The trumpet sounded

Magnitogorsk will provide Gazprom with iron

Gazprom and Magnitogorsk yesterday announced the signing of a framework agreement on cooperation until 2015, which concerns the iron and steel plant’s supply of rolled products to manufacturers of pipes and equipment for the gas monopoly. The head and main shareholder of Magnitogorsk, Viktor Rashnikov, agreed with the chairman of the board of Gazprom, Alexey Miller, in April of this year that this agreement would be signed. Mr. Miller himself, as reported, will return to work only on Monday after a long sick leave. In his absence, the agreement was signed by the deputy chairman of the board of Gazprom, Alexander Ananenkov, and Mr. Rashnikov.

As part of the agreement, Gazprom and MMK “will coordinate joint actions with the involvement of leading pipe manufacturers in order to provide them with high-quality rolled metal products,” the gas concern said in a statement. Gazprom undertakes, in the event of a need for products manufactured by MMK, to inform the company about the volume of expected orders. And Magnitogorsk, in turn, “will ensure priority placement and execution of orders” for Gazprom.

Meanwhile, the agreement assumes the possibility of concluding separate agreements between partners on a competitive basis. The agreement, according to MMK official representative Elena Azovtseva, does not regulate any minimum or maximum volumes of rolled steel supplies.

For Magnitogorsk, the conclusion of the agreement can be considered a victory: in fact, it is a guarantee of the company’s participation in the supply of products to the fuel and energy complex, and Gazprom, as the final consumer, acts as the guarantor of such participation. Since Magnitka itself does not have pipe production, without signing this agreement it remained dependent on pipe manufacturers. The main consumers of MMK products in the pipe industry are the ChTPZ group, the Pipe Metallurgical Company and the United Metallurgical Company.

“We are glad that we have entered into an agreement with the end consumer of our products,” says Ms. Azovtseva. - As a result, all of us, participants in the production process - MMK as producers of rolled products, pipe companies, and Gazprom as a consumer - will benefit from this. In addition, this agreement should help us achieve product quality that best meets the requirements of the end consumer. Achieving this goal in the future will allow us to increase supplies to Gazprom. It is known that Gazprom is picky about suppliers and places high demands on quality.

For Gazprom, the agreement is also valuable because, having an agreement with Magnitogorsk for the supply of rolled products, it will be able to redistribute orders among pipe companies and provide them, in fact, with its own customer-supplied raw materials.

To satisfy Gazprom's requirements for product quality, Magnitogorsk promises to carry out a number of measures to improve quality. And in 2009, it will commission a continuous casting machine and mill-5000, which will produce thick sheets up to 4850 mm wide with a strength category of up to X120 and will allow for the production of large-diameter pipes. Ms. Azovtseva says that the signed agreement also assumes cooperation between the partners after the launch of Mill-5000, which, in particular, can provide rolled pipes for the production of pipes for the second stage of the deep-water branch of the Nord Stream gas pipeline.

Anna LANDER