NLMK Belgium requests sanctions suspension on Russian slab in exchange for green investments

  • Proposed EAF to become NLMK’s second in Europe
  • Work underway to turn Verona into low-carbon mill
NLMK Belgium Holdings, a group of strip and plate mills in Belgium, France, Denmark and Italy, has requested the prolongation of sanctions exemption on Russian exports of slabs in return for investing sales from the trade in a new electric arc furnace, a source familiar with the matter said.

NBH, jointly owned by Russia’s NLMK and Belgian government-affiliated investment fund Wallonie Entreprendre, has asked the European Commission to prolong for four years an exemption from EU sanctions that are in place for the import of NLMK’s Russia-made slabs. The respective quota is set to expire just under a year from now on Sept. 30, 2024.

NBH is considering to invest NLMK’s revenue from these slab supplies to captive European rerollers in a steelmaking decarbonization project — construction of an EAF that would become the second within the NLMK group in Europe.

An NLMK spokesperson did not respond to a request for comment.

The EU suspended buying most Russian ferrous metals as part of sanctions against the country for its invasion of Ukraine, but the eighth sanctions package introduced sanctions-deferring quotas for the imports of 7.5 million mt of Russian slab and just over 570,000 mt of billet from October 2022 through the end of September 2024.

NLMK supplies the majority of its Novolipetsk-made merchant slabs to NBH mills under a quota averaging 312,000 mt/month, which effectively makes up the whole of the Russian slab quota.

“NLMK filed a request for quota prolongation due to limited slab availability [in Europe],” a German distributor said.

Feedstock shipments from Black Sea to the EU had dropped due to the combined effects of sanctions and the Russia-Ukraine war in February 2022, and European rerollers producing heavy plate were forced to buy slab from as far away as Asia to replace material that had traditionally been delivered from Ukraine and Russia.

Slab volumes coming from Asia, Brazil and other alternative origins would not be sufficient to saturate the EU market after the Russian quota expires and NLMK stops exports from October 2024, several market participants said.

NLMK Belgium Holdings is now requesting a prolongation until fourth-quarter 2028, according to the source, with the revenue that NLMK accumulates for these supplies to be potentially invested in a new EAF for green steel production, although no further details were available at this stage.

NBH is already working to refit the existing EAF at its ingot and plate plant NLMK Verona in Italy with a view of obtaining low-carbon steel.

NLMK Verona’s full capacity allows for the production of 350,000 mt/year of crude steel and 450,000 mt/year of finished products, but its real output before the war, when NLMK published operational updates, used to be half that much — 175,000 mt/year of salable products, including special steel plate for medical and energy equipment.

Last month, NLMK finalized the sale of its Russian long-rolled steel mills to Industrial Metallurgical Holding. The sold business unit comprises EAF mini-mills in Kaluga, near Moscow, and in the Urals and is capable of making up to 3.7 million mt/year of crude and 3 million mt/year of rolled steel products. The proceeds, although undisclosed, could enable NLMK to consider investments of scale elsewhere.

Author Katya Bouckleykatya.bouckley@spglobal.comMaria