Annual Report 2007 - Severstal

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Business review GDR price and stock turnover on the London Stock Exchange 30 Severstal (SVST), US$ Turnover, US$ mln 100 25 80 20 15 10 5 0 60 40 20 0 02.01.07 01.02.07 01.03.07 02.04.07 01.05.07 01.06.07 02.07.07 01.08.07 03.09.07 01.10.07 01.11.07 03.12.07 US$ 02.01.08 01.02.08 03.03.08 01.04.08 US$ millions YTM % 9.0 7.5 6.0 4.5 3.0 1.5 0 Severstal-2009 Severstal-2014 02.01.07 01.02.07 01.03.07 01.04.07 01.05.07 01.06.07 01.07.07 01.08.07 01.09.07 01.10.07 01.11.07 01.12.07 0101.08 01.02.08 01.03.08 01.04.08 60 Severstal Annual Report 2007
Corporate social responsibility Our corporate social responsibility objectives are built on open dialogue with all our stakeholders: our investors, employees, people living in the regions where we operate, and society as a whole. We work with people and local communities and we understand that long-term economic and financial success is only possible under conditions of social stability and partnership. Our social and charity projects are intended to achieve these goals. In 2007, our corporate social responsibility (“CSR”) activities covered the following areas: – Health and safety – Environmental protection – Social programmes – Charity. Last year we paid special attention to health and safety across all of our operations, especially in our Mining segment. Our environmental protection initiative focused on the Clean City environmental initiative at our Cherepovets Steel Mill. We introduced various new charity initiatives in 2007, including competitive technologies in the distribution of charity funds. The grant competition within our Museums of the Russian North charity programme is just one example of this approach. In 2007, for the first time we presented integrated data on our social and charity investments – a step on the way to forming a single system of CSR management. It helped to objectively evaluate the results of our activities, define our priorities clearly and develop suggestions for managing social projects more effectively. The total of our social and charity investments in 2007 was US$83.8 million, which is 64.4% more than in 2006. Health and safety Health and safety are of utmost importance at all stages of our production activities: from the extraction of coal and ore, the production of coke and smelting of cast iron and steel to the manufacturing of hi-tech metal products and metalware. Each year we organise a professional evaluation of approximately 1,000 engineering devices, buildings and structures in order to determine their technical conditions and to take into account specific conditions of operation. In 2007, 1,115 objects were evaluated. When organising and planning these repairs, we use the recommendations of independent experts from Cherepovets, Moscow, St. Petersburg and other Russian regions. Lucchini Group and SNA follow the same process with local experts. In 2006, the administration and the trade union of Cherepovets Steel Mill created the Safety Committee. In 2007, the committee, acting alongside divisional heads, developed special task programmes, taking into account specific conditions and root causes of work-related incidents. Starting from 1 January 2007, Cherepovets Steel Mill introduced a new standard of Safe maintenance, which has helped to decrease the number of injuries on the way to and from work sites from 23% in 2006 to 12% in 2007 of the total injuries. In 2007, our Mining segment continued to implement its Safety for All programme, unique in its scale and number of participants. A good measure of its effectiveness is the stable reduction of the overall numbers of accidents at the segment. In 2007, the Lost Time Incident Frequency Rate has decreased by 42% from the previous year. The same indicator for Russian Steel saw a 17% reduction, while Metalware achieved an 11% decrease. Environmental protection OAO Severstal is focused on implementing the international and Russian environment standards and legal requirements, and employs various environmental protection programmes. Each of our businesses develops their own plans to mitigate environmental risks by using modern technologies and modernising equipment. In 2007, Cherepovets Steel Mill modernised dust collection systems in its sintering production. In 2008 this project will reduce annual dust emissions by 700 tonnes. Cherepovets has also been successful in energy saving. The Complex energy-saving programme has conserved 326 million kilowatt-hours of electricity and 12,400 tonnes of fuel equivalent for the year. Additionally, Cherepovets Steel Mill has achieved the highest index of water re-use among all Russian steel companies through the in-plant recycling system: in 2007 this indicator amounted to 98%. Cherepovets Steel Mill also initiated the Clear City programme. Its goal is to improve the environment in Cherepovets through activities based on local community initiatives, and was supported by dozens of the city’s businesses. Last year the programme’s participants included the plant’s employees and local community Severstal Annual Report 2007 61
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Annual Report 2007
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We are a leading international stee
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Sales by delivery destination 2007
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Corporate structure In April 2008,
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Dividend payments were 40.1% of 200
Page 11 and 12: Our strategy for growth is to: - Re
Page 13 and 14: Principal events of 2007 January Ch
Page 15 and 16: Reconstructed in 1996 using steel p
Page 17 and 18: The mining area of Vorkutaugol cons
Page 19 and 20: Severgal, Cherepovets is equipped w
Page 21 and 22: A process technician at Spartan Ste
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Page 27 and 28: In 2007, Izhora Pipe Mill produced
Page 29 and 30: Crude steel production Million tonn
Page 31 and 32: Pipe industry In 2007, the steel co
Page 33 and 34: Risks Operational risks Investment
Page 35 and 36: Severstal revenue by segments,* 200
Page 37 and 38: Mining Severstal’s Mining segment
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Page 43 and 44: Russian Steel Crude steel productio
Page 45 and 46: Sales by products 2007 2006 Change
Page 47 and 48: Costs 2007 2006 US$ % of US$ % of C
Page 49 and 50: Key performance indicators 2007 200
Page 51 and 52: SNA revenues by industries Automoti
Page 53 and 54: Sales by products 2007 2006 Change
Page 55 and 56: Metalware Sales by industry in Russ
Page 57 and 58: Izhora Pipe Mill Production of larg
Page 59 and 60: Severstal on the capital markets Sh
Page 61: Eurobond issues Interest Date Date
Page 65 and 66: Clockwise from above: We have spons
Page 67 and 68: Christopher Clark Independent Chair
Page 69 and 70: When joining the Board, Directors a
Page 71 and 72: OAO Severstal and subsidiaries Cons
Page 73 and 74: Independent Auditors’ Report Boar
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OAO Severstal and subsidiaries Note
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Shareholder information and financi
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