March 4, 2020

Severstal discloses 2020 IT and digital investment

PAO Severstal, one of the world’s leading vertically integrated steel and steel-related mining companies, announces plans to invest 6.7 bn roubles in IT and digital projects, a 7% increase on 2019 investment levels.

In 2020, the Company will work on developing new solutions for managing material flows and optimising the quality of finished products. In particular, it will focus on building new models for customer engagement, as well as developing solutions for integrated planning and automatic product certification. In addition, Severstal will focus on creating automated solutions within its upstream production division, as well as within the Severstal-metiz production unit. In order to improve the quality of data transmission, new technological networks will be built at the steel plant in order to meet the requirements of Russian federal legislation and the Company's internal bandwidth requirements.The implementation of several ongoing initiatives will also continue in 2020: notable examples include the adoption of a new generation of the SAP ERP business management system within the Company’s different divisions (called SAP S/4 HANA), as well as the further development of Severstal’s online store.

In terms of digitalisation, Severstal will continue to develop and implement intelligent solutions that can detect and predict future product defects, issue recommendations on the production process, and increase production volumes by replacing manual control of the unit with an automated control using artificial intelligence technology. For example, in 2019, a solution which consists of using a neural network for recognising certain defects on metal sheets was introduced at the cross-cutting unit No. 4 in the metal finishing shop No. 2 at the Cherepovets metallurgical plant. Additional digital solutions include using a mathematical model to automate the middle section of continuous pickling unit No. 3, through which half of all metal that enters cold rolling at CHerMK passes.

Alexey Kulichenko, CFO of Severstal, commented:

"Severstal's investment programme focuses perdominently on the financing of development projects to deliver a significant cost advantage for basic products in the long-term, provide customers with unique solutions, and increase the volume of steel production. Investments in IT and digital are designed to support and strengthen these processes. Over the past three years, we have doubled our investment in information technology and digitalisation at Severstal, and we have seen a significant positive economic impact as a result of the projects we have implemented so far."