The production on Blast Furnace no. 1 was temporarily stopped on July 26. The reasons for this decision were stated by the Executive Director for Production, Vladan Mihailović, during his interview for RTS News.
“The business decision to temporarily stop the operation of Blast Furnace number 1 was made in order to further optimize the process, reduce costs and improve work efficiency. After the outbreak of the crisis in Ukraine, we faced several major issues. We have successfully resolved the drastic reduction of the raw materials supply from that direction by adjusting the logistics directions. Now, we receive the ore from the South African Republic, Australia, Mauritania, and coal from Colombia and the United States of America. In addition, due to increased prices of the energy sources and rather uncertain work perspectives, we have noticed a decrease when it comes to our customers’ needs for steel. We conducted careful analyses and came to the conclusion that we can meet all customer needs while operating with one blast furnace“, Mihailović pointed out.
He also added that the stoppage of Blast Furnace number 1 would last until the needs of our customers increase. Over the past period, we had a reduced operation of both furnaces, and the Blast Furnace 2 will now operate in full capacity, with full work parameters, lower energy source consumption, so the operation will be far more efficient. Comparing to the production from the first six months of this years, the production decrease will only be 15% per cent, explains Vladan.
Mihailović also addressed the allegations about the possibility of dismissal of employees and clarified how the employees from Blast Furnace number 1 will be engaged during the period of stoppage. “Certainly, such allegations are unfounded. This is not the first time that we are working with one blast furnace. For instance, in 2020, the BF1 was stopped for 13 months due to European Commission quotas. The employees from this facility will be working on minor overhauls, in order to improve the condition of the equipment, while some of them will be engaged in other plants of our factory, in accordance with their qualifications. There will certainly be no layoffs. We do not have redundant employees and we have great respect for the people who work for us and for their contribution to business results. The employees are familiar with these decisions and they accepted them without any issues, as they always have.”
Mihailović emphasized that the management of the factory is satisfied with the results in the first and second quarter. The decision to temporarily stop the operation of BF1 represents the continuity of positive business, he pointed out and expressed confidence that business will be positive in the third quarter as well.
The increase of export quotas by the European Commission and the situation with supplies were also topics that Mihailović addressed on that occasion. “It is true that the European Commission increased quotas for the export of hot rolled products to 120 thousand tons per year, which is 30 thousand tons per quarter. Quotas for cold rolled products and tin plate products remained at the same level. It is a very positive progress, we are grateful for it, however, in this situation it did not help us much. When it comes to supplies, we have enough for the production of two blast furnaces in the required operating mode”, concludes Vladan Mihailović.