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MMK to boost CapEx spending in 2018 in development push

PJSC Magnitogorsk Iron & Steel Works, or MMK, plans to boost CapEx spending to US$700 million in 2018 from US$664 million in 2017, Andrey Eremin, the company's director of economics, said during a Feb. 6 earnings call.

"We are expecting CapEx in the region of US$700 million," Eremin said, noting that the main portion of the company's CapEx is denominated in Russian rubles and the CapEx figure had been calculated using an exchange rate of 60 rubles to the U.S. dollar.

The company plans to invest about US$260 million in the upkeep of its existing assets, while the remaining CapEx will go toward development projects, including its sinter plant, reconstructing hot-rolling mill 2500 and several environmental initiatives.

Eremin said MMK plans a 2% steel production increase at the mill of its Magnitogorsk iron ore and steel complex. The company is on track to restart production of hot-coiled steel at its Turkish operations at the beginning of July with a potential output of 500,000 tonnes before the end of 2018, he added.

Rising metals prices benefited MMK in 2017, and the company posted a profit for the fourth quarter of US$375 million, up year over year from US$208 million. MMK also boosted production of pig iron and crude steel in 2017 to 10.2 million tonnes and 12.9 million tonnes, respectively.

As of Feb. 5, US$1 was equivalent to 56.82 Russian rubles.