Annual Report & Accounts 2015

Environment

Environmental strategy

EVRAZ NMTP introduces new dust protection technology

EVRAZ NMTP has finished erecting additional screens to protect the port and the surrounding town from coal dust. In doing this, it was the first enterprise to use aerodynamic panels, which minimise the kinetic energy of the air, reducing air movement and preventing the dispersion of dust. The panels represent one of the most effective dust suppression technologies available today. The port took the idea for the screens from Japan, where outdoor coal transhipment is standard practice. The aerodynamic panels prevent coal dust from leaving the loading area.

EVRAZ ZSMK replaces dust collection system in agglomerate cooling section of its sinter plant

EVRAZ ZSMK installed new dust collection system in the agglomerate cooling section of its sinter plant, as part of a dedicated project to upgrade gas and dust removal equipment. The old equipment has been removed and the base for its replacement is already in place. The new equipment will reduce pollution emissions from the unit by up to 80%.

EVRAZ steel mills and mining operations use substantial amounts of energy and water and involve environmental consequences, such as waste generation, wastewater discharge, air emissions and land contamination.

These operations are strictly regulated by environmental laws and thus make the Group dependent on having environmental permits and licences. The continued validity and extension of these are conditional on EVRAZ compliance with their terms, which generally include obligations to implement certain environmental commitments, recruit qualified personnel, maintain necessary equipment and environmental monitoring systems and periodically submit information to environmental regulators. Failure to comply with any of these conditions could result in the suspension, amendment, termination or non-renewal of environmental permits and licences or could mean the Group incurring substantial costs to eliminate or remedy violations.

EVRAZ is committed to further strengthening its environmental management systems, particularly by continuing its ISO 14001 audit programme. Although the Group has no legal obligation to obtain international certification, it currently has nine ISO 14001-certified sites, including its largest facilities, such as EVRAZ NTMK, EVRAZ ZSMK and EVRAZ DMZ. The certificate of EVRAZ Palini e Bertoli has been temporarily suspended due to production stoppage.

EVRAZ is undertaking the environmental reviews of its new business activities (projects) on the basis of the Environmental and Social Impact Assessment (ESIA). This process involves consultations with local and regional authorities, local businesses and community members. The study provides an evaluation of both the direct and indirect impacts of the new operation on the local community and on the wider environment. The key tasks are to develop mitigation plans to minimise and manage the possible impacts. It also provides a process to ensure that local communities are consulted in decisions we make throughout the life of the project.

EVRAZ supports the health and environmental goals of Regulation (EC) No. 1907/2006 of the European Parliament and of the Council, a European Union regulation concerning the registration, evaluation, authorisation and restriction of chemicals (“REACHREACH — Regulation (EC) № 1907/2006 of the European Parliament and of the Council according to which as of 1 June 2007, all chemical substances, mixtures and substances in articles (in some cases) produced in or imported to European Economic Area (EEA) territory above 1 tonne per year are subject to mandatory procedures such as registration, evaluation, authorisation and restriction of chemicals. If chemicals are not registered in accordance with REACH, the products are not allowed to be manufactured in or imported into the EEA.”). The Group’s goal is to ensure continued compliance with REACH requirements.

EVRAZ environmental strategy is to seek to minimise the negative impact of its operations and to use natural resources efficiently, while seeking optimal solutions for industrial waste management. Compliance with environmental standards is a major long-term target.

In 2012, after determining the key challenges and focus areas, EVRAZ voluntarily adopted five-year environmental targetsEnvironmental targets are based on 2011 performance levels. In 2015, the HSE Committee of the Board of Directors reviewed the implementation of environmental targets and agreed to re-base fresh water consumption and air emission targets by excluding data related to the disposed assets due to its material effect on performance. (over 2012-17) aimed at:

  • reducing air emissions Including nitrogen oxides (NOx), sulphur oxides (SOx), dust and volatile organic compounds only. by 5%;
  • decreasing fresh water consumption by 15%;
  • recycling 100% of non-mining wasteThe rate of the amount of waste recycled or used versus annual waste generation, not including mining waste. It can exceed 100% due to recycling of waste from prior periods.

The Group’s non-compliance-related environmental levies and fines decreased by 20% from US$2.5 million in 2014 to US$2.0 million in 2015. No significant environmental permits or licences were missing or revoked in 2015, and there were no significant environmental incidents at EVRAZ assets.


The Group has committed to various environmental protection programmes for the period from 2016 to 2022. As of 31 January 2015, the cost of implementing these programmes was estimated at US$110 million.

In 2015, EVRAZ spent c.US$29 million on measures to ensure environmental compliance and US$10 million on projects to improve its environmental performance.

By the end of the year, the Group had met the targets set for water consumption, which was reduced by 15%, and recycling, with 126% of waste being recycled (exceeding the 100% target by recycling waste from prior periods).

At the end of 2015, EVRAZ was yet to fulfil the target for air emissions, having registered a 19% increase since 2011.
Environmental awards in 2015
Business Unit Award Awarding organisation Comments
EVRAZ ZSMK Kemerovo region contest “Environmentally Responsible Company”, first place in the nomination “The best organisation with an innovative approach to environmental protection and nature management issues” Government of Kemerovo region, Mineral Resources Committee of Kemerovo region The plant was awarded for permanent ecological initiatives. Since 2006, EVRAZ ZSMK reduced air emissions by 20%, water emissions — by 60% and increased usage of recycled production wastes by 17%.
EVRAZ ZSMK National contest “100 Best Russian companies: Environment and Environmental Management” International Academy of Quality and Marketing, Council of the Federation Committee on Science, Education, Culture and the Environment EVRAZ ZSMK has received the award seven times. It has planned measures running through to 2017 and expects to spend more than RUB2 billion.

Air emissions

Key air emissions

Reducing air emissions is one of EVRAZ main environmental objectives. The key air emissions primarily consist of nitrogen oxides (NOx), sulphur oxides (SOx), dust and volatile organic compounds.

Even before 2011, the Group had made significant progress in reducing air emissions. Today, its air emissions reduction strategy includes plans to modernise gas treatment systems, implement modern technologies and withdraw obsolete equipment.

Nevertheless, in 2015, key air emissions increased by 9.9 thousand tonnes (or 8%) compared with 2014. The main drivers of the rise are an increase in sulphur content in the coal and ore used at EVRAZ ZSMK’s power and sinter plants, which has resulted in higher SOx emissions, and higher NOx emissions at EVRAZ KGOK due to increase of production.

EVRAZ key air emissionsThe dynamics in the total amount of key air emissions — nitrogen oxides (NOx), sulphur oxides (SOx), dust and volatile organic compounds — rebased to 2011., kt
EVRAZ key air emissions, kt

Taking into account the management’s decision to re-base the target by excluding data related to divested assets (EVRAZ VGOK, EVRAZ Vitkovice Steel, Evrazruda’s Krasnoyarsk mines, ZSMK’s central power plant, EVRAZ Highveld and EVRAZ NTMK’s Nizhnesaldinsky metal mill), key air emissions have increased by 19.2% since 2011.

Greenhouse gas emissions

EVRAZ operations are also associated with emissions of carbon dioxide and other greenhouse gases.

The Group recognises the importance of seeking to prevent climate change and supports the global effort to reduce greenhouse gas (“GHG”) emissions into the atmosphere. In accordance with the requirements of the Companies Act 2006 (Strategic and Directors’ Report) Regulations 2013, EVRAZ has undertaken to assess full GHG emissions from facilities under its control. Since 2011, it participates in the CDP Climate Change Programme.

The assessment covered direct (Scope 1) emissions of all seven “Kyoto” GHGsThese are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons and perfluorocarbons (HFC+PFC), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3) and indirect (Scope 2) emissions from the use of electricity and heat. The inventory approachThe inventory of emissions includes all entities that the Group controls. Entities that were disposed of during the year were included for the period in which they were part of the Group. Only entities deemed immaterial for consolidated emissions based on their operational indicators were omitted. Direct CO2 emissions from operations were calculated using the carbon balance method for carbon flows within production facilities, including fuel use. Emissions of other GHGs were calculated based on measured volumes, inventory changes or IPCC 2006 factors and models (including that for post-mining coal methane emissions) where direct measurement data was not available. Indirect emissions were estimated using emission factors specifically developed for the country or region, if available, or otherwise factors provided by UK Defra. was based on the 2006 IPCC Guidelines for National Greenhouse Gas Inventories (IPCC 2006) and WRI/WBCSD GHG Protocol Corporate Accounting and Reporting Standard. The Group provides data in tonnes of carbon dioxide (CO2) equivalent (tCO2e), calculated using IPCC 2006 global warming potentials.

GHG emissions data was collected for 2015 and compared with the 2014 and also 2013 levels, which were established as a baseline. The Steel segment is still responsible for more than half of gross greenhouse gas emissions from operations, while almost 93% of full emissions from the Coal segment are due to fugitive methane leakage, caused by methane ventilation from underground mines and post-mining emissions from coal.

In 2015, the Group’s overall greenhouse gas (GHG) emissions decreased by 8.4% year-on-year. Emissions of CO2 fell by 6%, due to low operational activity at EVRAZ Highveld Steel and Vanadium and a reduction of coking coal consumption at EVRAZ ZSMK amid greater use of pulverised coal injection technology. In the coal segment, CH4 emissions dropped by 3% due to a lower methane content in the coal mined and a decrease in coal production at some mines.

EVRAZ GHG emissions in 2015, MtCO2e
EVRAZ GHG emissions in 2015, MtCO2e
GHG emissions per net revenue, kg CO2e/US$
GHG emissions per net revenue, kg CO2e/US$

Overall, these factors enabled EVRAZ to reduce its Scope 1 emissions by 6%. The Group’s Scope 2 emissions decreased by c.22%, due to EVRAZ Highveld Steel and Vanadium’s low activity (which accounted for c. 15%) and lower volumes of energy purchased by EVRAZ NTMK and EVRAZ ZSMK in 2015.

EVRAZ reports an intensity ratio relating its annual GHG emissions to its activities: total Scope 1 and 2 emissions per consolidated revenue for the Group overall and each operating segment (see graphs) according to the divisional structure. In addition, specific emissions in the Steel segment per tonne of steel products for 2013-15 are compared with average specific emissions of World Steel Association members for 2014. Higher specific GHG emissions in the Steel segment may be due to the key role that integrated iron and steel works (which inherently emit more GHGs than rolling mills) play in EVRAZ steel production.

EVRAZ GHG emissions, MtCO2e
2013The results for 2014 and 2013 were recalculated due to a change in the global warming potential (GWP) values for methane (CH4) and nitrous oxide (N2O), improvements in data quality and several identified inaccuracies. In accordance with recommendations by the UK Department for Environment Food and Rural Affairs (DEFRA), GWP values were changed to the given in the fourth assessment report of IPCC — AR4 (values 25 and 298 accordingly), instead of values from the second assessment report of IPCC — SAR for a 100-year time horizon (21 and 310 accordingly), used previously. The total effect of these changes for Scope 1 emissions amounted to +1.45 MtCO2e for 2013 and +1.26 MtCO2e for 2014. Identified improvements in data quality and inaccuracies regarding material flows resulted in adjustments to Scope 1 emissions of +0.48 MtCO2e for 2013 and of +0.21 MtCO2e for 2014. 2014The results for 2014 and 2013 were recalculated due to a change in the global warming potential (GWP) values for methane (CH4) and nitrous oxide (N2O), improvements in data quality and several identified inaccuracies. In accordance with recommendations by the UK Department for Environment Food and Rural Affairs (DEFRA), GWP values were changed to the given in the fourth assessment report of IPCC — AR4 (values 25 and 298 accordingly), instead of values from the second assessment report of IPCC — SAR for a 100-year time horizon (21 and 310 accordingly), used previously. The total effect of these changes for Scope 1 emissions amounted to +1.45 MtCO2e for 2013 and +1.26 MtCO2e for 2014. Identified improvements in data quality and inaccuracies regarding material flows resulted in adjustments to Scope 1 emissions of +0.48 MtCO2e for 2013 and of +0.21 MtCO2e for 2014. 2015
Direct (Scope 1) 42.92 39.05 36.87
Consisting of:
CO2 33.78 31.08 29.13
CH4 9.06 7.89 7.67
N2O 0.08 0.08 0.07
PFC+HFC 0.0002 0.0002 0.0002
SF6
NF3
Indirect (Scope 2) 8.05 7.96 6.17
Total GHG emissions 50.97 47.00 43.04
Specific Scope 1 and 2 GHG emissions from the Steel segment, t CO2e per t of steel products
Specific Scope 1 and 2 GHG emissions from the Steel segment, t CO2e per t of steel products

Water consumption and water discharge

The Group’s objective is to use water resources efficiently and prevent any negative impacts on water quality through environmental incidents.

In 2015, almost 84% of EVRAZ total water intake was from surface sources, including rivers, lakes and reservoirs, versus 76% in 2014.

In 2015, EVRAZ enterprises continued to implement programmes to improve water management performance. The environmental benefit of these is expected to be seen after 2016.

In 2015, fresh water consumption increased by 8.1 million cubic metres (2.4%) compared with 2014. The main driver of the rise in 2015 was EVRAZ ZSMK’s Heat and Power Plant, which increased its water intake due to greater energy production (+60.4 million kW) and the need for more cooling water. Given the HSE Committee’s decision to re-base the target by excluding data related to disposed assets, fresh water consumption decreased by 67.2 million cubic metres (14.9%) compared with the 2011 adjusted baseline. Water discharge decreased by 77.2 million cubic metres over 2012–15.

EVRAZ fresh water consumption, million m3
EVRAZ fresh water consumption, million m3

Water pumped from mines (dewatering) is not included in the fresh water consumption target, although pumped water is partly used for technological needs. In 2015, 20.5 million cubic metres of mine water were pumped out and used, compared with 44.7 million cubic metres in 2014.

Water-saving measures at EVRAZ Bagleykoks

Waste management

Mining and steelmaking operations produce significant amounts of waste, including waste rock, spent ore and tailings (waste from processing ore and concentrates). EVRAZ aims to reduce the amount of waste that it produces, re-use natural resources where possible and dispose of waste in a manner that minimises the environmental impact while maximising operational and financial efficiency.

In line with the Group’s strategy to reduce waste storage volumes and enhance waste disposal, EVRAZ enterprises regularly review opportunities for waste recycling and reuse.

Waste management strategy

In 2015, EVRAZ steel mills generated 10.4 million tonnes of metallurgical waste (slag, sludge, scale, etc.), while 13.3 million tonnes were recycled and reused. Overall, in 2015, EVRAZ recycled or reused 126% of non-mining waste and by-products, compared with 110% in 2014.

Recycling rate Excluding waste products of mining industry and including materials from old dumps Goal 100%, %
Recycling rate , %

EVRAZ’s strategy for dealing with non-hazardous mining wastes, such as depleted rock, tailings and overburden is to use them where possible for land rehabilitation and the construction of dams or roads. In 2015, 17% or 24.6 million tonnes of such waste material were reused compared to 11% or 15.4 million tonnes in 2014.

All non-recyclable waste is stored in facilities which are designed to prevent any harmful substances contained in the waste escaping into the environment.

Safety at such facilities is monitored extremely closely, and steps have been taken to mitigate as far as possible any danger to third parties in an emergency. For example, EVRAZ ZSMK relocated residents of Mokrousovo who were in potential dangerous proximity to a waterworks. Altogether, 172 people from 107 apartment blocks were rehoused.