IN THE PAST YEAR, several major enterprises in the steel industry have announced ambitious modernization programs, moves experts say will help increase output and profits in one of Russia's key industrial sectors.

Novolipetsk Iron and Steel Works (NLMK) announced a $1.1 million modernization program, which is to be completed in five years.

The company listed the following as some of its key objectives:

• Fundamental reconstruction of the four furnaces at steel-rolling mill No. 3;

• Installation of a new compact mill for producing hot-rolled sections;

• A major overhaul of the worn out coke-oven batteries.

A number of the program's objectives have already been accomplished to date, the company said, including:

• Repairs at blast furnace No. 3;

• The launch of a new coke-oven battery worth some $20 million.

After the program is completed, the company is expected to increase its cast-iron output from 7.1 million tons to 8.2 million tons and its steel output from 7.5 million tons to 8.6 million tons, NLMK said.

The SUAL Holding said it is planning a technical modernization program along the following main guidelines:

• Development of high-tech production lines. A roller-burnishing line will be put into operation at the Demidovsky factory in March 2002. It will produce up to 2 million kitchenware pieces a year with anti-burn coating and cut production costs by more than 25 percent;

• Reconstruction of alumina and primary aluminum-production facilities. The documentation for the Irkutsk Aluminum Plant reconstruction project at the anodic shop is scheduled to be prepared by December.

The Urals Aluminum Plant reconstruction project will include its alumina shop, which will allow output to increase to 700,000 tons and the production of primary aluminum to 85,000 tons, the company said. The reconstruction will include the following:

• A project to reduce environment pollution. The introduction of modern technology at the majority of the company's production facilities has resulted in more reliable operation and has allowed the company to acquire an international quality certification, ISO, the company said.

All the projects are expected to be completed by late 2002 and will require a total investment of about $80 million, which will include the company's own funds and borrowed funds from Russian and foreign banks, the company said.

Evrazholding announced a massive modernization program to be implemented within the next 10 years. Among the biggest plans are:

• Construction of a wide-slab continuous caster at Nizhny Tagil Iron and Steel Works, to be completed by late 2003, a project requiring an investment of $80 million. A modernization of blast furnaces No. 3, 4 and 5 will take place from 2004-10 and will require $135 million, the company said.

• Construction of four continuous casting machines at Zapsib, which is expected to be completed between 2004-07, with an investment of $150 million. Construction of a blast furnace on the same plant is planned by 2006 and will require some $100 million.

• Tagil Pipe Works' biggest investments will be used for the construction of a large-diameter pipe mill within the NTMK facility, including a steel-rolling mill 5000, a pipe-welding shop and a pipe-coating facility. An investment of $750 million is needed and completion is expected by 2006, the company said.

Magnitogorsk Iron and Steel Works' (MMK) modernization program is in its final stage at the company's converter shop. The project will cost $48 million and will be completed by 2002, the company said. Major aspects of the project are:

• Installation of a two-stand reversing mill with a capacity of 800,000 tons per year;

• A continuous zinc-plating machine. From the 800,000 tons of steel sheets to be produced at the mill, 500,000 tons will be plated with zinc, which is expected to become a decisive factor for MMK to expand into both the domestic and foreign markets.

In 2001, plans call for more than $200 million rubles for modernization and related projects. Investment projects are financed mainly with the company's own funds, while borrowed funds constitute only 10 percent of the total investment, officials said.

Investment programs worth $500 million have been implemented during the past three years.

Tube Metallurgical Co. (TMK) said it is running an extensive technical modernization program. This year, investments include more than $5 million in the Volzhsk Tube Factory, more than $10 million in the Seversk Tube Factory and some $5 million in Kuznetsk Ferroalloys.

In the next three years, TMK plans to invest up to $100 million in a technical modernization of their production facilities. The first step has been the modernization of the steel-casting shop at the Seversk Tube Factory, which included the installation of a set of equipment called a "stove-basket" under a $5.3 million contract with the German company SMS Demag in September 2001.

The MDM Group is a strategic investor of the holding and, together with MDM-Bank, is running projects to attract syndicated loans from the largest banks in Europe and America, it said. A considerable portion of investments will be provided through U.S. and Japanese banks under guarantees from the Hermes Agency. In addition, investment resources are being generated by increasing the efficiency of use of their own funds, including profit re-investment, the company said.

The program is expected to help increase TMK output from 1.05 million tons in 2001 to 1.64 million tons in 2004, which will help the company boost its share on the Russian tube market from the current 22.6 percent to 37.6 percent, it said.