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V.Putin.О ситуации на предприятиях г. Пикалево.04.06.09.Part 4

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Published on Jun 4, 2009

Prime Minister Vladimir Putin inspected an alumina facility at Basel Cements Pikalyovo Alumina Refinery.Part 4
4 June 2009

Председатель Правительства Российской Федерации В.В.Путин провел совещание по вопросу "О ситуации на предприятиях г. Пикалево Бокситогорского района Ленинградской области".
04.06.2009
После совещания, на котором обсуждалась ситуация на предприятиях Пикалево, Председатель Правительства России В.В.Путин пообщался с жителями города. Премьер кратко рассказал им об итогах совещания

We worked at full production in the first quarter of 2008, and used only a half of our capacity in the second and third quarters. Things became even worse in the fourth quarter and through January-only one of six furnaces in the alumina refinery was functioning. I paid Fosagro for nepheline concentrate out of my own pocket the last month to keep production afloat-and we were barely coping.

The company has been at a standstill since February but we have paid wages in full for 8 months. The trade union will confirm that it has no grudges against us. 250 workers out of the 270 had been warned about dismissal, and I was to dismiss them on June 2, though I put it off until June 12,when we learned that the federal Government was delving into the problem and we saw a light at the end of the tunnel. If I have it right, the plants will restart production today, and there is no need to sack anyone.

Vladimir Putin: One of the problems concerns necessary materials to be obtained from Fosagro. We have discussed it in Moscow. Mr Volkov, please tell us what resulted.

Mikhail Volkov: Mr Putin, we are not representing the site proprietor. Fosagro-to be precise, its Apatit arm-supplies nepheline concentrate, one of the basic raw materials. We carefully complied with the contract whose term began April 1, 2006, and expired in March 2009.

The contract envisaged nepheline concentrate supplies at a fixed price. It was 1111 roubles at that time, and was adjusted every year according to the industrial inflation index.

I do not know why nepheline concentrate consumption declined by half since March 2008. We have inquired on many occasions about the current situation and future nepheline concentrate supplies but we have never received an explicit answer. The only news came from the press. That was how we learned about the plan to convert the works to cement production-which means nepheline concentrate will no longer be in need.

Despite all that, we began supplying nepheline concentrate in conformity with applications from Basel Cement Pikalyovo. As the result, our production for 2008 was only a half of the contract amount-540,000 tonnes. Respectively, the net cost of supplied nepheline was 1,340 roubles a tonne in 2008, so Apatit Co had 5-6% negative profitability in this part of its activity in 2008.

Consumption had been shrinking even quicker since November 2008, and the last batch of concentrate, 8,000 tonnes, was dispatched in February 2009. In January, we supplied 6,000 tonnes-14 times less than the nominal consumption volume. This disastrous production slump bloated nepheline concentrate net cost to 2,717 roubles a tonne in February.

A meeting chaired by Mr Igor Sechin made several decisions. We have accurately followed each one. The Federal Agency for State Property Management sent us an instruction this morning. The Agency has approved the contract terms agreed upon yesterday. The supply price has been appointed at 750 roubles for three months-that is, until the ad hoc team determines further the price structure or, to be more precise, the principles on which it should rest to keep Apatit afloat. If Apatit works at a loss, it will be a disaster to its 14,000 personnel and to the 90,000 people of two towns-Apatity and Kirovsk, which depend on the company for survival. Employment will shrink several-fold there.

So a circumspect decision is necessary. We will do everything we can. Our depots contain 8,000 tonnes of nepheline concentrate ready for distribution. We will start loading at once if we get the wagons.

Vladimir Putin: Have you signed the contract?

Mikhail Volkov: Yes

Vladimir Putin: Did Mr Deripaska sign the document? I do not see your signature. Come over here. Sign it. The document is over here.

Oleg Deripaska: Just give me a pen.
http://www.government.ru

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