8.0SUSTAINABLE DEVELOPMENT

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We seek to ensure that each of the Company’s workplaces is filled with skilled, motivated, and loyal staff well-positioned to meet the new challenges facing the Company in the digital age.


Our HR management efforts in 2018 were guided by the objectives declared in TMK’s new HR Strategy adopted in 2017:
  • Development of incentive systems aimed to align the interests of shareholders, management, and employees
  • Building trust in modern digital technology, and embedding it into the Company’s existing HR processes
  • Development of an effective talent identification and development system built around TMK’s Corporate University
  • Further transformation of regional teams into a single corporate community

Over the 17 years of its operation, TMK has built a highly professional team of managers, specialists and workers across over 20 plants in Russia, the USA, Canada, Romania, and Kazakhstan, as well in two R&D centers in Russia and the USA, by adopting cutting-edge HR practices and solutions.

To ensure full compliance with international laws and generally accepted principles, we have drafted a new version of TMK Group’s Code of Ethics which incorporates best practices in business conduct, corporate governance, and employee relations. The Code covers such areas as respect for human rights, equality, human dignity, safety, and anti-corruption.

The updated TMK’s Code of Ethics was approved by the Board of Directors in February 2019 and disclosed at: www.e-disclosure.ru/portal/files.aspx?id=274&type=1, www.tmk-group.ru/Documents

Headcount
38 465

TMK’S HR STRATEGY IN 2018

Corporate Development and Headcount Management

Our comprehensive approach to building a robust management framework focused on getting organizations in sync with business processes and production plans allows us to right-size our workforce across TMK while boosting labor productivity and employee performance.


The headcount increase:
  • in the European division was due to the implementation of 2018 investment projects including the startup of new equipment to manufacture products for automotive industry, and also a result of our efforts to minimize the risks associated with overtime work
  • in the American division was due to compliance with local legal requirements, expansion of the production program on the back of higher demand, and commissioning of new production complex with new coating facility (coating plant) in Wilder, Kentucky.

TMK’s average headcount in 2016–2018

2016 2017 2018
Total average headcount 39,750 38,934 38,465
Change in total headcount, % y-o-y, total: – 5.2% – 2.1% – 1.2%
Including:
Russian division – 3.4% – 3.7% – 2.9%
European division 0.5% 2.1% 8.5%
American division – 45.9% 44.5% 26.1%
We introduced an internal competition system to fill job vacancies as part of job rotation within the Group’s Russian division in 2018, which enabled us speed up staffing across the Russian division plants by almost 20%.

Employee Incentives and Compensation

The Company’s employee incentive system is aimed to align the interests of shareholders, management, and employees of TMK Group’s plants.


In 2018, we extensively used incentives for certain categories of employees responsible for the most important and sensitive tasks related to the current stage of the Company’s development:
  • A special incentive scheme was developed in 2018 for key operational employees operating and maintaining pipe rolling mills at TMK’s Russian plants, now covering about 200 employees. A similar program is in place at the European division’s Romanian plants
  • Financial incentives were developed and introduced for PAO TMK’s sales force to boost sales of large diameter pipe and small and medium diameter welded pipes
  • The existing incentive scheme for the Company’s key employees was extended in 2018 to members of our working groups focused on cost reduction and procurement performance as well as teams within our opex reduction project

Average pay at TMK in 2016–2018

2016 2017 2018
Change in pay, % y-o-y (rouble) 96% 112% 118%
Change in pay, % y-o-y (U.S. dollar) 88% 128% 112%

The rollout of advanced incentives and unification of the compensation system across the Russian division plants continued in 2018, as a result the Unified (Single) Remuneration System launched at TMK Oilfield Services and TMK-INOX. Thus, the Unified Remuneration System covered 82% of TMK’s employees across the Russian division’s plants as at the end of 2018.

We perform regular monitoring of the industrial and regional labor markets and overall make sure that our salaries remain competitive while making cost-of-living adjustments to salaries, provided for in the local legislation, collective bargaining agreements, and industry agreements, based on financial performance of the Company’s divisions. These principles and inflation indicators in the countries in which the Group operates inform our decisions on pay increases across all Group divisions.

Overall, the average pay across TMK’s plants increased by 18% yearon-year in rouble terms, or by 12% in U.S. dollars.

The average pay across TMK in 2018 was significantly affected by fluctuations in the Russian rouble exchange rate. Therefore, the Russian division posted a 9% pay increase in rouble terms and a 4% growth in U.S. dollars.

Employee Development and Training

In 2018, TMK invested about $3 million in corporate training and career enhancement programs.

Innovation and digitalization are a key focus of TMK’s new Strategy to 2027 to improve product quality and cut costs. For this reason, TMK’s HR Strategy encourages employees to continuously pursue professional growth by developing their overall professional and personal competencies.

TMK2U Corporate University, for which 2018 was the first year of operation, is the key element of the Company’s employee development and training system.

As an analytical, methodological, and consulting center for employee development and training, TMK2U Corporate University became an interface between the Company’s different divisions and plants as we bring them together into a single shared information space while harmonizing procedures for employee development, training, and assessment. Such system enables career lifts within the Company and helps build up a talent pool.

A special emphasis in TMK’s employee development and technology training plans is put on the opportunities offered by TMK’s R&D facility we are launching at the Skolkovo Innovation Center where also TMK2U Corporate University will be located.

TMK2U Corporate University headquarters
Skolkovo, Moscow, Russia

PROGRAM FOCUS

  • UniTech
    Development of competencies related to key production and technical functions
  • UniCom
    Development of commercial units’ competencies
  • UniPro
    Building advanced expertise and advanced professional skills
  • UniUp
    Building corporate and personal competencies, and basic professional skills
  • UniEx
    Building management competencies and business education courses, including courses exclusive to the top management

TMK2U Corporate University’s 2018 highlights:

  • Over 20 thousand employees of the Russian, American, and European divisions underwent training within 100 educational programs developed by over 120 inhouse experts, business coaches, and top managers of the Company
  • TMK was the first company in the metals and mining industry to establish and certify an industry-specific independent qualification assessment center at the National Agency for Qualification Development
  • We developed over 2,000 corporate professional standards that serve as a basis for building staff recruitment, performance assessment, and training processes of the Russian division
  • At our American division (TMK IPSCO), we implemented a program to prepare TMK Group’s managers for rotation across key business lines such as technology, production, sales, HR, marketing
  • We piloted TMK Corporate University’s L&D_SOTA online platform enabling the University to automate key staff education and performance assessment processes, and provide employees across the Russian, American, and European divisions with access to distance learning programs, and give employees more freedom to take courses and webinars when best suits them
  • About 200 internal secondments were arranged for our employees to facilitate experience sharing, foster cooperation between business units, and boost personnel motivation
  • Corporate social surveys are actively developed. For the first time, TMK has carried out a major employee engagement survey across the Russian division plants based on an international methodology. The survey results will inform our employee engagement programs across TMK
  • Over 770 employees from across TMK’s divisions participated in our annual Horizons International Corporate Forum in 2018. A Horizons mobile app was launched to create a single shared information space. It has since gained wide popularity with TMK’s employees

Promoting Blue Collar Jobs

TMK is actively involved with the international movement to promote blue-collar trades.
  • In 2018, we held our first corporate competition based on WorldSkills methodology. The six winners went on to represent TMK at the 5th WorldSkills HiTech National Competition, competing in five skills – Mechatronics, Industrial Control, Electrical Installations, Chemical Analysis Service, and Welding.
  • The Company successfully participated as an expert in a major, new-format I’m a Professional educational contest held for university students majoring in sciences and humanities.
  • An important highlight of 2018 was the inauguration of TMK2U Corporate University’s new training grounds at Seversky Pipe Plant.
  • A similar contest was also held for students at Don State Technical University (the Rostov Region).
  • As part of a cooperation program between PAO TMK and Ural Federal University named after the first President of Russia Boris Yeltsin, a contest was organized for the University’s students in industry-related degree programs to bring the best students to TMK’s annual Youth Scientific and Technical Conference.
  • PJSC Seversky Pipe Plant and PJSC Sinarsky Pipe Plant together with the Ministry of Education of the Sverdlovsk Region continued the career advising program for college students in the cities in which the companies operate. PJSC TAGMET signed a Cooperation Agreement with the Taganrog Technical College of Metallurgy and Engineering in 2018.

Social Partnership

We see our commitment to social partnership as key to sustainable development in the current market landscape.

TMK’s plants maintain close mutually beneficial relations with trade unions based on collective bargaining agreements, which enables optimal decisions to enhance social security of employees across TMK’s divisions.

Our representatives were actively engaged in negotiating with the Russian Mining and Metallurgical Trade Union (GMPR) and the Russian Metallurgists Association (RASMET) on the Russian Metals and Mining Industry’s Branch Tariff Agreement for 2017– 2019.

The Company signed a new collective bargaining agreement with the United Steelworkers (USW) at Koppel and Ambridge plants (the American division) in 2018. The agreement runs until May 2022.

In 2018, TMK IPSCO yet again actively participated in the Steel Safety Day sponsored by the World Steel Association (worldsteel). TMK IPSCO is an active member of Steel Manufacturer’s Association, with the Company’s top managers sitting on the organization’s Board of Directors and Board committees.

We focus on raising employees’ awareness of the Company’s operations, growth areas, performance indicators, new R&D projects, and employee benefits. Meetings with TMK’s management are held on a regular basis across all our divisions and entities.

Promoting Employee Health

Seeking to build upon our successful corporate recreation and health programs for the Company’s employees and their families, we continued to introduce new programs in 2018.

We are committed to maintaining a balance between employees’ physical, emotional, and financial well-being, and to promoting conscious employee attitudes towards their health. Activities carried out in this area in 2018:
  • Comprehensive preventive measures were taken within our Voluntary Health Insurance program across all pipe plants within the Russian division
  • TMK IPSCO (American division) introduced a three-tiered health plan: biometric screening – medical consultations – discounts on health insurance premiums. Over 730 employees and their family members participated in the program in 2018
  • The range of corporate health resorts was expanded to include Hotel Romantik in Arkhyz, Russia. Over 5,000 TMK’s employees and their family members spent their vacations and received health resort treatment at partner resorts and recreational facilities – Burgas (Sochi, Russia), Westend (the Czech Republic), and Hotel Romantik (Arkhyz, Russia)
  • More than 2,500 children of the Company’s employees spent their summer holidays at kids resorts
  • We continued our corporate tradition of organizing open sports events bringing together employees from most TMK’s entities

Pension Program

The corporate pension program is part of the Company’s benefit package, aimed at improving quality of life for retired employees and motivating employees to stay with the Company and improve their performance.

REWARDS, HONORARY TITLES, AND RECOGNITION

  • For developing and implementing a range of high-performance technologies for manufacturing nextgeneration import-substituting seamless steel pipes to develop hard-to-recover hydrocarbon reserves, the following TMK’s executives were awarded the 2018 Russian Government Prize in Science and Technology:

    Alexander Shiryaev, Chief Executive Officer of PAO TMK

    Sergey Chikalov, Deputy Chief Executive Officer of PAO TMK

    Sergey Chetverikov, Managing Director of JSC Volzhsky Pipe Plant

    Igor Pyshmintsev, Director General of OAO Russian Research Institute for the Tube and Pipe Industries (RosNITI)

    Sergey Rekin, Chief Executive Officer of OOO TMK-Premium Service.
  • PJSC Seversky Pipe Plant was awarded the 2018 Russian Government prize for achieving outstanding product quality and implementing highly effective methods in quality management.
  • In 2018, six TMK’s employees were awarded the Distinguished Metallurgist title by the Government; 72 employees received industry awards, and over 300 employees were recognized with various corporate awards and certificates of merit.
  • TMK also conferred Badges for Business Cooperation with TMK and Certificates for Business Cooperation with TMK to representatives of TMK’s partners in recognition of their contribution to promoting long-term and mutually beneficial relationships with the Company.

Our comprehensive measures to ensure occupational safety and prevent injuries have led to a significant reduction in work-related injury rates both across TMK and in the Russian and European divisions in particular. No emergencies with fatal or mass accidents were recorded in 2018.

During the year, we paid special attention to ensuring a safe working environment for TMK’s employees, guided by our corporate-wide Occupational Health and Industrial Safety Policy adopted in 2015. TMK takes systemic, consistent efforts to mitigate risks, reduce injury rates, and spread safe manufacturing practices.

TMK’s industrial safety performance was discussed during meetings of technical leaders of our plants, at the Company’s managing directors meetings during February and August 2018, at the Annual Management Meeting on June 08, 2018, and at the Board meeting on October 18, 2018.

TMK GROUP’S OCCUPATIONAL HEALTH AND INDUSTRIAL SAFETY FRAMEWORK

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Pursuant to the management’s decision and with its active involvement, all TMK entities participated in Steel Safety Day 2018 held by World Steel Association, which allowed us to identify and mitigate safety risks associated with key workplace hazards (83% of our production facilities were audited).

TMK’s participation in Steel Safety Day 2018

Participants 2016 2017 2018
TMK employees 36,346 35,343 35,518
Including safety auditors, % 16 32 81
Contractor employees 3,059 6,770 6,924

On April 28, 2018, the World Day for Safety and Health at Work, TMK summarized the results of activities held to mark the Steel Safety Day 2018, and submitted them to the World Steel Association. Activity plans for workplace safety risk mitigation are in place and monitored on a monthly basis across the Company. All activities planned for 2018 had been completed as at December 31, 2017. Preparations for the Steel Safety Day 2019 are currently underway.

TMK also participated in Russia Health and Safety Week and BIOT (Safety and Labor Protection) exhibition.

TMK spent $10.52 million in 2018 on measures to ensure a safe working environment ($9.2 million in 2017). The following new practices were adopted:

  • Development in cooperation with TMK’s plants and adoption of guidelines on micro-injury recording, reduction in hand injuries, ensuring safety during stacking pipe in racks, and mandatory eye protection practices in production environment
  • Identification and sharing of corporate best practices across the Group, such as:
    • lists of tools in use (TMK-IPSCO practice)
    • collective responsibility for occupational health compliance (PJSC Sinarsky Pipe Plant practice)
    • procedures for public commission investigations of accidents (JSC Volzhsky Pipe Plant practice)
  • Introduction of Occupational Risk Assessment and Safety Consciousness training courses for employees of the Group entities

Our comprehensive measures to ensure occupational safety and prevent injuries have led to a significant reduction in work-related injury rates both across TMK and in the Russian and European divisions in particular. No emergencies with fatal or mass accidents were recorded in 2018.

INJURY RATES BY TMK GROUP DIVISION:

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Across TMK Group

Indicator 2017 2018
Accidents 54 48
including fatalities 2 0
Frequency rate 1.52 1.37
Severity rate 59.8 33.0

Russian division

Indicator 2017 2018
Accidents 30 20
Including fatalities 0 0
Frequency rate 0.96 0.63
Severity rate 71.8 48.0

European division

Indicator 2017 2018
Accidents 7 3
Including fatalities 2 0
Frequency rate 3.39 1.33
Severity rate 83.0 79.7

American division

Indicator 2017 2018
Accidents 17 25
Including fatalities 0 0
Frequency rate 9.1 12.74
Severity rate 5.3 12.68

The best occupational safety practices were studied to further improve working conditions and implement advanced technology solutions, with a number of meetings held with R&D, consulting, manufacturing, and IT companies.


Based on the results of these meetings, the following initiatives are being explored for near-term implementation:

  • Comprehensive injury rate reduction solutions
  • Electronic pre-shift medical checkup system
  • Employee occupational health and safety knowledge testing
  • Integrated risk-based approach
  • Safety Consciousness system
  • Digitalization of occupational safety
  • Eye protection solutions

TMK representatives actively participate in RSPP’s expert group on improving industrial safety legislation.

Public recognition

PJSC TAGMET was awarded a Silver Medal for Implementation of the Safe Workplace System in the Health and Safety 2017 best occupational health and safety innovation competition at Russia Health and Safety Week, held annually by Russia’s Ministry of Labor and Social Protection in Sochi (www.aetalon.ru/ub).

JSC Volzhsky Pipe Plant

ranked first on the municipal level and fourth regionally in the ranking of Top Manufacturing Companies in Occupational Health (national Russian Success and Safety 2017 contest www.aetalon.ru/ub

third in the Best Occupational Health Leader category

fourth and seventhin the Best Expert (national Russian Mastership and Safety 2017 contest www.aetalon.ru/mb).

PJSC Sinarsky Pipe Plant and PJSC Seversky Pipe Plant

also received recognition letters from the Governor of the Sverdlovsk Region dated July 25, 2018, for winning the industrial standards and occupational health and safety contest held in the Sverdlovsk Region (in 2017).

As a leader of the global pipe industry, TMK sees ensuring environmental safety while maintaining fast production growth and driving stronger economic performance as a strategic priority

  • TMK’s environmental expenditures increased in 2018 by 5% year-on-year.
  • External environmental training and awareness programs completed by 817 TMK’s employees and managers across all levels.
  • 11 of the Company’s plants confirmed their compliance with ISO 14001:2015.
  • Percentage of water recycled and reused by TMK’s Russian plants reached 95.32%.
  • Total pollutant emissions decreased by 1% year-on-year.
  • A total of 26 investment initiatives undertaken, aimed at fulfilling the requirements of national legislation, ensuring environmental safety and a favorable environment.
  • Despite an increase in output, overall water consumption levels remained flat year-on-year.
  • We recognize our social responsibility for protecting the environment across our footprint.
  • Environmental targets are an integral part of TMK Group’s Development Strategy.
  • In our operations, we are guided by international environmental protection initiatives and treaties, and comply with local environmental standards and regulations.

TMK’s total environmental expenditures, $ million

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Our environmental management practices are guided by PAO TMK’s Environmental Policy (www.tmk-group.ru/media_ ru/texts/814/EKOPOLITIKA_TMK_s_Koncepciey_realizacii.pdf), which is in line with the Fundamentals of Government Policy in Sustainable Development in the Russian Federation Through 2030, as well as the Environmental Security Strategy of the Russian Federation Until 2025 and is based on effectiveness and efficiency of environmental activities, environmental and social responsibility, and transparency.

In 2018, we focused on improving the environmental performance of production processes, reducing water consumption, controlling air pollution, and minimizing the amount of landfilled waste while allocating necessary resources to these activities.

Financing environmental initiatives helps TMK’s plants to comply with the local environmental protection and safety laws, standards, and regulations.

We increased funding for environmental activities by 5% in 2018, spending a total of $39.6 million.

Environmental Management System

We make sure that our green investment in fixed assets is steadily rising: it increased by 8% year-on-year to $11 million.

PAO TMK’s Environmental Policy and the individual environmental policies adopted by TMK Group’s plants outline the Company’s commitments to reducing and preventing environmental impact from its operations in the Company’s host regions.

TMK’s plants make consistent efforts to ensure continuous improvement of our environmental performance and manage environmental risks. 11 of the Company’s plants have implemented an ISO 14001:2015 compliant environmental management system – they successfully passed audits and confirmed their compliance during 2018.

Environmental Investments

Environmental projects are an essential component of the Company’s development programs, including our current Strategic Investment Program.

Our environmental investment focused on water and air pollution control (63% and 34%, respectively).

During 2018, TMK implemented 26 capex projects to ensure compliance with local laws, environmental safety, and a healthy environment.

TMK’s environmental investments,
$ million

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Focus of TMK’s environmental investment

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Key Capex Projects and their Results

Russian division:

  • Seversky Pipe Plant:

    • completed upgrade of aeration tank No. 3 and reduced impact on the Severushka River

    • continued building water reuse treatment facilities for a heat treatment facility, which will help reuse up to 20 million cubicmeters of treated water

    • installed aspiration equipment at the crushing and screening plant
  • ТAGMET:
    TAGMET launched dust control and gas cleaning units at the ferro-alloy and lumps preparation facility of its EAF shop
  • Sinarsky Pipe Plant:
    The combined heat and power (CHP) plant at Sinarsky Pipe Plant completed technical upgrades of its boiler facility including a redesign of exhaust pipe No. 4 to comply with the environmental legislation

American division:

  • Koppel plant upgraded its EAF shop gas cleaners, improving the overall performance of its gas cleaning systems
  • Ambridge is upgrading its water disposal system
  • Catoosa implemented noise control measures to comply with local laws

-1% y-o-y

These efforts helped reduce the Company’s overall gross pollutant emissions

Emissions Control

TMK’s facilities comply with the legislation covering air emissions inventory, regulation, and control, as well as operations in adverse weather conditions. Our emissions control activities ensure compliance with the prescribed air emissions limits.

Key initiatives to reduce air emissions implemented by TMK’s facilities

  • Improving the performance of gas cleaning units
  • Air emissions control in adverse weather conditions
  • Containing, redirecting, and cleaning dust and gas flows

TMK’s air pollution control expenditures totaled $2.1 million in 2018. The money was used to implement a range of organizational and technical initiatives, improve treatment technologies, and carry out routine maintenance and overhauls of treatment facilities. These efforts helped reduce the Company’s overall gross pollutant emissions to 11 thousand tonnes in 2018 (down 1% year-on-year).

Total pollutant emissions by TMK, thousand tonnes

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We make efforts to ensure a comfortable environment for people living in areas adjacent to sanitary protection zones around our plants. To that end, we install high-performance gas cleaning equipment and implement noise control measures (in 2018, at the Russian division’s Volzhsky Pipe Plant, Seversky Pipe Plant, TAGMET and TMK-INOX, and at the American division’s Camanche and Catoosa)

Water Management

As stated in TMK’s Environmental Policy, the Company’s water management strategy focuses on reducing water consumption and mitigating negative impact on water bodies. A recycling water supply system is essential for any of TMK’s new, upgraded or renovated facilities. In 2018, percentage of water recycled and reused by TMK’s Russian plants reached 95.32%.

Key initiatives to mitigate negative impact on water bodies implemented by TMK facilities

  • Building and upgrading treatment facilities
  • Organizational measures to prevent spills, leaks, and unsustainable use of water
  • Enhancing water recycling and reuse systems

Subject to permits, TMK’s facilities abstract water from surface and underground sources to supply water for production, general and drinking, and process use, and public needs.

TMK spent $17.8 million on sustainable water use and water pollution control in 2018. 2018 progress vs. 2017:

  • Despite an increase in output, overall water consumption levels remained flat year-on-year
  • Water intake from surface water bodies decreased by 3%
  • Wastewater decreased by 2%, and wastewater discharge to natural water bodies was reduced by 10%
  • Discharge of pollutants into water bodies decreased by 11%

TMK’s water intake from surface water bodies, thousand cubic meters

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Success of our sustainable water use efforts is demonstrated by positive changes in TMK Group’s water consumption.

TMK’s overall water consumption, thousand cubic meters

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TMK’s total wastewater, thousand cubic meters

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Key water management initiatives and results across TMK’s facilities:

Russian division

  • Seversky Pipe Plant
    • cleaned waste water pits at Pipe Rolling Shop No. 1 and Pipe Rolling Shop No. 3, which helped reduce oil sediment content in the discharge water
    • started cleaning the water recycling system for untreated process water at Pipe Rolling Shop No. 2
  • Sinarsky Pipe Plant
    Sinarsky Pipe Plant cleaned the intake screens at the Isetsky water intake
  • Seversky Pipe Plant
    Seversky Pipe Plant completed cleaning bottom deposits in the biological treatment system for industrial wastewater, storm water, and sewage
  • TAGMET
    TAGMET replaced pipelines of its water recycling system, thus reducing seawater consumption by eliminating losses
  • Orsky Machine Building Plant
    Orsky Machine Building Plant repaired pumping equipment, and cleaned waste water wells, pipelines and the plant’s waste water discharge system

American division

  • Blytheville
    The Blytheville facility upgraded its water supply system and started enhancing its water disposal system
  • Baytown
    The Baytown facility upgraded its filtration system at the quenching unit

Waste Management

TMK’s waste management system aims to:

  • reduce waste generation
  • reuse waste
  • minimize waste landfill.

Our production and consumption waste management is in line with approved industrial guidelines and standards in place at TMK’s facilities, which set up a recycling system and practice waste sorting. Volzhsky Pipe Plant and Seversky Pipe Plant developed and rolled out specialized industrial waste management software solutions. Our waste disposal and temporary storage sites are subject to industrial environmental monitoring.

In 2018, we spent $4.8 million to minimize the impacts of our waste on the environment, including about $1 million on land protection (land reclamation, etc.).

Total waste generation from TMK’s operations increased in 2018 to 684 thousand tonnes due to production growth at the Russian and American divisions.

TMK decommissioned and transferred for disposal a total of 452 units of PCB-containing electrical equipment in 2018, including 4 transformers and 448 condensers.

The following figures for 2018 clearly illustrate our waste management performance: 4% of total waste generation was disposed of at our own designated facilities, 55% was reused internally, and 41% was transferred to specialist contractors, of which 20% was reused as raw materials by other industries.

TMK contributes to the Government efforts to fulfil Russia’s obligations under the Stockholm Convention on Persistent Organic Pollutants ratified by the Russian Federation. The Company developed a Program for Disposal of PCB-Containing Equipment (equipment containing polychlorinated biphenyls).

Waste usage

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Key waste management initiatives and results across TMK’s facilities:

  • Sinarsky Pipe Plant :
    • reclaimed basins 2 and 3 of its sludge collector (biological stage) to recover 8.66 hectares of disturbed land
    • upgraded a mill scale deoiling centrifuge at the recovery unit of its treatment facilities for industrial wastewater
  • Volzhsky Pipe Plant
    Volzhsky Pipe Plant planted 214 trees on the landfill operation area
  • Blythevillle
    The American division’s Blythevillle facility implemented a range of spill prevention measures to prevent any negative impact on soils

Environmental and Industrial Monitoring

Our plants are continuously monitoring the areas around their production facilities for environmental impact, leveraging a high-performance industrial environmental monitoring system. All plants of the Russian division have in place certified chemical laboratories equipped with all necessary state-of-the-art equipment. alt

ENVIRONMENTAL EDUCATION

A total of 817 employees and managers across all levels completed external environmental training and awareness programs in 2018.

In addition, TMK’s Corporate University TMK2U launched Ecology for Non-Specialists, a new training program developed in-house. The program covers the basics of environmental legislation and explores the environmental aspects of TMK Group’s operations. Additionally, the Company offers a range of up-to-date distance learning programs.

The Company’s plants include environmental safety matters in their briefings for contractors working at TMK’s production facilities. Our plants are implementing educational initiatives to improve environmental awareness among school and university students; 219 students attended such lectures in 2018.

Through sponsorship and philanthropy, TMK seeks to create positive social change in the regions hosting our plants. Within the Russian Federation, these are the Volgograd, Orenburg, Sverdlovsk, and Rostov regions.

TMK runs its charity projects in the Sverdlovsk Region via a professional operator – the Sinara Charity Foundation, and in the Volgograd, Orenburg, and Rostov regions, directly via the Company’s plants.

We mainly focus on supporting the activities of non-profit organizations in health, education, culture, and sports on a project-by-project basis through grant-based activities and developing our corporate citizenship initiatives.

Initiatives supported by TMK and the Sinara Charity Foundation in the Urals Region in 2018:

  • Financial support provided to 80 non-profit organizations, 19 of which were through various grant competitions. The 22nd Sinara Charity Foundation grant competition and the 3rd Man of Labor Open Media Content Festival dedicated to the new industrial economy were held
  • The next stage of Tochka Opory (Foothold), a corporate career advising project, launched in the Volgograd, Rostov, and Sverdlovsk regions in cooperation with the Presidential Grants Foundation. More than 1,000 events were held under the project, benefiting 4,000 high-school students from 85 schools. A total of 46 classrooms in winning schools have been equipped for industry-related programs over the five years since the project’s establishment. Almost 90 teachers were trained in the Theory of Inventive Problem Solving (TRIZ) method and received certificates to teach students using innovative methods
  • Rehabilitation and medical equipment for children with special needs was purchased for 13 preschools in the Sverdlovsk Region as part of the Rostochek program for supporting preschools
  • The second Chudo Yarmarka charity fair was held in collaboration with the Yeltsin Center, all proceeds from which were allocated to building a pediatric rehabilitation gym for children with ASD and cerebral palsy
  • A dedicated Publishing Project was run by the Sinara Charity Foundation and the Ural branch of the National Center for Contemporary Arts (part of ROSIZO) to nurture the artistic environment in the region. The works of four young artists were publicly exhibited for the first time in the form of creatively designed brochures. The project was inspired by the Cahiers d’Artistes collection, published for 30 years to date by the Swiss Arts Council Pro Helvetia
  • Seversky Pipe Plant held the traditional Nashi Deti (Our Children) regional arts festival for children with special needs
  • In cooperation with the Donors Forum and with the support of Sinara Group and the city administration, the Objective Charity photo exhibition was organized in Yekaterinburg, showcasing the day-to-day activities of non-profit organizations and socially active businesses. The exhibition featured 34 photo stories: winners of the Objective Charity federal competition and the charitable activities of TMK and Sinara Group plants
  • Yekaterinburg hosted the participants of the 9th International Puppet Theater Festival, Petrushka the Great, and the 4th International Classical Dance Competition, The Nutcracker Invites
  • Yekaterinburg’s Nutcracker Ballet Theater toured in two cities where TMK operates, Kamensk-Uralsky and Polevskoy, bringing unique entertainment to more than 1,200 adults and children

We are continuing to develop our Corporate Citizenship project, which encourages TMK plant employees to donate blood and plasma to children with serious blood diseases, collect childcare products for orphaned babies, and provide New Year’s gifts to children deprived of parental care and living in orphanages or social shelters.

The first educational program, Corporate Philanthropy and Volunteering as Employee Engagement Tools, was held in 2018 in cooperation with TMK2U Corporate University.Within the program, 25 volunteer leaders from TMK and Sinara Group plants were taught how to prepare and present projects with potential for corporate-wide use.

In 2018, TMK’s volunteers:

  • organized celebrations for children deprived of parental care on the Children’s Protection Day and New Year’s Eve
  • participated in the #GivingTuesday international initiative – the Leave Your Mark on Nature! corporate charity event was held at TMK’s Russian plants
  • took part in the Bezhim S Dobrom (Run for a Good Cause) charity runs and a bicycle race to raise funds for the Daily Charity project helping children with cancer.

Our Russian plants run charitable programs and campaigns, are involved in volunteering initiatives, and consistently provide aid to both veteran organizations and children’s and healthcare institutions.

  • As with every year, TAGMET participated in the nation-wide Pod Flagom Dobra (In the Name of Kindness) charitable campaign to raise funds for seriously ill children, supported the 1855 Defense of Taganrog historical military festival, and helped local orphanages and sponsored schools hold celebrations, raise funds, and make renovations.
  • Volzhsky Pipe Plant helps educational institutions equip research labs and provides scholarships to promising students. In 2018, the plant covered the cost of developing the design documents for building a new secondary school. The plant’s Council of Young Pipe Manufacturers traditionally provides aid to the Volzhsky Baby House, the Nadezhda Center for Rehabilitation of Children and Adolescents with Disabilities, the Cheremushka Childcare Center for Visually Impaired Children, and to WW2 veterans.
  • Sinarsky Pipe Plant places a special emphasis on the physical development of young people through organizing municipal and regional competitions and financing children’s sports clubs and the local ballroom dancing team. The plant also supports popular song and Cossaсk song companies, organizes concerts and theater performances for both employees’ children and children from orphanages.
  • The plant provides multilateral support to Kamensk-Uralsky residents: over RUB 2 million was allocated to urban greening projects and developing city parks, during which more than 200 tonnes of waste was collected and removed during environmental cleanup days and sponsorship aid was provided to 12 educational institutions during the backto-school season.
  • Seversky Pipe Plant focuses on developing educational programs in its home town, and collaborates with local authorities and educational institutions on career advising initiatives. To celebrate the 300th anniversary of Polevskoy, urban development initiatives worth almost RUB 40 million were carried out.
  • Orsky Machine Building Plant supported a track and field competition and a charity football game with residents of the Children’s Orphanage state educational institution. The plant employees traditionally donated gifts to disadvantaged families with first-graders via the Oktyabrsky District Administration in Orsk. Major efforts are undertaken each year to support the veterans’ association and people with special needs. As part of our career advising initiatives, we supported the participation of technical college students in the regional vocational skills competition WorldSkills – Young Professionals 2018.
  • TMK’s American division ran its annual campaign collecting toys and school supplies for children in disadvantaged families in Texas, took part in both the Relay For Life fundraiser cancer walk and the creation of food banks for the poor and disadvantaged, and provided financial support to the Museum of Fine Arts in Houston.
  • TMK’s European division continued its involvement with local non-profit charitable organizations and supported cultural, sporting, and educational initiatives. Assistance was provided to talented students and students from lowincome families wishing to receive a hightech education.

To promote sports, TMK provides financial support to the Russian Ski-Jumping and Nordic Combined Federation, the Russian Olympians Foundation, the Futsal Association of Russia, and a number of professional sports clubs in the regions where TMK operates, including:

  • Ural Football Club of the Russian Premier League (Yekaterinburg)
  • Sinara Mini-Football Club, a two-times Russian champion (Yekaterinburg)
  • Dinamo-Sinara Women’s Handball Club, a twelve-times Russian champion (Volgograd)
  • TMK-TAGMET Tennis Club (Taganrog)
  • TMK-TAGMET Sports Club (Taganrog).

Recognition

Seversky Pipe Plant was ranked third in the Best Program Promoting Education in the Ural Federal District category of the Corporate Philanthropy Leaders contest.

We also support amateur teams representing TMK’s entities in various sports competitions, including in children’s, youth, and adult sports.

TMK’s plants implemented a number of initiatives in 2018 to reduce energy consumption and improve energy efficiency, resulting in a lower specific consumption of key energy resources and cost savings of $2 million. Overall, the Company invested about $1.3 million in energy efficiency

Energy consumption by PAO TMK and its subsidiaries in 2018

Type of energy source Unit of measurement Consumption by volume Consumption by value (thousand $)
Natural gas thousand cu m 784,506 60,236
Electricity thousand kWh 3,702,672 182,312
Heat Gcal 1,061,855 18,062
Gasoline tonnes 19,783 537
Diesel fuel tonnes 58,417 6,601
Fuel oil tonnes 2 0
Total 267,748

Selected key initiatives to improve energy consumption and efficiency:

  • Volzhsky Pipe Plant:
    • Water demineralization system was upgraded, phasing out the use of chemicals for demineralization and shutting down the facility that posed chemical risks. Project costs amounted to $0.2 million. The expected payback period of the project is 19 months;
    • Natural gas savings for its air chamber were achieved by adjusting its gas burner operation schedule to reflect the ambient temperature
  • Seversky Pipe Plant:
    • Nitrogen gas compressors for low-pressure nitrogen were installed at Power Shop 2
  • Taganrog Mettalurgical Plant:
    • Power consumption was lowered by reducing the uptime of the main motors in the EAF’s gas cleaning system by 6.5 hours during preventive maintenance
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