Russian steelmaker Magnitogorsk Iron and Steel Works (MMK), one of the world's largest steel producers and a leading Russian metals company, claims it has saved RUB 500.9 millon (USD7.7 million) in 2018 through the use of a mathematical model to optimise the delivery and consumption of coal. These savings, it is claimed, were achieved by improving the structure of coal charge and the quality of coke.

This model is part of MMK's large-scale digitalisation strategy. The programme is based on the creation of a comprehensive multi-level model of sinter production, designed to optimise the production processes of the first processing stage.

The optimisation model for the delivery and consumption of coal raw materials at MMK has been in operation since February 2017. MMK developed the model, based on the study of coke and blast furnace production at the site since 2011. Implementation and development of the model is carried out at MMK's science and technology centre, by a group of mathematical modelling and system-analytical researchers. The model optimises the process both for the technologists and for the delivery specialists. The goal is to obtain the required quality of coke at the minimum cost.

To date, the model is used for purchasing coal concentrates and integrating the knowledge and requirements of all MMK services involved in this process: this includes category management of delivery (owner model), the science and technology centre, coke production and economy management. Monthly calculations are made as part of the process of purchasing coal concentrates, offering a forecast quality of coke when given the structure and volume of raw coal; optimisation of the structure of the delivery and consumption of coal charge; and analysis of the sensitivity of the optimisation calculation to prices and calculation of the recommended effective prices for the purchase of coal concentrates.

MMK claims that this is not the first successful mathematical modelling project to optimise the production processes of the first stage of conversion (the contribution of the first stage to the cost of production is about 50%). The optimisation mathematical model for delivery and consumption of iron ore raw materials is being developed and the automated information system 'optimum cast iron' is being created. Big data technologies and artificial neural networks are used in the development, but traditional physical and chemical models are also used, in particular, to take into account the dynamic characteristics of the domain process.

MMK has partnered with Deloitte CIS to create a digitalisation strategy for the company. The agreement was signed during the St. Petersburg International Economic Forum.

MMK plans to update its digital portfolio as part of an overall development strategy up to 2025. Deloitte CIS will prepare a roadmap for the digitalisation of the business in the medium term. The company claims it will include 'the most effective projects to help MMK achieve strategic goals faster and significantly improve the company’s business efficiency'.