Abstract
Introduction
Russia is the 4th greatest producer of steel in the world. Around 10% of
industrial production volume and 7% of proceeds from export sales of Russia
belonged to Russian ferrous metallurgy sector in 2005. Share of state in
pattern of ownership in the sector is below 2%.
Until recently, the features of standing of Russian ferrous metallurgy as a
whole were as follows:
- Improper grade and competitiveness of production owing to availability of
outdated and worn productive facilities;
- Too high material and power consumption of the production;
- Misbalance between distinct branches of ferrous metallurgy sector,
aggravated by breaking economic ties between enterprises of the ex-USSR
countries;
- Extremely unfavorable environmental situation around metallurgical
enterprises.
The main negative tendencies, making themselves evident in Russian ferrous
metallurgy in early 90s, to a large extent arose from features of Soviet
economy, in which political reasons dominated over economic ones. For
instance, the task was become the greatest producer of iron and steel in the
world, to construct the largest in capacity steel-making facilities, etc. As
the result, great steel-making facilities proved located irregularly; in
addition, they, as rule, were closely specialized in distinct products.
Resulted disproportion in production and consumption of steel by territories
caused too high transport costs, too complicated power and transport lines,
surplus expanding auxiliary productions.
Soviet policy tending to only extensive production growth resulted in the fact
that, by mid-90s, productive capacities in Russian ferrous metallurgy proved
extremely obsolete and worn owing to delay in production reconstruction and
modernisation (degree of depreciation reached 60-70%).
That is why current Russian ferrous metallurgy is characterised by
availability of obsolete and worn facilities, consuming too much power, fuel
and raw materials - by 20-30% (in specific consumption) more than in developed
countries.
According to German consulting company UBT/Wolfgang Ruoff&Partner, which
analyzed standing of Russian ferrous metallurgy, the main problems of this
sector are inefficient utilisation of productive capacities, obsolescence of
facilities and high environmental damage from the operating facilities.
When changing to market economy, Russian ferrous metallurgy, being too
large-scale, inertial, non-flexible, showed its inadequacy: instead of
reducing production costs, the sector demonstrated increasing price on
products, growing nonpayments and cutting production volume.
Low competitiveness of production of Russian steel-making sector is owed,
first of all, by obsolescence of productive capacities and weak management.
According to EU experts, advantages of Russian ferrous metallurgy are great
resources base, availability of modern know-how in metallurgy (high level of
scientific-research works), rather qualified and cheap working force,
relatively low production costs. On the other hand, among its disadvantages
are obsolescence and wearing of productive capacities, high specific
consumption of power and resources and unfavourable location of steelmakers
(too far from consumers).
In latest years, standing of Russian ferrous metallurgy began to change with
changing ownership pattern: new owners increased investments in production
development, modernising production facilities and improving grade and
competitiveness of products (this is true, first of all, for great steelmaking
companies). For instance, by 2007, the Russian steelmaking facilities
depreciation (as a whole) decreased to around 48% owing realizing large-scale
modernization projects.
At the same time, obsolescence and degree of wearing productive facilities at
steel-working enterprises is even higher than at steelmaking enterprises
(65%), that hinders increasing output of finished products with high added
value. In this connection, share of semis in Russian steel exports remains too
large.
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