THE STEEL DEAL

Azerbaijan 2012 | INDUSTRY & MINING | INTERVIEW

TBY talks to Suleyman Mammadov, General Director of Baku Steel Company, on the regional steel industry, increasing capacity, and the outlook for exports.

Suleyman Mammadov
BIOGRAPHY
Born in 1974, Suleyman Mammadov graduated from the Azerbaijan Construction Engineering University, and has been General Director of Baku Steel Company since 2008. He had previously worked as the Commercial Director at Baku Steel Company, and as Head of Logistics at Irsi Group and Commercial Director at Gunar.

How has the company evolved over the years to become the largest steelmaker in the region?

The building boom that has occurred across the world, as well as in our country, has increased the demand for construction rebar to fantastic levels. Baku Steel Company (BSC) was established in June 2001. Over the years, we have been very consistent in our policies and we have become the largest modern steelmaker in the region. To date we have produced over 2.5 million tons of rebar, and we now employ 3,200 people. It has been 10 years since we entered the construction market. With its great development path over the past decade, the company now holds an important position in the economy of Azerbaijan, has taken an active role in creation of new jobs, and has worked to maintain an ecological balance. Baku Steel Company LLC is the largest taxpayer in the non-oil sector. We began a major restructuring in 2011, which made it an important year for us. Our performance indices clearly prove that it was an economically efficient year for us as well.

What is the nominal capacity of BSC, and how has production capacity changed over the years?

We are the largest modern steelmaker in the region, and our nominal production capacity is 770,000 tons per year. In order to meet the growing demand for steel products both domestically and abroad, we are undergoing a large-scale restructuring. BSC's products have been and are being used successfully in the construction of industrial projects and bridges. Also, we take environmental issues very seriously. Badische Stahl-Engineering GmbH of Germany and LECES of France, which are some of most advanced enterprises in the world, have installed the latest technology in our production factory, which enables us to reduce production costs and minimize our environmental impact.

How developed is your range of products, and where are you focusing your resources?

BSC is specialized in the manufacture of oil industry equipment and installations. It is also recognized in the region as a producer of a range of construction rebar and steel billets. Our mold-casting shop, which is a production tradition in the company, has template-making, molding, and finishing and heat-treatment areas. Alloy and high-alloy mold castings are produced in this shop to order, and such castings are in great demand within the oil industry. In line with the demand for steel products in domestic and foreign markets, the company has been restructured in order to expand its product range. We will begin producing angles, channels, I-beams, rods, wire, and other metal products as well. We have purchased new equipment and installed a new rolling mill that will enable us to produce a wider range of goods.

What is the company doing to ensure the quality of its services and products?

The production of quality products is the cornerstone of the company's tradition. Since our first days of operation, we have cooperated with Swiss company SGS, which has offices in 114 countries, and the British Standards Institute (BSI). Today, the production and sale of manufactured products for export are implemented according to the quality and quantity guarantee of the International Inspection Company of Great Britain (Intertek). With its representatives in more than 100 countries, Intertek conducts independent testing and affirms the quality certificates issued by the plant. Also, the State Committee on Standardization, Metrology, and Patents of Azerbaijan has issued a Certificate of Conformity for our steel rebar. I would also like to say that we take recruitment processes very seriously. People working in the heavy industry sector should be careful and responsible enough to avoid accidents. For this reason, the company has established a training center to teach and promote standards and regulations on health and safety, and care for the environment. At the same time, a focus on our employees' health has always been essential for the company. The medical center operating in the company was reconstructed in compliance with state-of-the-art requirements, and provided with new equipment. This medical center, where qualified medical personnel work on continuous duty, is provided with every thing necessary to render first aid to injured personnel.

What role do domestic demand and exports play in the development of the company?

Today, the company supplies the domestic market with quality reinforcing bars and billets. Just 10 years ago, the domestic market demand for construction rebar was covered entirely by imported products. Now, a free market relationship has been formed in Azerbaijan, there is competition, and it's quite natural that products from abroad are still imported into the market. Nevertheless, the main provider to the domestic market is BSC. Supplying the domestic market is our primary task. However, we also play a key role in foreign markets and we are the main exporter in this field in the country. We export our products to Russia, Georgia, Turkmenistan, and Iran. The company's products were used in the construction of the Baku-Tbilisi-Ceyhan oil pipeline, a number of industrial projects, bridges, and residential and public buildings. We continue to try to find new markets. This means that work is being done every day in order to keep our production in line with today's requirements. Our products have been exhibited at various international fairs held in Moscow, Astana, Tabriz, and Baku, and each time they have been awarded diplomas and certificates of quality.

What are BSC's future prospects?

The first stage is the more efficient processing of light scrap metal, which involves the cleaning of metal scrap on shaker mechanisms, the removal of non-metallic inclusions by means of magnetic separators, and cutting in press-shears. Our plant has purchased a packaging machine from famous Italian firm Vezzani that prepares press packages at a size of 400 x 400 millimeters with a specific weight of 2.2 tons per cubic meter. The capacity of this machine is 70 tons per hour. This machine will enable us to use advanced methods in the processing of charge material for the electric arc furnace (EAF), resulting in relatively clean and high-density scrap packages. The second stage relates to processing operations. We recently signed a contract with Siemens VAI of Germany to develop a project that would replace our existing furnace with a more advanced EAF, which is a very serious step for us. The new EAF will have an updated control system for purging carbon-containing materials. This, and the other projects we are carrying out, will be important not only for increasing our production volumes, but will also contribute to cleaning up the Caspian Sea and Azerbaijan's environment in general. We will install new dust and gas collection technology in parallel with the new furnace of the type that is used in state-of-the-art steelworks in Germany. These systems are fully automated, meaning they are equipped with an automated apparatus to monitor the quantity of all pollutant emissions, and software with continuous control features. This project will bring BSC into line with other state-of-the-art European steelworks. These are the plans we intend to implement in the short term. In general, the company has invested $75 million since 2009 to implement these improvements. All of this will contribute to increasing the plant's annual steel production, and will also reduce our energy consumption, improve our production methods, and enable us to produce more using alternative energy sources in the smelting process. Our aim is to increase the capacity of the plant to 1.1 million tons by the end of 2012.

What are the competitive economic advantages of Azerbaijan's steel sector, and what is your outlook for the sector in 2012?

Today, iron ore is regarded as one of the main necessities for the development of industry and of economies. There are three iron ore fields with proven commercial iron ore reserves within the territory of Azerbaijan providing us with a reliable raw material base. There are vast opportunities for the development of the metallurgical industry in our country, including the availability of abundant and varied raw materials and different sorts of scrap metals, local energy resources such as oil and natural gas, a metal-consuming industry and construction field, experienced personnel and labor resources, and opportunities for the creation of new fields on the basis of the existing material and technical resources. For example, during the first eight months of 2011 the production volume of the metallurgical industry increased by 1.8 times. We hold a very hopeful and optimistic view of the future.