31 May 2004 08:51
Violent turf wars a thing of the past for Russia`s revitalized metals industry
Russia's metals industry is no longer marked by turf wars and violent crime, the external TV service NTV Mir
reported. It is now in the hands of a few oligarchs and the banditry of old has made way for ordinary civilized
competition. Having carved up the Russian industry amongst themselves, they are now looking to expand into other,
related, industries and abroad. The Russian government has pulled out of the sector. Whether this was voluntary or not,
the results are impressive, the report commented. The following is an excerpt from the report, broadcast on 29 May:
[Presenter] Deal of the week. Russia's top producer of aluminium, Rusal, clinched a major deal this week to
build a mill in Kazakhstan. The value of the contract is 3bn dollars. If it comes to pass, then Oleg Deripaska's
empire will become the world's largest aluminium maker.
It seems that our metals industry oligarchs have snapped up everything they could in this country and have moved onto
foreign markets. Aleksey Mordashov's Severstal is buying up steel mills in the USA. Another steel king, Alisher
Rusmanov, is in talks to buy mills in the UK. A strong world market situation and a home government that in the event
dropped attempts to regulate the metals market, have done their job. The turf wars in the metals industry are over. Now
mundane and boring competition remains, without the shootings and abductions. An annual turnover of 20bn dollars is a
powerful reason for all the oligarchs to talk to each other in the same language.
Who owns Russia now? Here is the second report in a joint project between the Personal Contribution programme and the
Kommersant Vlast weekly magazine, with Ilya Zemin on ferrous and nonferrous metals. [Passage omitted]
[Correspondent] To the West, Russia's metals industry remains a Cinderella. All they want are raw materials, and
their domestic markets are shut tight.
[Vladimir Lisin, chairman of board of directors, Novolipetsk Iron and Steel Combine, captioned] We haven't got
anywhere left to extensively develop. We can only develop intensively, by improving our quality and reprocessing.
There's no point at all in competing with each other. There's nothing left.
[Correspondent] The main players have set about expanding their holdings and breaking into related industries. In
addition to [car maker] UAZ, Aleksey Mordashov has bought the Volga Motor Factory, where they make engines for the gas
industry. Here his interests have coincided with those of Oleg Deripaska, who has the Gorkiy car factory, Ural
[engineering works] and lots more of the automotive sector.
[Aleksey Mordashov, managing director, Severstal Group holding company, captioned] Our aim is to make our businesses
self-sufficient. They should earn and generate their own money, and invest it themselves.
[Correspondent] In ferrous metallurgy, steel is smelted from ore using coal. Nonferrous is to do with aluminium,
copper and nickel. The main figures in nonferrous metallurgy are Roman Abramovich and Oleg Deripaska. Having done a
massive deal, they ended up with the Rusal holding company - which incorporates the Krasnoyarsk, Bratsk, Sayansk and
Irkutsk aluminium mills, and the Achinskiy aluminium oxide works. They squeezed out the aluminium titans of the 1990s,
the Chernyy brothers. Mikhail, one of the first oligarchs, left for Israel. Lev is still in Russia but there is no sign
of his former glory.
[Oleg Deripaska, chairman of the council of directors, Rusal, captioned] Throughout your life you have to be
responsible for what you do. Even given the imperfections in our legal system.
[Correspondent] Whether Abramovich has quit the business is a mystery. But even his brief flirtation with the
industry provoked much controversy.
Four years of stability in the metals industry has led to a battle for pipes - not ordinary ones but gas ones.
They're almost like gold. Diameter 1,420mm. A unique product, and not everyone can make them. After a series of
disputes a new empire is born, the pipe empire. The emperor is Dmitriy Pumpyanskiy, whose meteoric rise has blinded
rivals. He was a regional businessmen but then broke onto the federal scene by himself. According to rumours, he now
wants to bring the Romanovs' crown back to Russia.
The 38-year-old boss of Severstal spent a long time working in the West. He started out at his company as a lowly
economist, and grew into an oligarch.
[Mordashov] There's lots we can do. We're going to invest, we're going to boost efficiency, we're
going all the way to the top. The main thing is that there's someone to do that for.
[Correspondent] In the workers' canteens of Cherepovets, Mordashov is taking on the remnants of socialist-style
catering. But in Lipetsk there is a revival of sport, a passion of the boss here. Vladimir Lisin likes clay pigeon
shooting. Lisin is 10 years older than Mordashov and started out at the furnaces as an apprentice steelmaker. He makes
the clay pigeons out of offcuts from the main production lines. A special workshop at the Novolipetsk works moulds,
fires and paints clay pigeons not only for the boss but also for the sport's national federation - which he also
heads.
An engineer can walk 20 km as he surveys the metalmaking production line. A single workshop can occupy 40 hectares.
The entire Novolipetsk works is a veritable city in itself, with highways travelled by minibuses. [Passage omitted]
Russia remains a raw-materials appendage, but the metals kings want to export ready-made products. To that end they
are refitting their factories. This is what an iron roll, weighing tonnes, looks like. It's being packaged almost
like in the gift-wrap department of a European department store. But for the time being Europe prefers to buy scrap
metal, and given the size of this export trade this is also an empire, but a semi-criminal one. Railway tracks and even
used power-transmission lines are smelted down.
The banditry and oligarchical turf wars have been replaced with mundane positional rivalry. The only place where
they're still plotting is the Magnitogorsk metals combine. The sale by auction of the state holding there has been
postponed, and the existing empires are gathering their strength. The state has voluntarily quit the metals business. We
don't know if that was a voluntary or forced move, but the results are impressive.
[NTV Mir] |
RUSSIA IN FACTS
