This text is translated into Russian by google automatic human level neural machine.
EastRussia is not responsible for any mistakes in the translated text. Sorry for the inconvinience.
Please refer to the text in Russian as a source.

Broken stumbling block

Re-simulated "Amurmetal" remains without state support measures

State support measures for the plant "Amurmetal" are discussed all 2017 year, but the authorities have not yet come to any concrete decision. The enterprise plans to reach the pre-crisis volume of production, but without preferences from the state this is unrealistic. The plant would be helped by a two-fold lower tariff for the transportation of basic raw materials - scrap metal, as well as a ban on the export of scrap metal through the ports of the Far East to reduce the shortage of raw materials. Against the last measure, however, have already made stevedores of Primorye, receiving a year to 700 million rubles of proceeds from scrap exports to the APR countries.

Broken stumbling block
In almost three months of work since the resumption of smelting (the plant was idle for six months), Komsomol metallurgists produced 72,5 thousand tons of continuously cast steel billets. According to Vladimir Lebedev, General Director of TOREX-Khabarovsk LLC, at the moment the primary task is to bring the enterprise to the planned production capacity of 800 thousand tons of liquid steel per year with the release of products according to the available mix. In the future, it is possible to increase the volume up to 1 million tons annually. “The sale of finished products will be carried out on the domestic market, in terms of long products, and for export to the countries of South-East Asia, in terms of billets. At the same time, the owners of the plant are working on the formation of an investment program aimed at further development of the plant, its technical modernization and preservation of existing equipment that requires major overhaul, ”said Vladimir Lebedev.

As is known, "Amurmetal" is the only electrometallurgical enterprise in the Far East for steel smelting with subsequent conversion into long products and sheet products and products of further redistribution. The best production figures for the plant were observed in 2008. Then 1,062 million tons of steel were smelted, the total shipment to consumers of the products was 979 thousand tons. Then the plant began to experience financial difficulties. In 2013, a competitive production was introduced at Amurmetal, and the authorities of the Khabarovsk Territory began to search for a potential investor to take the enterprise out of the crisis.

The strategic partner of the plant was LLC "TOREX" - the largest metal trader in the Far East (it has 53 scrap processing and production sites in the Far Eastern Federal District). In late January of this year 2017 acquired the property complex of Amurmetall. At the same time, the governor of the Khabarovsk Territory Vyacheslav Shport said that the regional authorities in conjunction with the Ministry of Regional Development are considering the possibility of giving the investor of "Amurmetal" a whole set of preferences.

In particular, it was not ruled out that the enterprise could be included in the regime of the advanced development territory of Komsomolsk. But in the future the idea did not develop. "As for the resident of the TOP, the position of the representatives of the authorities is that the production itself at the plant is not new, in this connection it does not fall under the formal criteria established for the residents of the TOP," Vladimir Lebedev explained. 

As explained by the top manager, after the acquisition of the metallurgical complex of TOREX there is no debt burden. "We are not legal successors of OJSC Amurmetal and did not buy this company. We have acquired the assets of OAO Amurmetal as part of the bankruptcy procedure. The money from the sale went to partial repayment of Amurmetal's debt to creditors. LLC "TOREX-Khabarovsk" is a new legal entity that has nothing to do with JSC "Amurmetal", "Vladimir Lebedev said.

Another possible preference for the company was associated with railway tariffs for the transportation of raw materials - scrap metal - and finished products. For your information, in 2016 the loading of ferrous metals on the Far Eastern Railway amounted to 565 thousand tons, which is 4,2% less than in 2015. These were mainly the products of Amurmetal. Shipments of ferrous scrap from the Far Eastern Railways stations reached 225 thousand tons, with an increase of 5,2% versus the previous period.

"TOREX" appealed to OJSC "RZD" with a request to assist the plant by lowering the tariff for transportation. The company claimed the lowering coefficient of 0,5. "Consultations were held, but, unfortunately, RZhD's position on this issue is negative. Nevertheless, LLC "Torex-Khabarovsk" sent a set of documents to RZD to receive discounts within the tariff corridor (its lower limit is 50% - EastRussia) for transportation of ferrous scrap, "Vladimir Lebedev informed.

As a measure of support for metallurgists, the Russian authorities can return to the issue of restrictions on the export of scrap metal from the Far East. "We believe that this issue is one of the key to ensuring the stable operation of the plant," said the head of TOREX-Khabarovsk.

According to the company, for 2016 year 1,1 million tons of scrap was exported. At the same time, the total volume of scrap collecting in the DFO was 1,6 million. A similar situation is observed this year. In turn, for the output of the plant to a production capacity of 1 million tons, it will require 1,1 million tons of scrap. 

"The President and the Government of the Russian Federation have repeatedly stated that Russia should orient towards the production and export of products with high added value, and not just raw materials, such as scrap. The lack of a decision on the issue of raw materials supply of the plant can bring it back to the state of 2013, "Vladimir Lebedev said.

However, the stevedores of Primorye have already opposed attempts to limit exports. Representatives of the PJSC Vladivostok Commercial Sea Port, OJSC Vladivostok Sea Fishing Port, JSC Nakhodka Sea Fishing Port, PJSC Slavic Ship Repair Plant sent an appeal to the Primorsky Krai legislative assembly, urging deputies to support their position at the federal level.

“The entry into force of this act and the restrictions it envisages will lead to adverse consequences for the economy of Primorsky Krai and the Far East as a whole. The loss of a stable cargo base for ports about 1 mln. Tons per year will cause a decrease in revenues by 700-800 mln. Rubles, the same reduction in customs payments to the budget, a reduction of hundreds of jobs. Even greater losses (up to 2-3 billion rubles per year) from the competition, non-market and forced reduction of prices for ferrous scrap planned by the initiators, will be borne by the legitimate owners of its sources - enterprises of various industries in the DFO, ”the statement said. Also, stevedores point out that export restrictions will cause “significant damage to international trade relations” with the Republic of Korea, which consumes a large amount of Russian scrap.

"This is not the first attempt to ban exports," recalled Denis Sarana, a member of the board of directors of Vladivostok Sea Fishing Port. "But you can support the industry, you can not - a separate enterprise." He also believes that the regime of the free port of Vladivostok should protect economic entities from any prohibitions.

A different opinion is held in the leadership of the Khabarovsk Territory. "I support my colleagues who pierced this decision. For Komsomolsk it is not just a factory. This is 3 thousand employees, taking into account their families, this refers to the welfare of 10-15 thousand people, "said Yury Chaika, the deputy prime minister for investment and priority projects. According to him, it is necessary to strive to ensure that metallurgical raw materials, like fish and wood, are maximally processed in the region, and not exported in this form. "The free port should develop both the logistics and production potential," the official concluded.

Whatever it was, at the moment there are no specific decisions on the part of the federal authorities on measures to support the Komsomol plant. "A number of meetings were held in the Ministry of Industry and Trade of the Russian Federation, but there is no result yet," the general director of TOREX-Khabarovsk states.
September 20: current information on coronavirus in the Far East
Digest of regional events and latest statistics