and implement more effective transport control in open pit mines using comprehensive machinery performance monitoring systems.
“Such things are quickly becoming more popular here.”
While such substantial investments, be it plant upgrades or technological improvements, undoubtedly have a significant impact on Metinvest’s proficiencies, their purpose extends far beyond revenue improvements or productivity enhancements.
Its facilities often act as central pillars in the communities where they are situated, and the group takes pride in this, diligently paying taxes that are pivotal to municipal budgets and working with local populations to understand how and where it can deliver benefit in wider ways where possible.
The CEO summarises this ethos: “When people talk about corporate social responsibility, they often begin to confuse it with the function of the many public services that are supposed to be responsible for certain things.
“This happens especially often in Ukraine. Everyone remembers the Soviet Union, when industry was assigned roles that were not typical for it, and that’s created historical expectations that mills should support everything located around them. However, if we live in a capitalist country, the mills should do their business and generate profit and a return on investment for their shareholders.
“At the same time, our employees are part of the society and cities where they work – families have a strong influence on our employees, which is normal. From a business standpoint, the task of the mills is to do their best to create conditions in the cities where they operate that would help our staff to be more effective in their operations. To have young and talented people come to the production entities, the city must have good conditions for life and education. At the same time, for the cities to develop, they need skilled specialists.
“This is why we are involved in corporate social responsibility and strive to improve the cities where we operate.”
Here, Mariupol is once again a case in point.
Situated in southeast Ukraine, the city is home to Metinvest’s two largest steel mills that are also the region’s two largest employers, creating a certain symbiosis among the enterprises, the local community and the municipal authorities.
As a result, the three parties work closely together, identifying projects that have the capacity to improve the city’s infrastructure and quality of life, resulting in an accumulation of impactful projects which to date have included the development of parks, educational institutions and
an administrative service centre.
Metinvest’s role as a community custodian does not end here either, the organisation acknowledging the need for personal responsibility in other verticals.
The mining and metallurgy sector has been subject to a degree of scrutiny of late owed to its negative impact on greenhouse gas emissions – an industry-wide problem that has no simple solution in the eyes of Ryzhenkov.
“No effective, quick or cheap way has been invented so far to produce steel while avoiding this outcome,” he affirms.
To say that the company approaches the topic with ignorance would be far from the truth, however. In reality, it is quite the opposite, many of Metinvest’s recent projects focused on improving the group’s carbon footprint.
The reconstruction of its gas cleaning systems at the Ilyich Steel sinter plant stands as one such example, a second being the revamp of its basic oxygen furnace and dusting systems both at Ilyich Steel and Azovstal, the latter also based in Mariupol.
“These are projects that the entire Group can be proud of since they are part of the largest environmental initiative in Ukraine’s industry, which is being implemented completely at private expense without state financing,” Ryzhenkov declares.
It is estimated that the aforementioned projects, slated for completion in 2023-24, will contribute to the quality of life of around one million Ukrainian residents. Meanwhile, looking beyond this, the CEO is optimistic that better, bolder solutions to the current challenge will emerge.
“Many large companies have announced research efforts into hydrogen-based metallurgy such as carbon-free steel production,” he states as our conversation comes to a close. “This is the future of steel – if we as a sector of the world’s economy focus
on this, I am sure we’ll find the solution.
“In the meantime, our slogan for the coming year will be operational efficiency. We aim to be in the first or second quartile in terms of efficiency for the steel industry globally. This is what our investment projects and operational improvements target – it will be a key driver for the next year.”