Digital and Steel
Severstal is replacing foreign software with in-house systems and positioning itself as a flagship of industrial digital transformation in Russia, translating patents, AI deployments and R&D investment directly into measurable financial returns.
Turning Patents Into Billions
PAO Severstal has entered the top 10 most innovative companies in Russia. Over the past four years, the company has registered 2,165 patents covering inventions and industrial designs.
A core driver of this growth has been import substitution. Rather than relying on turnkey solutions from global vendors, Severstal built its own research infrastructure. That strategic pivot reduced external dependencies while strengthening internal engineering capabilities.
In parallel, the company expanded its partnership ecosystem. Severstal’s scientific network now includes more than 500 specialized partners and experts, including researchers and engineers from leading Russian universities, research institutes and technical centers. The company also invests heavily in developing its own high-skilled workforce capable of solving complex technological challenges.
The introduction of generative AI and RAG technology into the corporate ecosystem significantly accelerated engineering workflows. Instead of spending months reviewing previous developments, engineers can now retrieve equipment analogues or identify relevant partners within minutes. This shift frees highly specialized staff to focus on research-intensive work that can be directly converted into intellectual property.
In 2024, R&D spending reached 317 million rubles or $4.1 million, up 42% year over year. The economic effect from implemented projects exceeded 1.3 billion rubles or $16.8 million, demonstrating a strong return on innovation investment.
From Blast Furnace to Generative AI
Severstal can be described as a highly digitized and automated enterprise. Over the past five years, the company developed more than 300 new products and solutions across machine building, construction and energy. These delivered a cumulative economic effect of approximately 10 billion rubles or $129.5 million for Severstal’s customers.
The company’s strategic priority for the coming years is defined as “Leader in Digital Technologies.” Under this program, annual IT investments are expected to reach approximately 14 billion rubles or $181 million. By 2028, the company projects incremental EBITDA growth from digital technologies of 20 billion rubles or $259 million.
The most promising direction over the next five years is AI and advanced analytics. Severstal already deploys AI to improve production efficiency and quality control. AI is also being integrated into sales operations and corporate processes. The current portfolio includes more than 60 digital solutions. In 2024 alone, AI-related projects generated more than 1 billion rubles or $12.9 million in economic impact.
At the company’s largest hot rolling mill in Russia, Mill 2000 at the Cherepovets Metallurgical Plant, AI-based solutions reduced the average pause between slabs by one second, delivering an economic effect exceeding 180 million rubles or $2.3 million. Productivity at Mill 5000 at the Kolpino production site increased by 6%.
An AI-driven control model for the continuous hot-dip galvanizing line automatically manages coating application, furnace power and line speed within technological constraints. The solution reduced zinc consumption by 1.5% and increased line productivity by 3.4%. Another AI system for pellet production automatically optimizes pelletizing line parameters, resulting in an 11% productivity increase.
Building a Proprietary Digital Ecosystem
Among Severstal’s flagship digital developments are its proprietary systems for production management: MES Metallurgiya and IPS Proizvodstvennoye planirovanie, both recognized by the Russian government as strategically significant software solutions.
IPS Proizvodstvennoye planirovanie is a modular system that supports demand forecasting, supply chain optimization, sales and operations planning, and end-to-end production lifecycle management.
MES Metallurgiya enables analysis, synchronization and coordination of production across all metallurgical stages, from steelmaking to final shipment. At the end of 2023, the first version of the system was successfully implemented at Severstal’s service metal center in the Kolpino district of Saint Petersburg. Operational results showed up to a 20% increase in overall equipment effectiveness, up to a 5% productivity increase and up to a 10% reduction in energy consumption.
Severstal’s experience illustrates that Russian industrial enterprises are not merely following the global digital manufacturing trend but in certain areas moving ahead of it. Digital transformation delivers competitive advantages, supports output growth and contributes materially to broader economic development.
