Fitch found that Evraz has an unusually high level of vertical integration, reaching 100 percent self-sufficiency in regards to iron ore, and 56 percent self-sufficiency in coking coal. This makes Evraz better at controlling base operations costs than its less vertically integrated competitors, according to Reuters.
The ratings group also found a particularly high capacity utilization rate at the company’s steel-making facilities in Russia due to cash costs of slab production at levels nearly 25 percent lower than the global average. Because of lower production costs, Evraz is expected to be one of the main beneficiaries of future growth in the sector. Evraz currently controls more than 30 percent of Russian long products production, while domestic sales comprised about 40 percent of Evraz’s revenues in 2011.
The company has also achieved a healthy liquidity position, with $626 million in short term loans, $801 million in cash on hand and $562 million in unused committed bank loans. The company expects a positive free cash flow margin in 2012, Reuters reports.
Evraz is one of the world’s largest steel and mining businesses.