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V.Putin.On the situation in city Pikalevo.04.06.09.Part 3

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Published on Jun 4, 2009

Prime Minister Vladimir Putin inspected an alumina facility at Basel Cements Pikalyovo Alumina Refinery.Part 3
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

Vladimir Putin: You were offered, you say? Who made such an offer?

Filaret Galchev: The head of Basic Element made an offer to our manager. We turned it down, and raw material supply problems started soon after that-as early as the beginning of 2008. I have preserved the correspondence on the controversy. We have won two or three cases on this dispute.

Supplies to our company stopped abruptly in August, without any explanation, under the pretext that cement production was re-profiled. We started to upgrade the plant-what else could we do? We quickly drew up a relevant contract, and made blueprints. We have spent 800 million roubles so far-in particular, to build a quarry. We have opened up raw material reserves-we have 500,000 tonnes. Equipment will be brought in in June, and it will be fully assembled by September. The plant will be able to work independently by mid-September.

We have decided to bring clinker brick from our other plants, and so retain at least a part of the personnel. We are reprocessing the brick now, and using a mere 30% of our total capacities-but we hope to restart full-scale production after September.

We have signed a general contract with Russian Railways for clinker shipments from the Maltsovo Works. It is a long way, however, and such transportation does not pay.

Despite all this, we are coping. We have always paid wages on time. The average monthly wage is 18,000 roubles. As for social welfare, personnel are entitled to free meals and health services. 15% of the staff receive free seaside holiday accommodations every year.

However, the current situation does not suit us or our employees. Because of long-term contracts, we were not prepared for the sudden stop, but this is what happened.

If we switch production to the traditional pattern, which all cement plants follow, the alumina refinery will fall into a dramatic situation. A conversion to cement production is planned-but then, forecasts for this year's cement consumption in the Leningrad Region estimate it will be 2 million tonnes, as opposed to 3.85 million tonnes in 2008.

On the average, total cement output in the Leningrad Region and St Petersburg is approximately 5 million tonnes, and if new production is launched, the region will have 5-6 million tonnes more than it can consume. That is unlikely, however-a technical analysis says there is little chance for such huge output. So I think production should be launched-but the production pattern should be amended.

Vladimir Putin: Just think, we used to import cement from China! Cement went at exorbitant prices quite recently-but we coped. Everything functioned smoothly.

Mr Uteshsky has the floor.

Alexander Utevsky: We managed the entire production complex before the company merged with SUAL in 2003, and SUAL started shedding non-core assets. The cement plant was sold the first. Then, when they shifted to the one share arrangement, SUAL refused to incorporate the chemical works of the Volkhov Aluminium Plant, though the chemical works accounts for 85% of its total production-aluminium output is down to a miserly 22,000 tonnes a year. The Pikalyovo chemical works was also turned down.

In short, the chemical works has stayed in our company. We have launched an independent production line and started cement production in Volkhov, which promises a million tonnes. We have a strong market position there.

In reality, the Pikalyovo facilities are quite small, employing 270. The company produces soda, half of which is taken to Volkhov for its basic production, and potash. There is no demand for top quality potash in Russia, so it is exported to the West, while inferior product is processed into potassium sulphate fertiliser in Volkhov.

I think Mr Deripasko's subordinates have not yet told him that we have signed price agreements for carbonated lye. I have raised its purchase price by 61% because we have improved its quality in the past five years after investing $12 million in this small-scale production. Our profits have grown spectacularly, and it really matters to us, with all our current problems.

http://www.government.ru

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