OREANDA-NEWS. April 30, 2008.  ESTAR metallurgical holding intends to invest about RR8 bn in the development and upgrade of its JSC Novosibirsk metallurgical plant named after Kuzmin in the next 3 years, Vadim Varshavsky, State Duma deputy and another co-owner of ESTAR, said.

“The entire upgrade project will require about RR8 bn of investment. It includes upgrade of steelmaking production, construction of shopping malls, a hotel and office premises”, said Mr. Varshavsky.

As Mr. Varshavsky put it, a new shopping mall with total floor area of 56,000 sq. m., in which the Holding invested about RR1.5 bn, will open its doors to the tenants shortly after the state commission signs the certificate. This will create 800 new jobs.

“Near the shopping mall, there will be a hotel, where finishing is carried out now. After that we plan to construct a retail and exhibition centre with total floor area of 140,000 sq. m. through conversion of existing plant workshop – which will cost more than RR2 bn, plus investments in the plant itself. But, undoubtedly, this is just the beginning”, told Mr. Varshavsky.

He also mentioned that the main source of funding for upgrading at the plant will be construction and revenues from retail and entertainment centers and hotel located in the plant territory. “We want every plot of land to bring maximum profit for both, our company and city dwellers”, added Mr. Varshavsky. 

Investments in upgrading of the steelmaking production at the plant will amount to RR3,839,000. Design and construction of the steelmaking production will kick off in 2008. Construction will take 2.5 years. The complex will be commissioned in the end of 2010. A payback period will be 5 years from investments.

On Tuesday, April 8, the upgrade project received an aid from the Novosibirsk region authorities to the amount of RR380.6 mn.

The aid includes certain property tax and profit tax privileges, plus subsidies for a portion of the interest on a bank loan within 3 years.

The fundamentally upgraded plant will produce blanks for pipes (which are already produced today), as well as blanks for pipes with a diameter of 426 mm for large diameter pipes, including those for oil industry. In fact, there will be two plants at the site of existing NMP named after Kuzmin – Electric metallurgical plant named after Kuzmin and Novosibirsk pipe plant. 

The first upgrade stage provides for construction of modern arc furnace facilities with total capacity of almost 700,000 t of metal products yearly. The second stage implies construction of a Steckel wide sheet mill. The new mill is designed using other technology than the existing one and will take lesser space. The third stage will see construction of a new mill to produce steel pipes with a diameter of 426 mm, including those for oil industry.