Investment Activity

Russian Division

TMK’s investment activity in Russia in recent years has been aimed at increasing the efficiency of seamless and large diameter welded pipe production, improving the quality of steel and pipe products, as well as optimizing production costs.

In 2010, the Volzhsky Pipe Plant completed reconstruction of its seamless pipe mill, including the transition from shaped to round billets. The reconstruction of continuous casting facilities was also completed, which supports production of seamless pipes with round billets.

In addition, reconstruction of the seamless mill equipment was also completed at the Volzhsky Pipe Plant, which increased the plant’s seamless capacity by 210 thousand tonnes. The improvements that were carried out were the final stage of the plant’s modernization, which resulted in Volzhsky becoming Russia’s most modern complex for pipe production.

Development of production at TAGMET in 2010 included the commissioning of a vacuum degassing facility and continued construction of a new electric arc furnace, which the Company expects to complete in 2013.

At Seversky Tube Works, construction continued on a new FQM rolling mill, which TMK plans to commission in 2013. The new seamless mill is the final step of an integrated reconstruction of the production process at Seversky, which will allow the Company to increase production of high quality seamless pipes for the oil and gas industry, improve the quality and structure of production and reduce costs. The net increase in seamless production capacity at Seversky Pipe Plant will be in the range of 300-350 thousand tonnes.

The modernization of production at Sinarsky Pipe Plant in 2010 involved commissioning of a gas furnace with protective atmosphere for heat treatment of pipes up to 24 meters in length. This equipment is unique in Russia, and it will allow TMK to increase the competitiveness and profitability of its products.

In 2010, construction began on a line to produce premium threaded casing at the Orsk Machine-Building Plant, with total capacity at 30 thousand tonnes per year. Project completion is scheduled for 2011.

American Division

The main investments of the American division in 2010 were aimed at increasing capacity for pipe finishing. The need for investment was prompted by increasing demand for TMK IPSCO’s premium products. In May 2010, a facility to thread pipes with ULTRA premium connections was opened in Brookfield, Ohio. The new, highly automated line was installed in the immediate vicinity of the Marcellus Shale — the largest shale gas play in the United States. High demand for premium products from companies producing shale gas led to the opening of a second ULTRA thread line at Brookfield in March 2011.

European Division

During 2010, major investment projects at TMK-ARTROM and TMK-Resita were aimed at environmental protection, including the reduction of carbon dioxide emissions. Successful modernization of the heat treatment furnace at TMK-ARTROM’s Assel hot rolling mill has enabled the company to improve the quality of pipes that go through heat treatment, as well as to fully comply with European environmental legislation.

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