Speaking to IM at the 2018 Capital Markets Day in London, Severstal CEO Alexander Shevelev said the company is upping production by five times at its Yakovlevsky DSO iron ore mine, which is unusual for that commodity in being an underground operation. The aim is to reach 5 Mt/y by 2023 from the current capacity of just over 1 Mt (2018 estimated full year production is 1.3 Mt).

The mine uses underground stoping so the investment includes substantial new fleet from loaders to conveyors and both development and production drilling equipment.

The mine is a long-standing supplier of quality iron ore to Severstal’s Cherepovets steel mill and the investment mirrors planned increases in Severstal’s steel output. Yakovlevsky mine is located in Yakovlevo, 40 km north from Belgorod in the Kursk Magnetic Anomaly basin. The total resource base of the Yakovlevsky deposit exceeds 9.6 billion tonnes. The operational scheme includes underground mining and surface crushing without beneficiation (DSO). The ore has an iron content of 61.4% and beyond crushing can be shipped as DSO without beneficiation beyond crushing due to the high grade. The mine has direct access to the main railroad via a private 28 km long rail line.

The company expects that the economies of scale will see the mine cash cost fall from the current $41/t to about $18/t. Severstal has always benefitted from haivng its own integrated high quality iron ore and coking coal production, and this move shows its continued commitment to its vertically integrated business model.