MMK invests in the digitalization of business 5 billion until 2024

Magnitogorsk iron and steel works (MMK, has produced 12.7 million tonnes of steel in 2018, belongs to Victor Rashnikov) announced that, together with Deloitte has developed a five-year strategy of digitalization.

the strategy 98 IT projects, most of which (72) to increase the efficiency of production processes. The rest will be linked to research and increasing production safety, said the Director of Economics of MMK Andrei Eremin. “People are no longer able to cope with the huge amount of data. And today data is an asset industrial companies, – told Eremin. – It is important to create a data management system to understand which ones are needed and how to use them.” The average payback period of a digital project – 1-3 years, and the average cost – 36 mln.

digital projects the company will spend RUB 5 billion from 2020 to 2024, according to the materials of the MMK, or about 2% of the capital costs for this period ($4.3 billion). 2025 MMK expects to receive additional $686 million (RUB 42.3 billion) EBITDA from new projects, reported the company’s investor day in November. 14.7 per cent (6.2 billion rubles) will be provided with digital initiatives, said Eremin, and in the future digital projects will enable the company to obtain additional 4.5% EBITDA annually.

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up To 80% effect will ensure that IT projects on the production, the remaining 20% – improving internal efficiency and client services, he hopes.

In 2018-2019, the company completed several targeted digital projects. In 2019 they will be about $25 million. for Example, the project 2018 “Sniper” (creates a physical-chemical model of melting is based on big data and with the help of artificial andthe intellectum accurately calculate its parameters and thus to reduce the consumption of ferro-alloys 4 to 6%) allowed the company to save $3.9 million a Similar project for a competitor of the company Novolipetsk metallurgical combine Vladimir Lisin (NLMK, 17 million tons of steel in 2018). Economic effect obtained by NLMK from the new system of control over consumption of ferroalloys based on modeling and analysis of data – about 200 million rubles, was praised by the Director on mathematical modeling and data analysis of the company Andrzej Arshavsky in an interview TAdviser.

In CMI for three years running, the group of mathematical modeling and system-analytical research, told “Vedomosti” Director “MMK-informservis of” Vadim Feoktistov, the company has implemented several of its models operating on big data technologies and artificial neural networks.

From February 2017 working model of optimization of supply and consumption of raw coal, said Feoktistov: predicts how much raw material is needed and what the composition, to produce coke of desired quality. In 2018, the plant has saved more than 500 million rubles due to the use of this model, given the data representative of the MMK. The model works in the company since February, 2017 and is the development of CMI.

Neural network is planning to use and “Severstal” Alexey Mordashov (12 million tons of steel in 2018). 25 December, the company announced that it has developed a neural network EVE for the classification of surface defects of metal. The neural network will find four types of defects in the digital images of the metal surface and display information about them on the operator screen, says the company. Previously, quality control was mainly carried out by manual sampling inspection of the surface of the finished sheets of steel, said a company representative. Just 2019 “Severstal” has allocated to IT projects 5.7 billion RUB., cited data from its reprthe representative of the. In the next few years the expenditure in this sector will grow by 20-25% annually.

previous topic: the Russian metallurgy was not scared of the fall in world prices for steel

the Potential of digital technologies is in almost all areas of metallurgical production, says the head of practice for the provision of services to the metallurgical and mining industries PwC in Russia Mikhail Buchnev. Using sensors can gather information about the activity of employees, to analyze and optimize their loading, the same approach can be applied for optimization of repairs and maintenance of equipment: with the help of sensors examines the condition of equipment and projected needs for spare parts, says the expert.

are now engaged in the Digitalization of all companies in the industry. It allows you to manage expenses, improve sales channels, improve internal efficiency and overall competitiveness, says the analyst of Fitch Raitings Julia Buchneva: “Digital projects – from the category such which at a minimum cost to achieve maximum effect and IRR (internal rate of return) is much higher than the standard benchmark for decision 20%”. Predicted CMI effect seems quite achievable, I’m sure Buchneva. NLMK, she recalls, in the development strategy until 2022 was transferred several projects to improve efficiency with investments of $50 million effect on EBITDA of $500 million annually. IT projects intended to improve operational efficiency, allow for inflation and costs, and the companies need to remain competitive, the expert believes.