Ispat Karmet: The Reincarnation of A Giant
Dr. Nawal Kishore Choudhary, General Director of Ispat Karmet
LNM Group was one of the first major foreign investors to come into the metallurgical complex of Kazakhstan. This is the world’s second largest steel-casting trans-national corporation, producing some 42m tonnes of steel per year in 13 countries. For more than eight years Ispat Karmet?the locomotive of Kazakh ferrous metallurgy?has held an important position in the LNM Group.
Ispat Karmet was set up on 17 November 1995 on the basis of the former Karaganda metal works, having assumed all its assets. This large enterprise was then on the verge of closure. The new owner of Karmet began at once to implement his strategic plan for restructuring. Pursuing a corporate philosophy aimed at the production of quality goods with low primary cost, LNM Group invested over $800m in Ispat Karmet. The bulk of this money was spent on re-equipping the enterprise. In October 1998 the first bar galvanizing line was completed and commissioned, whilst the second was built in 2001. A metal etching line in a cold rolling workshop was reconstructed alongside finished production packing sites. Blast furnace 3, which was closed as far back as the early 1990s, resumed operation in 2003.
To ensure a stable supply of energy and raw materials, the company purchased the Heat-Power Plant, the Karagandashakhtugol Property Complex and 13 enterprises servicing the Karaganda coal basin whose explored reserves surpass 1.5bn of coking coal. Today Ispat Karmet comprises companies such as Orken (production of iron ore in Lisakovsk, Kentube and Atasu), and Ok-Zhetpes (heat, electricity and water supply to the population of Temirtau).
Having combined human resources, raw materials and technology into an effective process, the company has successfully survived restructuring and enjoys stable production growth. In 1995-2003 total productivity more than doubled. In 2003 alone the coal department of the company had an output of more than 12.5m tonnes of coal, and Orken produced over 4m tonnes of iron ore. Whilst in 1995 production of liquid steel stood at a mere 2.581m tonnes, last year the figure was more than 4.9m tonnes. The company produced 4.137m tonnes of hot metal and 4.04m tonnes of rolled ferrous metal products. By 2007 Ispat Karmet plans to be producing 6m tonnes of steel per year.
At the same time as technical modernization, a great deal of improvement has been made in marketing. The market was rediscovered and the consumer database formed anew. As a result, some 95% of Ispat Karmet’s production is exported to Russia, China, Iran, South Korea, the EU and the CIS. The North American market is also very attractive due to its high solvency.
Although this marketing success depended on a whole host of factors, the wide range of products, an optimum price/quality ratio and the accurate delivery timeframe were the key. Today Ispat Karmet offers hot and cold-rolled products, spars, corrugated hot-rolled products, rolled electrical steel, tin and black plate, zinc- and zinc-aluminium coated rolled products, profiled rolled products and electrically-welded pipes. More than 50% of the factory’s production is sold under the standards of developed countries (EN, DIN, JIS ASTM). Yet another condition for effective sales was the fact the factory’s rolling mills were certified to meet the ISO 9001:2000 standard in 2003. In 2005 it is planned to certify the chemical recovery, agglomeration, blast furnace and steel-smelting facilities.
It is crucial to emphasize that, whilst previous years were marked by stabilization, 2003 was the beginning of a new era in the history of Ispat Karmet. Under a five-year plan for strategic development, one of the company’s priorities is to strengthen its positions in the market by improving quality and expanding its range of products. Ispat Karmet intends to continue placing considerable investment in the use of modern technology at all levels of production, but also to achieve its objective of becoming a world-class metallurgical enterprise.
One of the primary tasks is the construction and commissioning of a machine for continuous casting of steel, allowing an increase in the product range. The company will also master production under new standards and specifications, including special types of steel such as cold and hot rolled steel, non-aging galvanized steel for advanced and very advanced forming, non-aging, low-strength tin, electrical steel, structural steel with improved features, steels for enamelling, low-alloy, high-strength steel for use in the automotive industry and hot rolled steel for gas and oil pipelines.
As the construction, appliance and various other industries are switching more and more to pre-painted steel sheets Ispat Karmet starts the new project on installation of a new Colour coating line.
The company is also committed to a new bar mill project with a capacity of 400 thousand tonnes per annum, which will have an Electric arc furnace, a billet caster and a bar mill. This facility is being installed especially to take care of the ever-growing construction needs of Kazakhstan.
A plant for producing large-diameter spiral pipes is being built in Aktau to meet the growing domestic demand for piping. It should be noted that the pipes are covered with an epoxy or three-layer polyethylene coating to ensure protection against corrosion. The design capacity of the plant will be 500,000 tonnes of API-class pipes and 75,000 tonnes of water pipes per year. In addition, establishing the production of cold roll formed sections from hot-rolled strips for the automotive industry is contemplated.
As a result of these and other projects, the company’s total investment will reach $1.398bn by 2007. Part of these funds will be spent on environmental measures and improving the quality of raw materials.
There is a special emphasis placed on training. The company organises training programmes to equip its managers with the latest in modern management practices. Programmes on Team Building, Leadership, effective communication, etc are regularly conducted for all levels of management. A platform has also been created to share best practices and experiences by organising Knowledge Management Programmes with its other mills across the world. The company also focuses on grooming young talent so that they could take up responsible positions in the LNM plants worldwide in the future.
Ispat Karmet will also continue to support small and medium-sized businesses, as part of the company’s philosophy aimed at active participation in Kazakhstan’s development. So far, up to $5m per year has been granted for social projects.
For instance, the majority of the residents of Temirtau, a city of metallurgists, enjoy the lowest tariffs in the region for utility services. The company also maintains the tramcar fleet, recreational facilities and children’s camps. Considerable funds are spent on sponsorship and charitable purposes. Over recent years the company has built a training and laboratory building for a local metallurgy institute, an aqua park in Astana, a tennis centre, a fountain cascade in Karaganda and performed other social projects.
Ispat Karmet spends the necessary amount on medical insurance for its employees and their families, and the development of sports and other socially important activities. Although a few problems are, of course, unavoidable in the operation of a huge company such as Ispat Karmet, the management of the combine solves them in close co-operation with its staff of 55,000 and the Kazakhstani authorities at all levels.
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