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ЕВРАЗ. Годовой отчет за 2021 год - часть 5
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VANALYTICA© FOR ACCELERATED PRODUCT
DEVELOPMENT
In the last 18 months, the EVRAZ
Regina’s steelmaking, rolling and pipe-
The EVRAZ R&D team continues to diligently
EVRAZ Vanadium R&D centre
VanadiumR&D group developed a
making facilities offer a unique opportunity
investigate new ways to improve the low
(East Metals AG, Zug)
software-driven consulting approach called
to be a market leader in these steel grades.
temperature toughness of the heavy-gauge
NEW GENERATION: SUPER-
To unlock this potential, the EVRAZ R&D
X70 and X80 grades. Modern data analytics,
The EVRAZ Vanadium R&D centre teamed
their needs. EVRAZ is partnering with a
team and Regina facility conducted a series
including the use of machine learning, is
up with EVRAZ Pueblo’s R&D team
TOUGH DT400IK RAIL
Cambridge-based start-up that is active in
of mill trials to develop an X80 product line
providing new insights into previous trials and
to develop a new high-strength wire steel
AI alongside a leading technology provider,
with up to 0.75”wall thickness to enhance
production data.. Collaboration with leading
grade. The driving force for developing
NEARS COMPLETION
which designs digital twins of existing
its toughness capabilities. Through data-
academic partners, such as the University of
the new wire is to produce new power
production lines. State-of-the-art process
driven decision-making, pilot-scale and mill
British Columbia and McMaster University,
transmission lines with longer spans
EVRAZ, together with Russian Railways, has completed operational testing
models are being used to demonstrate the
trials, a combination of the alloy design
has provided a greater understanding of
between towers that ensure minimum
of the new DT400IK rail. These rails which are made of hypereutectoid steel,
best ways to produce advanced steel grades
and processing schedule provided both a
these complex steel properties. Pilot-scale
have greater durability and are designed for operation on tracks with freight
that are cost effective and highly competitive.
high level of toughness and significant cost
experiments through a partnership with
was applied using AI. Within a short
capacity per year of 80 mgt or more on sharp curves.
The team is focusing on accelerating product
savings compared with initial estimates. This
CanmetMATERIALS, a Canadian government
period, a new grade was developed
The tests were carried out on curves with a radius of 320 m or less and
development through virtual process design,
success led to EVRAZ securing an order
lab, offer a cost-effective method to study the
based on several thousand data sets
freight capacity per year of around 160 mgt. This combination represents
utilising the customer’s domain data in a
from Coastal GasLink for 230,000 tonnes
alloys and process the possible changes. The
of pearlitic wire rod production. Research
some of the most severe operating conditions of Russian Railways, and the
secure and effective manner, while ensuring
of this heavy gauge X80 product and over
combined efforts of all these research bodies
and qualification is ongoing and will
DT400IK rails showed a 15.8% reduction in wear compared with the basic
DT350 rails. Although these results are not unexpected for rail wear,being
data privacy.
US$9 million in alloy cost savings, a landmark
and mill trials have boosted the resilience of
support electric infrastructure investments
confirmed by data from North American railways, EVRAZ will continue to
achievement for the heavy gauge programme
EVRAZ high-strength and heavy gauge line
by sustainably reducing the carbon
develop new rails with improved wear resistance and a contact-fatigue life
The digital twin approach creates an initial
and for EVRAZ.
pipes, ensuring that the Group is capable of
footprint of the entire installation.
of 25-30% in 2022-23.
digital model of a mill. A huge library of
meeting customers’ needs in the future.
empirical and proven metallurgical models
As part of long-term cooperation
is used to simulate the entire process of
with the steel institute of RWTH Aachen
reheating, rolling and cooling and to predict
University of Technology, EVRAZ
material properties like grain size, strength
is joining several publicly funded projects
and elongation.
on infrastructural steel, heat treatment
EVRAZ NORTH AMERICA’S
and the circular economy.
AI offers a faster and more generic approach
INITIATIVES ON
in this regard. This fast and disruptive
In addition, the EVRAZ Vanadium R&D
method uses physical process data acquired
centre has expanded its network through
of new rails and to expand its product
and to transfer this behaviour to re-bars.
ALTERNATIVE ENERGY
in the rolling mill and properties from lab
cooperation with the University of Perugia
range. In addition, EVRAZ ZSMK rails
Based on FEM modelling, thread parameters
investigations. Combining AI with domain
PRODUCT DEVELOPMENT
and the Italian Welding Institute. Leading
are produced through the electric arc
were modified to comply with Russian codes.
knowledge leads to surprisingly high R2
Italian steel companies will support
furnace method using ferrous steel scrap
The connection costs were also optimised.
values that describe the confidence level of
the project for further study.
as raw material, which results in the rails
The R&D centre is continuously studying
As global efforts aim to achieve net zero emissions by 2050, the hydrogen-
reality against the prediction of the model
and other alternative energy-based economy is expected to grow rapidly.
having a lower carbon footprint.
the behaviour of the re-bar connections
used.
As one of the largest line pipe manufacturers in North America, EVRAZ NA
through internal tests..
is developing the expertise and products that will be needed in the near
future, positioning itself as an industry leader.
EVRAZ ZSMK
EVRAZ fully threaded bar
EVRAZ NA is exploring new market opportunities, including hydrogen and
EVRAZ North America
CO2 pipelines as well as geothermal connections. The main objective is to
EVRAZ has decided to establish a state-
In 2021, EVRAZ developed a new product:
EVRAZ NTMK
develop technical capabilities to produce and qualify these products while
of-the-art R&D centre at EVRAZ ZSMK
the fully threaded bar. Its main advantage
also leading the industry through various collaborations and contributions
Heavy gauge line pipe: line pipe designs in
to research, improve and develop
is the ability to connect bars at any point,
A new R&D centre is being built at EVRAZ
to standards, codes and industry guidelines. As part of these efforts, R&D is
North America aim to produce high-strength
new rail products. The centre will
reducing connection time and providing
NTMK. The main goal is to support
working with industry partners, establishing collaboration local government
steel for large-diameter and thick-walled
be equipped with new testing facilities
benefits for the construction industry. During
product-related research and new product
research labs and academic research groups in both Canada and the US.
pipes due to their economic advantages.
to conduct research using electron
its development, the Group had to work
development, since EVRAZ NTMK has
Safety and integrity are of utmost importance,
microscopy, dilatometry, tribometry,
under strict Russian code requirements
the most broad product portfolio within
particularly in cold operating environments,
physical and mathematical modelling
concerning connections of fully threaded
the EVRAZ Group. High-quality beams,
so toughness is also a critical property. With
of rolling processes and rail heat
bars. EVRAZ worked with the R&D
rails, wheels, grinding balls, merchant bars
this in mind, previous investments in EVRAZ
treatment. EVRAZ seeks to achieve
centre in North America to incorporate
and other long products are being produced
global leadership in the development
experiences from OCGT pipe connections
for the Russian market and export.
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DIGITAL
EVRAZ ECO WHEEL LOWERS
TRANSFORMATION
OPERATING COSTS
The new European wheel for ŠKODA passenger cars was developed
to achieve a low stress level and increased strength. The EV006 wheel
EVRAZ DIGITAL TRANSFORMATION PATH
features increased operational reliability compared with the current Ba429
prototype. The disc’s special design ensures the wheel has greater wear
2017-18
2019
2020
2021 Results
2022-23 plans
resistance, which reduces customers’ operating costs and provides a positive
contribution to sustainability.
• Pilot projects and proof
• Broad discussion of digital
• Decision to make digital
Implementation of new
Further R&D was carried out to modify the wheel material in combination
of concept.
transformation approach,
transformation a strategic
digital transformation
176
projects
with improved heat treatment modes for North American Class C+ freight
objectives and outcomes.
priority of EVRAZ.
projects with an annual run-
implemented with an
rate effect of
cars. The increased wear resistance level improves the wheel life cycle amid
• Outcome analysis.
economic effect on 2021
its special alloy design and geometry due to hardness > 341HB, again in an
• Decision to systematically
• Launch of major digital
EBITDA of
employ digital tools
transformation projects.
effort to reduce customers’ operating costs.
on a large scale
>US$100
m
throughout enterprises
• 68 projects.
and business units.
US$65
m
and an annual run-rate
• Implemented
effect of
with an annual effect
of US$17 million.
US$150
m
Generating new ideas for the
also the subject of research conducted
Another key goal is to support the VRB
DIGITAL TRANSFORMATION IN 2021:
use of beams
jointly with Austria’s Materials Center
market with proper quality vanadium feed.
Leoben (MCL) in 2021. The simulation
In 2021, the Tula R&D centre completed
KEY FACTS
One R&D project aims to study the
process and model will help the production
work on high-purity oxide production
composite behaviour of a precast concrete
line find a way to control stress distribution
technology. The centre proved that it is
• An ambitious programme of digital projects was successfully completed and the economic
floor together with a hot rolled steel
and tolerance following levelling process.
able to efficiently produce battery grade
effect target was achieved.
section structure under bending loads. The
vanadium oxides. In 2022, the Tula R&D
test results could help to create a composite
centre will focus on electrolyte production.
• More than 80% of the effect in production came from improving technical drivers.
structure of precast reinforced concrete
• Digital technologies are making a substantial contribution to improving production safety.
slabs joined with hot-rolled steel profiles
EVRAZ Tula
• A ‘conveyor belt’ of digital products was put into operation.
and be followed by the development of
• A data-based management approach was consistently introduced at all levels of the Group.
composite structure construction codes.
EVRAZ Vanady Tula’s R&D centre is
• A portfolio of digital initiatives for 2022 was created.
primarily focused on decreasing vanadium
In 2021, the Group launched another R&D
losses in by-products. A brand new
project with its partner Central Scientific
pilot plant has been built to support the
Research Institute for Building Structures
transition from pure lab experiments to
(CNIISK) to investigate how the initial
a full-scale production unit. The work
residual stress distribution in EVRAZ hot-
performed in 2021 produced promising
rolled beams affect the buckling reduction
results. In 2022, the Group plans to finalise
factor curve for elements subjected to
pilot plant tests and begin implementing
compression. Residual stress in beams was
the vanadium recycling facility project.
PLANS FOR 2022
• Maintain the implementation speed for digital projects and the economic effect achieved.
• Focus more on working with a ‘funnel’ of digital transformation ideas.
• Become one of the world’s digital transformation leaders (a ‘beacon company’, based on
World Economic Forum terminology).
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RISKS
Our approach
Risks assessment in 2021
companies also showed that the risks
risks associated with product delivery
of regulatory actions are growing. While
to customers, including coal to ports,
As a major international mining
Identifying and assessing risks,
remaining acutely aware of the high
EVRAZ actively uses railcars that can handle
AND RISK
and steelmaking group, EVRAZ faces inherent
as well as developing measures to mitigate
volatility and uncertainty on markets due
increased loads and long-haul trains.
business risks that have the potential to impact
them and monitoring their implementation,
to the ongoing COVID-19 pandemic,
MANAGEMENT
its operations. Identifying and mitigating
are ongoing challenges for both
management is paying increased attention
To enhance its focus and control
risks is one of the most important aspects
management and the internal audit function.
to risk management in these areas.
over Environmental, Social
of the Group’s strategy and daily activities.
and Governance risks, EVRAZ published
The basic risk management processes that
In 2021, management continued to actively
Management is closely monitoring risks
its new Environmental Strategy in 2021
RISK MANAGEMENT
EVRAZ follows are outlined below.
manage the risks that the Group faces.
that could negatively impact the Group’s
with emissions reduction targets set
In late 2021, EVRAZ conducted a detailed
operations and financial position
for 2030, including GHG emissions.
analysis and reassessment of both existing
as the COVID-19 pandemic continues. EVRAZ
In addition, EVRAZ updated its qualitative
and potential new risks as well as their
has developed a system of measures that
assessment of specific climate change risks.
TOP-DOWN
CEO
Board of Directors
impact and probability. As it pays increased
aim to both reduce the incidence of illness,
This will provide more transparency on how
APPROACH
Has ultimate responsibility for risk
attention to the risks of sustainable
as well as promptly identify and isolate sick
the Group addresses related risks.
•Has an oversight role.
Oversight,
management, ensuring that it is in place
development and climate change,
employees. To reduce the risk of illness,
•Ensures that risk management processes are in place,
identification,
and effectively functioning.
adequate and effective.
For more details, see pages 92-96
the Group has integrated risk assessment
many office staff now work remotely.
assessment
Approves the risk appetite in accordance with the risk
•
into the process of drafting a long-term
In addition, EVRAZ has altered many of its
and management
management methodology adopted by EVRAZ.
development strategy and has added
internal processes to improve its efficiency
of risks
a new risk - Decarbonisation - to the list
in this new environment. Over the past
Key developments in 2021
at the corporate
of principal risks (see page 92 for details).
two years, the Group has shown that it
and outlook for 2022
level.
Given the importance of managing such
is in control of the situation and is dealing
Risk Management Group
Audit Committee
Internal audit
risks, the Board’s HSE Committee has been
with it quickly and efficiently.
In 2021, EVRAZ continued to roll out
renamed the Sustainability Committee
the health and safety risk management tools
Identifies, assesses and monitors
•Supports the board
Supports the Audit
Group-wide risks and mitigation actions.
in monitoring risk exposure
Committee in reviewing
given the expanded range of issues
A detailed analysis of their impact
that it has developed. A significant level
against risk appetite.
the effectiveness of risk
and responsibilities under its purview.
and probability of negative consequences
of employee engagement in the process
management and internal
•Reviews the effectiveness
for the Group led to a recalibration
and heightened focus on safety were among
of risk management
control systems.
in the assessment of certain risks. The Audit
the key aspects that contributed
and internal control systems.
Committee carefully reviewed this
to a reduction in injury rates. While focusing
For more details, visit
assessment on behalf of the Board.
on employee safety, the Group continues
the Group’s website
at the following link:
to work on improving its processes
The assessment also included other risks
in this area and developing a risk culture
en/company/governance/
policies/#tabs-reference
that were not recognised as principal,
throughout all stages of production.
Effective risk management
for example, HR and employee risks
(including the risks of a lack of skills,
EVRAZ also assessed the risks of changes
The risk management process aims to identify, evaluate and manage
In addition, starting from 2021,
the failure of succession planning
in international and national legislations
potential and actual threats to the Group’s ability to achieve its objectives
EVRAZ has created a permanent
and diminished productivity due to labour
associated with the introduction of
Sustainability Management Committee
unrest or poor job satisfaction), taxation
carbon emission taxes and is taking
at the level of the Group’s management.
and compliance risks (including anti-
the necessary steps to reduce emissions1.
The committee is headed by the CEO
corruption and antibribery matters), social
To this end, possible taxes on CO2
and its tasks include considering
and community risks, risks related to respect
emissions are taken into account when
Site levels
Regional business unit management teams
and assessing all risks associated
for human rights and other risks. While
evaluating new and ongoing investment
•Identification, assessment
•Adopt regional risk appetite.
with climate change and sustainable
the impact and probability analysis suggests
projects. The use of energy-efficient
and mitigation of risks.
•Support the Risk Management Group in reviewing
development that could impact
that such risks could affect operations
equipment and an environmental impact
and monitoring effectiveness of risk management.
•Promoting risk awareness and safety
the Group’s activities (see more details
to some extent, management believes they
assessment have also become part
culture.
•Identify, assess and manage risks at the regional level.
on governance at page 59).
are being adequately managed and does
of the evaluation process when considering
BOTTOM-UP
•Monitor the risk management process and effectiveness
APPROACH
of internal control.
not deem them to be capable of seriously
investment projects.
The market recovery that began in late
affecting the Group’s performance, future
Identification,
2020 continued into 2021. This led
prospects or reputation.
In addition, an ongoing programme
assessment
and management
to higher demand for EVRAZ’s products,
to improve project management
of risks at regional
but also increased such risks as the cost
Despite growing risks in logistics,
practices involves revisions to the risk
and site levels
of materials, equipment and services that
the Group’s supply system works efficiently
management approach, regular updates
and across
the Group purchases. The government’s
and delivers all the necessary materials
to the investment project risk register
functions.
introduction of additional duties for steel
and equipment on time. To reduce
and appropriate employee training. These
84
For more information, read risk management and internal control section of the corporate governance report on pages 122-123
1. EVRAZ is set to incorporate TCFD principles into the Group’s risk management processes.
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measures are intended to ensure more
results indicate that it implemented effective
Principal risks and uncertainties
•Changes in technology.
predictable results when implementing
measures to overcome the uncertainty seen
•Societal issues.
investment projects.
during the period.
•Demographic imbalance.
Our basis
Strategic priorities
Direction of risk change
After a computer virus impacted its assets
Whilst there have not been direct impacts
Emerging risks may be transferred
in North America in spring 2020, the Group
on the Group to date, the Board continues
to the class of current risks depending
Sustainable
Debt management and stable dividends
No changes
strengthened its IT security and accelerated
to monitor the situation in Ukraine and the
on their circumstances and materialisation.
development
Prudent CAPEX
Decreased
work in the area. The EVRAZ Information
response of international governments.
Management works continuously
EVRAZ Business
Retention of low-cost position
Increased
Security Operations Centre also proved
The Directors have considered additional
to monitor and manage emerging risks
System
Development of product portfolio
its ability to quickly process information
scenarios for the purposes of its going
and devise mitigation measures.
and customer base
about potential information security threats
concern assessment ( see page 189) and
and act promptly to eliminate them.
the viability statement ( see page 97).
The major part of the Group is based in
the Russian Federation and is consequently
Environmental risk has always been a focal
exposed to the economic and political
point for management and is recognised
Emerging risks
effects of the policies adopted by the
RISK
DESCRIPTION AND IMPACT
RISK
MITIGATING/RISK MANAGEMENT
THE TREND
as a principal risk for EVRAZ.
Russian government. Worsening situation
OWNER(S)
ACTIONS IN 2021
OF RISK
The Group mitigates environmental risk
In addition to principal risks, management
related to Ukraine has further increased the
EXPOSURE
by implementing air emission reduction
pays particular attention to threats that
economic uncertainty and the risk of the
1.
EVRAZ' operations are dependent
CEO, VP
This is an external risk that is largely beyond
programmes at all plants, participating
could become significant over a certain time,
imposition of sanctions. These conditions
on the global macroeconomic
of strategy
the Group's control; however, it is partly
Global economic
in developing greenhouse gas emission
known as emerging risks. The Group defines
and future policy changes could affect the
environment, as well as economic
and performance
mitigated by exploring new market opportunities,
factors, industry
regulations in Russia, implementing energy
these as events that could meaningfully
operations of the Group and the realisation
conditions,
and industry conditions, for example,
management
focusing on expanding the share of value-
global supply and demand balance
added products, further downscaling inefficient
efficiency projects and, as a result, reducing
impact EVRAZ’ activities and results, but
and settlement of its assets and liabilities.
industry
for steel, iron ore and coking coal,
assets, suspending production in low-growth
cyclicality
greenhouse gas emissions.
have a lower likelihood of materialising
which affect both product prices
regions, reducing and managing the cost base
in the next three to five years. They include:
and volumes across all markets.
with the goal of being among the sector’s lowest-
The COVID-19 pandemic did not have
•Climate-related issues.
cost producers, and improving the balance sheet/
The Group’s operations involve
a material impact on the risk management
gearing.
•Liabilities incurred due to environmental
substantial fixed costs, and global
processes in place at EVRAZ in 2021.
impairments.
economic and industry conditions can
Overall, the Group’s financial and operating
impact its operational performance.
•Geopolitical instability.
New capacity and lower demand
amid the economic recession put
significant pressure on prices.
PRINCIPAL RISKS AND UNCERTAINTIES HEAT MAP IN 2021
2.
EVRAZ faces excessive supply
VP of sales, VPs
EVRAZ mitigates this risk by expanding
on the global market and greater
of business units
its product portfolio and penetrating new
Product
SEVERITY
competition, mostly in the steel
geographic and product markets.
competition
1. Global economic factors,
5. Functional currency
products market, primarily
It is continuously developing and improving
industry conditions
devaluation
due to competitors’ activity
its loyalty and customer focus programmes
and cyclicality
6. HSE: environmental
and the commissioning of new
and initiatives.
2. Product competition
7. HSE: health, safety
facilities.
5
The Group is also implementing quality
3. Cost effectiveness
8. Business interruption
Other risks include low demand
improvement initiatives and strives to increase
4. Potential regulatory actions
9. Digital effectiveness,
for construction products
the share of value-added products.
by Governments, incl. trade,
effective, efficient
and increasing competition in this
antimonopoly, anti-dumping
and continued IT service
segment.
regulation, sanctions
10. Capital projects
Competition is rising in the rail
regimes, and other laws
and expenditure
4
product segment. The Group also has
and regulations
11. Decarbonisation (New risk)
to deal with excessive supply of slabs
11
1
on the global market and intensified
competition.
Risk appetite level
8
7
High
Medium
Low
3
9
10
5
2
4
Volatility
6
Speed of impact
3
2
Risk migration,
1
YoY
1
2
3
4
5
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RISK
DESCRIPTION AND IMPACT
RISK
MITIGATING/RISK MANAGEMENT
THE TREND
RISK
DESCRIPTION AND IMPACT
RISK
MITIGATING/RISK MANAGEMENT
THE TREND
OWNER(S)
ACTIONS IN 2021
OF RISK
OWNER(S)
ACTIONS IN 2021
OF RISK
EXPOSURE
EXPOSURE
3.
Most product groups in the steel
VPs of business
For both the mining and steelmaking operations,
Development and enhancement of internal
industry are highly cost competitive
units
EVRAZ is implementing cost reduction projects
controls in order to introduce preventive
Cost
and this is particularly relevant
to increase asset competitiveness.
measures to monitor risks associated with duties
effectiveness:
cost position
to the Group's key markets in Russia
The Group’s focused investment policy aims
and other negative measures against the Group.
and North America. The majority
vs competitors
to reduce and manage the cost base.
Pricing on products subject to anti-dumping
of the Group’s steel production
duties is tightly monitored and controlled in order
EVRAZ also seeks to mitigate this risk through
remains cost and price sensitive.
to ensure duties are reduced or eliminated.
the control of its Russian steel distribution
EVRAZ is increasingly moving
network, the development of high value-added
Taxation control function monitors planned
its products to semi-finished
products and the implementation of EVRAZ
changes to tax laws, analyses their impact on
commodities, which requires less
Business System transformation projects that
EVRAZ’s operations and reports them to the
customer service and is more
focus on increasing efficiency and effectiveness.
Company’s management on a quarterly basis.
cost driven. Steelmaking is a high
capital cost industry and the impact
In addition, the Group’s digital projects
EVRAZ and its executive teams are members
of lower plant utilisation increases
help to reduce risks associated with primary
of various national industry bodies and, as a
the underlying cost per tonne
equipment and improve effectiveness.
result, contribute to and participate in relevant
of crude and rolled steel, reducing
discussions with political and tax authorities.
any profit margin.
5.
The devaluation of functional
CFO
This is an external risk which is largely beyond
Digital transformation is having
currencies leads to foreign exchange
the Group's control, however management
Functional
a significant impact in the sector
losses (included in the consolidated
is reducing the risk through proper disclosure
currency
as companies seek to use new
statement of operations) on US dollar
and monitoring.
devaluation
technologies to support efforts
borrowings, as well as exchange
to improve productivity and margin
losses on intercompany loans
across the value chain. The failure
between entities with different
to employ and use digital
functional currencies.
transformation to solve the most
In times of severe devaluation,
urgent business problems could
while the Group's EBITDA and cash
lead to the diminished flexibility
generating capacity may increase
of operations and cost advantage.
(at least in the medium term) because
Mining production is a high capital
a large proportion of sales are priced
cost industry. Inefficiency in mining
in dollars, its profit and retained
costs contributes to higher production
earnings may decrease significantly.
costs both for mining and steel
6.
Steel production involves an inherent
Sustainability
EVRAZ monitors its environmental risk
products.
risk of environmental impacts
Committee
matrix on a regular basis, and it develops
HSE:
4.
Governments could adopt new
CEO, CFO, VP
EVRAZ and its executive teams are members
and incidents due to such diverse
under the Board
and implements mitigation measures in response
Environmental
laws and regulations or otherwise
of legal, VP
of various national industry bodies. As a result,
issues as water usage, the quality
of Directors
to these risks. Risk assessment is regularly
Potential
impact the Group's operations. This
of sales, VPs
they contribute to the development of such
of water discharged, air emissions,
and management
reviewed within the Sustainability Committee's
regulatory
could limit EVRAZ' ability to obtain
of business units
bodies and, when appropriate, participate
metallurgical waste recycling,
level
agenda. Senior management also devotes
actions
financing on international markets
in relevant discussions with political
and community discontent.
greater attention to the monthly monitoring
by governments,
or sell its products (for example,
and regulatory authorities.
Consequently, EVRAZ faces risks,
of environmental risk trends and factors.
including trade,
restriction of trade, export or import
including regulatory fines, penalties
antimonopoly,
The Group seeks to monitor potential legislative
EVRAZ has developed an environmental strategy
quotas, pricing control or capital
and adverse impacts on its reputation
anti-dumping
changes before their introduction at the point
until 2030 and updated its list of projects
flow restrictions). EVRAZ may also
or, in extreme cases, the revocation
regulation,
when new laws are being drafted:
in accordance with the strategy to achieve its
be adversely affected by government
of plant environmental licenses,
sanctions
•identification of key stakeholders among
strategic goals regarding emissions and waste.
sanctions that are imposed
thereby curtailing operations
and other laws
government authorities;
The strategy is being implemented through
on Russian businesses or otherwise
for an indefinite period. Globally,
and regulations
dedicated programmes in each division.
•monitoring of the legislative agenda planned
reduce its ability to conduct business
there has been an increase
by key stakeholders;
Most of the Group’s operations are certified
with counterparties.
in regulatory scrutiny and pressure
•proactive approach to building regulatory rules
in accordance with ISO 14001, and work
as well as the expectations
Introduction of duties and tariffs
(acting as metals and mining experts).
is ongoing to bring the remaining plants
of investors and customers. This
on steel products in North America.
Further development of control
into compliance with this international standard.
will require more investment
over antimonopoly and anti-dumping regulation:
EVRAZ is currently compliant with REACH
in the medium to long-term.
requirements.
•issuing and monitoring of the Group's trade
Mining production involves
policies;
It is obtaining integrated environmental permits
an inherent risk of environmental
•preventing anti-dumping policies among
for compliance with the new regulation.
impacts and incidents, mostly due
competitors/customers - Introduction of an IT
to tailings management, water
For its North American operations, EVRAZ
tool with a dashboard for antimonopoly risk
quality and the less significant
is formulating a strategic 3-5 year plan
management.
risk of air emissions. Operations
to be competitive in reducing greenhouse
Ongoing liaison with both US and Canadian
are subject to a wide range of HSE
gasses and its carbon footprint through utility
governments and the American and Canadian
laws, regulations and standards,
and energy utilisation, including through
steel associations and ongoing engagement
which, if breached, may result
such projects as Big Horn renewable energy
with the Canadian government to monitor
in fines, penalties, the suspension
at the Pueblo facility.
and implement anti-dumping measures.
of production or other sanctions.
EVRAZ is also involved in drafting GHG
88
emissions regulation in Russia.
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DESCRIPTION AND IMPACT
RISK
MITIGATING/RISK MANAGEMENT
THE TREND
RISK
DESCRIPTION AND IMPACT
RISK
MITIGATING/RISK MANAGEMENT
THE TREND
OWNER(S)
ACTIONS IN 2021
OF RISK
OWNER(S)
ACTIONS IN 2021
OF RISK
EXPOSURE
EXPOSURE
7.
Safety risks are inherent
Sustainability
To mitigate these risks, EVRAZ is taking
8.
Prolonged outages or production
VPs of business
The Group has defined and established disaster
to steelmaking and mining
Committee
the following actions:
delays, especially in coal mining,
units
recovery procedures that are subject to regular
HSE: Health,
Business
safety
operations. Employees face a range
under the Board
•Review of the Lockout Tagout (LOTO)
interruption
could have a material adverse
review. Business interruptions in mining mainly
of risks, including the potential
of Directors
procedure as the main cause of fatalities
effect on the Group’s operating
relate to production safety. Measures to mitigate
dangers of fire, explosions
and management
in 2021 - and further development
performance, production, financial
these risks include methane monitoring
and electrocution.
level
and implementation of the occupational
condition and future prospects.
and degassing systems, timely mining equipment
safety risk management programme.
maintenance, as well as employee safety training.
Additional risks specific to individual
In addition, any long-term business
mines include methane levels, rock
•Transformation of the Health & Safety
interruption may result in a loss
Implementation of quick actions that reduce risks
operational model with the implementation
falls caused by geological conditions
of customers and competitive
on the main equipment at mines (digital projects).
of roles and responsibilities, reviewing training
and accidents involving equipment
advantage, as well as damage
Creation of the equipment maintenance
processes as well as monitoring and continuing
and/or vehicles.
to the Group’s reputation.
and repair (TORO) system, including certain
improvements.
Operations are subject to a wide
digital projects and its circulation at mines.
•Further development/update of health
range of HSE laws, regulations
EVRAZ performs detailed incident cause analyses
and safety tools (behaviour safety observations,
and standards, which, if
to develop and implement preventive actions.
contractual safety, etc.) based on a regular
breached, may result in fines,
analysis of major causes of incidents.
Records of minor interruptions are reviewed
penalties and adverse impacts
to identify any other significant underlying issues.
•Introduction and development of safety audits.
on the Group's reputation or,
The repairs and maintenance process
•Consideration of the implementation
in extreme cases, the revocation
of proactive KPIs and indicators.
continues to undergo transformation in Siberia
of mining operational licenses,
and the Urals.
In addition, EVRAZ is utilising the EBS roll-
thereby curtailing operations
out in order to further prompt employees
9.
The failure to proactively use IT
VPs of business
Digital transformation is a part of the Group’s
for an indefinite period.
to identify improvements and/or safety concerns
capabilities to increase the efficiency
units, VP
IT strategy. EVRAZ continuously assesses
Digital
In addition, there is a risk
and to increase visibility and enable the Group
of business operations may result
of IT and IT
and monitors information security risks, and it
effectiveness
of employees being infected
to prioritise, execute and communicate safety
in the loss of competitive advantage
Architecture
takes mitigation measures based on external
with COVID-19, which could lead
and effective,
improvements and abatement measures. It
and margins. Increased digital
Committee
assessments by an independent advisor.
efficient
to the mass quarantine of workers.
is also driving the utilisation of a risk matrix
transformation and the convergence
and uninterrupted
The Group conducts regular continuity testing
in the incident management system through
of IT and operational technology
IT service
for the most critically important IT systems.
safety initiatives, taking it down to the front line
also makes companies more
Other mitigating actions includes:
in order for supervisors to implement higher
vulnerable to continued rogue activity
levels of safety controls and risk reduction
in the sector. IT and information
•Further improvement of IT processes
measures and working to change the safety
security risks have the potential
with a focus on fast and efficient project
culture through the Leadership Development
to cause prolonged production delays
implementation.
Programme.
or shutdowns.
•Building and improving IT competences
in high-demand areas: data science,
In the coal segment, EVRAZ is implementing
back- and front-end programming, design
the following programmes with a focus
and information security.
on the safety of its operations:
•Realisation of the IT security improvement
•Further execution of the five-year degassing
programme.
programme.
•Mine collapse prevention programme.
•Prevention of spontaneous coal combustion
in working spaces (performance control).
•Dust and explosion safety of mines.
90
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MITIGATING/RISK MANAGEMENT
THE TREND
change and the uncertainty of changes in
•
The assessment process includes
All risks, including climate-related risks, are
OWNER(S)
ACTIONS IN 2021
OF RISK
the business strategy past 2050. However,
identifying risks in relation to all major
closely monitored and taken into account
EXPOSURE
transitional climate-related risks, such
divisions of the Company (Urals, Siberia,
when planning the Group’s strategy. To
10.
The Group’s development plans
CFO, Strategy
EVRAZ reviews all proposed capital projects
as carbon price, the Carbon Border
North America, Coal and Vanadium).
mitigate the consequences, EVRAZ has
largely rely on capital projects
Committee,
on a risk return basis. The current list of projects
Adjustment Mechanism (CBAM), and other
Our risk identification process is in line
developed a list of initiatives that will assist
Capital projects
•
and expenditures
and depend on their economic
Investment
has been reviewed and updated.
regulatory risks, are already moving
with three climate scenarios: low-
in lowering the risk scores and consequently
viability, efficiency and effective
Committee, VPs
Each project is presented for approval against
into the short-term risk category amid
carbon development, Paris-compliant
reducing its impact on the climate. For more
execution, as well as the availability
of business units
the Group’s risk matrix to assess its potential
increased scrutiny from stakeholders.
and business-as-usual. These align
details about our increased resilience plans
and cost of capital to finance capital
downside and any possible mitigating actions.
with SSP1-2.6, SSP2-4.5 and SSP5-8.5,
and decarbonisation pathway, see page 63.
expenditures.
EVRAZ has created a list of typical project risks
Changes in regulation, including in climate
and focus on time horizons that
In case our assessment detects a risk of any
Economic issues outside of those
and a database of lessons learned.
regulation, being kept under review and
are llong (2050), medium (2030) and
sort, we consider mitigating it no matter
factored into the Group’s business
Project delivery is closely monitored against
monitored closely. In addition, in 2022, we
short (2025).
the strength of impact or its financial
plans, including regulatory
project plans, which allows for high-level action
approvals, may also impact
are planning to incorporate climate-related
The Group uses SSP2-4.5 (2.0˚C) as the
consequences. EVRAZ compares the financial
•
to manage project investment for both timely
anticipated free cash flow
risks into financial sustainability models and
primary scenario for strategic planning,
potential losses against the risk mitigation
delivery and planned project expenditures.
and cause certain components
conduct a quantitative analysis to assess how
assessing risk materiality, and evaluating
cost. If a significant change affects the risk
of the planned capital expenditures
New mine development and the definition
climate risks will affect our financial stability
impacts and opportunities. We consider
assessment results, EVRAZ is set to adjust its
to be re-phased, deferred or
of feasibility plans are reviewed and signed off
and performance.1
SSP2-4.5 the most likely scenario for the
strategy accordingly.
abandoned with a consequential
by independent mining engineers.
industry and have aligned the Company’s
impact on the Group’s planned future
The Group regularly revisits key assumptions
performance.
Climate-related risk identification
decarbonisation pathway accordingly.
for its main investment projects and performs
and assessment process:
Each risk is analysed based on
Transition risks
In addition, the profitability of new
scenario analyses, which may result
•
in the suspension and/or postponement
information from various sources, such
projects may be impacted by higher
•EVRAZ determines climate risk materiality
than expected operating and life
of certain projects.
according to the Group approach, which
as the Intergovernmental Panel on
Transitional risks are currently being
of mine costs due to variables such
EVRAZ also uses financial modelling
includes a five-point scale of the impact
Climate Change (IPCC) and International
managed by assessing new regulations
as lower than expected coal and iron
to define the strategy of each individual asset
and a five-point scale of the likelihood
Energy Agency (IEA) scenarios, World
related to our operations in various
ore quality, coal seam economics,
and the enterprise in general for the purpose
of the risks. The risk impact/likelihood
Steel Association, International Council
countries, publicly disclosing climate-
as well as technical processing
of long-term FCF forecasting, including
scale goes from 1 (Insignificant/Rare)
on Mining and Metals (ICMM), national
related risks and opportunities following
and engineering factors.
investment projects.
to 5 (Major/Almost certain). The final risk
reports and peer-reviewed scientific
the TCFD recommendations, and tracking
An ambitious corporate investment
The project management system’s transformation
score varies from one to 25 and reflects
articles.
the development of new steel production
programme may cause a shortage
is ongoing.
of qualified project staff.
the overall risk rating.
technologies.
A pilot project is being conducted at one mine
on a long-term detailed planning of LOM (life
of mine) using a 3D model and restrictions on air,
gas and sinking.
11.
Russia and the markets to which
Sustainability
Assessing, verifying, and monitoring Scope 1, 2,
New risk
EVRAZ exports steel could impose
Committee
and 3 GHG emissions on a yearly basis.
Decarbonisation
different systems of carbon emissions
under the Board
Materiality
Direction of risk change
Reducing GHG emissions.
control. These systems could vary, but
of Directors
Setting an internal carbon price for assessment of
Very high
High
Medium
Low
No changes
Decreased
Increased
will most likely include selling CO2
and management
new investment projects.
emissions per tonne of production,
level
See page pages
EVRAZ considers SSP2-4.5 (2.0˚C) as the primary
Following the decarbonisation initiatives
Time horizons
92-96 for more
which will be gradually reduced
scenario for assessing risk materiality.
details.
to zero in 2050-60.
roadmap.
Short
Medium
Long-term
Assessing the financial impacts of
decarbonisation on EVRAZ in 2022
All risks have been evaluated against short (2025), medium (2030),
and long-term (2050) time horizons.
Climate change risks
are reassessed annually to ensure that they
of the Task Force on Climate-related
RISK
DESCRIPTION
CONSEQUENCES
RISK MANAGEMENT INITIATIVES THE TREND
are appropriately documented and that
Financial Disclosures (TCFD) since 2020.
OF RISK
EXPOSURE
The identification, determination of
timely risk management procedures
In late 2021, the Group conducted
significance and probability of climate-
have been developed throughout
a qualitative risk reassessment, which
Carbon
Includes the introduction of carbon
When additional fees
Regularly assessing, verifying, and
related risk is scored and fully aligned
the Group and at operational levels based
resulted in climate-related risks being
price
pricing and emission charges,
are introduced related
monitoring Scope 1, 2, and 3 GHG
with the Group's unified process
on the Group’s risk management approach.
integrated into its principal risks
1.5˚C
and the introduction of taxes
to direct GHG emissions,
emissions.
on greenhouse gas emissions.
the Group’s annual variable
of managing risks. This framework
in the form of decarbonisation risk,
2.0˚C
Setting an internal carbon price.
For more details, see pages 84-86, 122-123
costs may rise.
encompasses all business processes
as well as its overall score being elevated
4.5˚C
Developing decarbonisation initiatives
Accordingly, the price for end
and day-to-day activities. The method
(for more details, see page 85). We
and reducing GHG emissions.
consumers might increase,
used to categorise risks as either
EVRAZ has been assessing climate-
consider climate-related risks up to 2050
which could cause a decrease
principal or non-principal is also applied
related risks and opportunities based
due to the unpredictability of social and
in the Group’s sales.
to managing climate-related risks. All risks
on the recommendations and terms
economic aspects related to climate
1. A quantitative risk assessment will allow us to understand better the financial impact of climate-related issues on the Company. We plan to include the effects of climate
92
scenarios in the analysis and describe the processes used to determine which risks and opportunities have arisen. Results will be published in the 2023 disclosure.
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RISK MANAGEMENT INITIATIVES
THE TREND
Physical risks
OF RISK
EXPOSURE
The categories of physical risks listed
more frequent in the future, will receive
in transportation supplies due to extreme
CBAM
The introduction of cross-border
The price for consumers
Regularly assessing, verifying, and
below have been designated as ones
the most attention. Our supply chain is the
weather events such as storms, hurricanes,
carbon regulation law (CBAM).
in the EU, US and China might
monitoring Scope 1, 2, and 3 GHG
that require regular monitoring. Extreme
second primary focus, with consideration
road erosion, power outages, and smoke
1.5˚C
EU importers will be required
increase (both due to the direct
emissions..
weather, which is expected to become
given to anticipated disruptions and delays
from forest fires.
2.0˚C
to compensate for CO2 emissions
cost of purchasing CBAM
Regularly monitoring international
4.5˚C
arising from production processes
certificates and preparing
regulatory changes.
by purchasing CBAM certificates.
and verifying quarterly
Setting an internal carbon price.
Other countries might also
carbon reports). Accordingly,
implement such initiatives
the Group’s sales in the EU
Developing decarbonisation initiatives
and reducing GHG emissions.
Materiality
Direction of risk change
in the future.
and other countries that
introduce the CBAM may
Very high
High
Medium
Low
No changes
Decreased
Increased
decrease.
EVRAZ considers SSP2-4.5 (2.0˚C) as the primary scenario
Other
The risk of increased government
An inadvertent violation
Regularly monitoring regulatory
Time horizons
for assessing risk materiality.
regulatory
demands includes changes
of new carbon regulation
changes in regions of presence.
Short
Medium
Long-term
risks
in national regulations, regulations
in the context of emerging
Reducing GHG emissions.
to meet the Paris Agreement
legislation decreases
1.5˚C
Disclosing climate-related
All risks have been evaluated against short (2025), medium (2030),
objectives and climate change-
the speed of decision-
2.0˚C
information according to TCFD
and long-term (2050) time horizons.
related disclosures.
making on adopting changes
4.5˚C
recommendations.
and coordinating the Group’s
This risk is also associated
with the Group’s non-
activities.
compliance with the new
listing rules and insufficient
RISK
DESCRIPTION
CONSEQUENCES
RISK MANAGEMENT
THE TREND
disclosure of climate-related
INITIATIVES
OF RISK
information according to TCFD
EXPOSURE
recommendations.
Changes in air
With an increase in the number
Overheating and breakdown
Monitoring the condition of
Reputational
Reputational risk includes
If investors’ expectations
Interacting with investors on climate
temperature
of extreme weather events
of equipment, which can also lead
our equipment, as well as
risks
the risk of a change in investor
regarding the Group’s ESG
change and other themes related to
in regions of operation due
to emergencies and the suspension
conducting timely repairs.
1.5˚C
attitudes, which is associated
initiatives continue to rise,
sustainable development.
to temperature fluctuations,
of operational activities;
1.5˚C
2.0˚C
with a loss of interest in the event
EVRAZ will have to make
an increase in days with extreme
the deterioration of health
2.0˚C
Disclosing climate-related
4.5˚C
of insufficient public information
additional efforts to comply
heat (temperatures above
and increased injury of employees;
information on the development
4.5˚C
about the following:
with the new requirements.
+ 30°C) and heat waves
premature wear of buildings
and progress of the Group’s
Otherwise, investors might ask
(prolonged periods with high
and equipment.
decarbonisation initiatives.
•The impact of climate change
for higher yields.
temperatures) is expected.
on the Group’s activities
Disclosing the Group’s climate-
and the measures that
Change
There is a trend towards
Premature wear and tear of
Monitoring the condition
related and other non-financial data
the Group is taking in response.
in accordance with international
in average
an increasing number
buildings and structures; erosion
of our facilities, as well as
•Levels of GHG emissions,
rating agencies.
annual
of dangerous rain showers.
of the road surface; destruction to
conducting timely repairs.
carbon intensity of production
precipitation
The risk of increased intensity
infrastructure; the breakthrough
and other climate-related
of spring floods is due
of hydraulic structures and the
1.5˚C
metrics and goals.
to the melting of snow
flooding of buildings, structures,
2.0˚C
accumulated during the winter
and mines.
Technology
Technology risk is associated
Clients are likely to favour
Monitoring and analysing
4.5˚C
season, which leads to more
risks
with a tendency for a demand
products with a lower
potential technological trends
pronounced peaks during spring
for metallurgical products to shift
carbon footprint. The Group
and opportunities for EVRAZ;
1.5˚C
floods.
towards less carbon-intensive
may either have to incur
2.0˚C
Increasing investments in R&D
products.
additional costs to maintain
projects.
Droughts
An increase in average annual
Damage to the Group’s property
Considering climate risks
4.5˚C
a competitive level of carbon
and fire
temperatures and a change
(increased repair and maintenance
when making investment
Developing decarbonisation
intensity (for example, for
hazards
in precipitation norms could
costs), smoke pollution of
decisions.
initiatives and reducing GHG
carbon capture) or survive a
increase the danger of fires
production facilities, injury to
emissions.
1.5˚C
Continuing projects for water
drop in demand.
in natural ecosystems (fire
employees, potential disruption of
2.0˚C
recycling and closed-loop
hazard).
operational activities (such as an
Market risks
This risk is associated with the
Seeking opportunities in new
water treatment technologies.
•A decrease in profits
4.5˚C
interruption of the mining process).
trend of a technical modernisation
is possible due to the
markets related to the transition
1.5˚C
towards less carbon-intensive
reduction in demand for
to a low-carbon economy, as well
2.0˚C
products, as well as a decrease
products with a high carbon
as climate change adaptation and
4.5˚C
Dangerous
The impact of hazardous events
Damage to the Group’s property
Considering climate risks
in demand for raw materials for
footprint when compared
mitigation.
meteorological
is determined by the materiality
(increased repair and maintenance
when making investment
production processes. Market
with competitors.
Striving to implement new
phenomena -
of damage and destruction
costs), power outages, injuries to
decisions.
risk also includes an increase in
•With an increase in the
technologies to introduce
strong
to the Group’s various assets
employees, penalties due to delays
Monitoring the Group’s own
the cost of electricity and heat in
cost of electricity used, the
decarbonisation and resource- and
winds, floods
and the impact of such events
in exports shipped by sea, loss or
supply chain operations.
Russia.
cost of production might
energy-efficiency projects.
and storms
on local communities.
damage to products transported by
increase.
1.5˚C
sea and the flooding of warehouses.
2.0˚C
4.5˚C
94
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VIABILITY
STATEMENT
As a global steel and mining group, EVRAZ
The key scenarios tested can
sanctions, management also performed
is exposed to a range of risks and inherent
be summarised as:
a further scenario to reflect a severe
uncertainties that are explained more
•
Base scenario:
downside sensitivity, reflecting a material
fully in this section. The Group’s principal
and sustained interruption to the Group’s
-The key assumptions as disclosed
risks and its approach to managing them,
in Note 6 to the financial statements
business. This scenario assumes a material
together with the latest financial forecasts
under Impairment of assets
reduction in EBITDA throughout the viability
and five-year strategic plan, have formed
on pages 211-214.
assessment period, reducing Russian export
the basis of this long-term viability
-The scenario reflects the effect
sales outside the CIS to nil combined
assessment. EVRAZ believes that a five-
of the highly probable demerger
with a significant further reduction in EBITDA
year period is optimal for the viability
of the coal business (Note 13)
as a result of other possible factors,
analysis, as it corresponds to the period
and the effect of the new excise
including further international sanctions.
used in the Group’s strategic planning
tax on liquid steel and higher taxes
This scenario reflects a reduction in capital
and therefore reflects the information
on mineral extraction imposed
expenditure to US$500 million per annum.
available to management regarding
by the government of the Russian
This also assumes the Group raises additional
the future performance of the business.
Federation from 1 January 2022
financing in 2023 followed by more significant
Visibility of performance and risks beyond
(Note 30).
financing in 2024. The Directors have also
the strategic planning cycle is limited,
considered additional mitigating actions that
-Future pricing of steel and raw
and scenarios beyond this five year period
materials is within the range
would be available were such a scenario
have not been analysed for the purposes
of the external analyst forecasts set out
to occur including further reductions
of the viability statement. The Group
in Note 6.
in costs, capital expenditure and the deferral
modelled the impact of expected carbon
of dividends.
-Annual steel volumes are assumed
taxes upon the business but other emerging
to vary from -1.6% to 11.9%, compared
OPPORTUNITIES:
climate change risks are not anticipated
with the 2021 level over the five-year
The scenarios are designed to be severe
to pose a material threat to the business
period to December 2026.
but plausible. They take full account
Climate change represents a challenge for EVRAZ. However, rapid and proactive actions will enable
over the period of the viability assessment
Global economic decline:
of the potential actions available to mitigate
•
the Group to leverage the opportunities that arise from this global transition. Below are some of the
and were not modelled at this time.
the occurrence and impact of the risk,
-Steel and raw material prices
actions that we are taking and opportunities identified.
and exchange rates during 2022
and the likely effectiveness of such action.
In accordance with provision 31 of the UK
and future periods are at the lower end
The process makes certain assumptions
Resource efficiency
Energy sources
Corporate Governance Code 2018,
of the external analyst forecast set out
about the normal level of capital recycling
the Board has assessed the Group’s
in Note 6.
likely to occur and considers whether
•Enhanced use of scrap metal.
•Improving the energy efficiency of existing
processes.
prospects over the period of the current
additional financing facilities will be required
•Improved efficiency of water resources
-Sales volumes are assumed to decrease
management (closed-loop water systems).
strategic plan to December 2026
by 3.0% in comparison with the base
and available in each scenario. EVRAZ
•On-site generation of renewable energy.
•Increased use of internally produced coke oven
•Gradually transitioning to less carbon intensive
and considers it possible to form
scenario.
considers this assessment of its prospects
gas and reduced consumption of natural gas.
and more efficient energy resources.
a reasonable expectation of the Group’s
Increased conversion costs in the CIS.
based on stress-testing to be reasonable,
•
viability over this five-year period.
Increased CAPEX.
given the risks and inherent uncertainties
•Gradually increasing of renewable energy
•
Resilience
in the Group’s energy mix.
The assessment included consideration
Potential changes in HSE requirements
facing the business.
•
of the stress-testing detailed below,
and standards.
•Using scenario analyses in planning our
•Using hydrogen.
medium- and long-term strategy.
with particular attention paid to the forecast
•
Appreciation of local operating currencies.
The directors confirm that their assessment
Markets and products
cash position and compliance with financial
Cybersecurity failure resulting
of the principal risks facing the Group
•Introducing climate-related risk assessments into
•
corporate management processes.
maintenance covenants in each scenario,
in production delays or shutdowns
is robust. Based on this robust assessment
•Identifying opportunities in new markets
and new products related to the low-carbon
as well as the mitigation plan developed
at a major operation.
and the stress-testing of the Group’s
•Collaborating and participating in partnership
programmes for the development of low-carbon
economy transition and climate change
by the management.
Introduction of new tariffs and duties
prospects across several risk-related
•
solutions and and exchanging best practices
adaptation and mitigation.
•
Business interruption, leading to lost
scenarios the directors have a reasonable
through the World Steel Association and Russian
The assessment was underpinned
production.
expectation that EVRAZ will be able
•Producing carbon-free steel.
Steel.
by scenarios that encompass a wide
Introduction of carbon taxes.
to continue in operation and meet its
•
spectrum of potential events. These scenarios
Combinations of correlated risks/
liabilities as they fall due over the five-year
•
are designed to explore the Group’s resilience
scenarios.
period to December 2026.
to the significant risks set out on pages 84-92
and combinations of correlated risks.
In order to further test the resilience
In making this statement, the directors
Some risks are outside the Group’s control
of the viability assessment to potential
have made a key assumption that funding
and the potential implications are difficult
uncertainties, particularly with respect
or refinancing, by way of capital markets,
to predict in the current environment
to worsening situation relating to Ukraine
bank debt and asset financing, continues
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and considered remote.
and heightened risk of the economic
to be available.
97
Meet EVRAZ
EVRAZ in figures
STRATEGIC REPORT
Corporate governance
Financial statements
Additional information
ANNUAL REPORT & ACCOUNTS 2021
STATEMENT
IN ACCORDANCE
WITH S172
OF THE COMPANIES ACT
The EVRAZ Board has considered in detail
that the Group’s net debt/EBITDA ratio
All shareholders are normally welcome in
the year, senior management attend the
initiatives to improve this. In addition, it
projects available over the medium to long
the Company’s business model outlined
remains below 3x. In addition, the Board
person at the AGM, where all directors
Group’s Board meetings to present the
considers the planned actions necessary
term. When development plans for projects
on pages 14-15 of this report, which
may consider further distributions of free
are available to discuss any issues that
annual budget for their respective business
to reduce the Group’s impact on the
are in their early stages, management
identifies, and explains why it identifies, the
cash flow available after implementing
they might wish to raise. In 2021, while not
units and key investment projects that
environment, including the reduction of
engages key customers to ensure that the
Company’s stakeholders as:
its investment programme to support
all Board members could attend because
require the Board to approve significant
greenhouse gas emissions. During 2021,
products manufactured meet their specific
the business. The Board reviewed and
of COVID-19 restrictions, the meeting
capital expenditure.
the HSE Committee considered its terms
requirements.
•Shareholders and investors.
considered that, despite the impact of
proceeded for UK shareholders.
of reference and workload, and made
•Employees.
COVID-19 on the operational results of the
All presentations made to the Board
suggestions to the Board about how it
All suppliers are treated in line with
•Customers.
Group and the economy, the underlying
During the year, supported by the CFO,
consider both the benefit to shareholders
could best monitor the Company’s ESG
agreed contract terms, and when new
•Suppliers and contractors.
strength of the business was sufficient to
the CEO held conference calls and briefed
of proposals and the impact on other
performance. These were adopted, and
opportunities become available, the Group
•Local communities.
continue paying dividends relating to the
analysts and institutional investors fully
key stakeholders. The Remuneration
the plan of work will be introduced across
has transparent tendering procedures to
•Government and regulatory authorities.
2021 financial year.
after the publication of the Group’s half-
Committee receives detailed presentations
2022 and reported on in that year’s report.
ensure that new contracts are awarded
•Media.
year and full-year results, and after the
from the Vice President of HR, which
To reflect the committee’s wider role, the
on a fair basis. The full range of EVRAZ
•Industry organisations.
The Group has an active IR programme to
announcement of the coal demerger.
outlines remuneration and incentive plans
decision was taken to rename it as the
stakeholder engagement is detailed on
The Board recognises the benefit of clear
enable shareholders to engage with the
Additionally, supported by the director for
at each level across the whole business. A
Sustainability Committee.
pages 124-125.
and precise engagement with the Group’s
Company and the Board, both on business
investor relations, the CFO held a series of
whistleblowing arrangement is in place that
stakeholders. Value is generated through
issues and on any governance concerns
online meetings with institutional investors.
allows staff to raise issues in confidence,
The Board considers the interests of all
These actions assist the directors in
the Group’s core activities as outlined
that they might have.
and responses to them are routinely
stakeholders by taking a long-term view
performing their duties under S172 of the
in the discussion of its business model
Engagement with employees remains key,
monitored by the Audit Committee, which
of how the business needs to develop in
Companies Act 2006, and the analysis will
on pages 14-15.
For the investment community, a capital
and the Board closely monitors the results
escalates key issues with the Board.
its markets (see principal decisions taken
confirm to the Board that management
markets day is held each year, and it
of the annual engagement survey, which
by the Board on pages 115-118). The Board
consider the impact of business plans on all
Throughout 2021, the Board continued
covers both the current performance and
indicate satisfactory levels of improvement.
Since 2011, the Board has had in place a
evaluates technological developments to
stakeholders when developing initiatives for
to consider the impact of the COVID-19
future plans of the Company, as well as
Two independent non-executive directors
Health, Safety and Environment Committee
ensure that its assets remain competitive
Board approval.
pandemic on all stakeholders.
governance issues. Due to the pandemic,
have taken responsibility for engaging
to help it to monitor the Group’s
and makes the necessary financing
an in-person event was not possible
with employees in the businesses in North
performance in the area and management
requirements to implement strategic
The Group’s dividend policy anticipates
in 2021, but a virtual meeting was well
America and Russia, respectively, and
dividend payments to shareholders of
attended, and an in-person meeting is
they do so by attending key staff briefing
US$300 million per annum, provided
planned for 2022.
events and town hall meetings. Throughout
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