During the meeting, Vladimir Putin stated that the steel industry is coming out of the crisis - production growth was more than 20% in the first half of the year. He noted that Russian steel plants have implemented large-scale investment plans, investing a total of around 900 billion roubles in modernisation in the past 10 years and he said that he is confident that the Russian steel industry will shortly consolidate its position among the world leaders in the sector.
Mr Putin tasked steelmakers with the goal of setting up the types production for which Russia still depends on imports. In addition, Mr Putin drew steelmakers' attention the new situation in the economy in connection with the enactment of the regulations of the Customs Union of Russia, Belarus and Kazakhstan. Mr Putin said that the advantage of the Customs Union should be used to increase cooperation and the competitiveness of Russian steel companies.
In his closing remarks, Mr Putin called upon steelmakers to build up effective joint operations between the sector and the government. He also emphasised the need to account for the requests of the main steel consumers.
Vladimir Putin's introductory remarks:
Ladies and gentlemen,
Today I think most of you visited the Chelyabinsk Region's metalworking facilities that are implementing really big, breakthrough projects.
One of them promises to meet all of the Russian oil and gas industry's demand for large-diameter pipes.
Incidentally, when I visited this production facility, I had the impression that I was in some sort of theatre production or Disneyland. I said so to Mr Andrei Komarov (Chelyabinsk Pipe Plant stockholder) and I will say it again. The atmosphere is inspiring! When you see production on such a huge scale, you have no doubt that this is a real high-tech production facility that meets the highest international standards and employs top-notch personnel. It's really impressive.
On the way out of Chelyabinsk Pipe Plant we passed the production facility's health centre. There is an undeveloped beach nearby, [on a lake] within the city limits. I am not sure enough is being done in Chelyabinsk for public recreation. The beach we saw might not be developed, but the City Hall should do something about it - at least install simple conveniences. I didn't see a single vendor, and there were no toilets. Maybe there are some there, but I didn't see them.
Does the regional governor address these everyday issues? I hope mayors and governors will pay attention to these sorts of issues in other parts of Russia, too. Summer is hot, and people just need to relax.
Because, you know, places like this are probably the inspirations for famous jokes like:
"Have a dip, Grisha!"
"Why, Mum? I can't swim and I don't need to take a wee right now."
This would be funny if it weren't so sad. Because this really is serious stuff. If municipal leaders pay attention to stuff like these - especially since these issues are part of municipal leaders' jobs - people will be grateful: they will notice and be grateful, especially since these improvements don't cost anything.
Alright, let us get back to the steel industry, which is the focus of our meeting today. Let me repeat the issue I started with: this is only one part of a huge job.
Practically all our steel mills have launched ambitious investment programmes, investing roughly 900 billion roubles in modernising production within ten years. The industry is coming out of the recession. Output increased by more than 20% in the first six months of this year, and we do not intend to give up on modernisation.
I am convinced that the Russian steel industry has everything it needs to become one of the world leaders in effective production and management, energy efficiency and environmental friendliness quite soon.
I have seen what the Magnitogorsk Iron and Steel Works is doing in this field, under the leadership of Mr Rashnikov (Magnitogorsk Iron and Steel Works CEO Viktor Rashnikov). It is very impressive! Especially everything that pertains to environmental friendliness.
Much remains to be done. You know it better than anyone else, because your production facility still lags behind its competitors in labour efficiency and consumes 15% to 20% more electricity. All this, of course, is a legacy of the past, a legacy that is difficult to get rid of. You can't undo everything in one fell swoop, but we are moving in the right direction. We need to start manufacturing the products where we still rely on imports, for example, high-quality automobile sheeting used in the production of new AvtoVAZ models and vehicles for foreign corporations operating in this country.
I hope that today we will have the opportunity to discuss the results we have already achieved as well as the practical plans for improving technology in Russian iron and steel works.
I would also like to draw your attention to a number of current issues for the industry.
First, developing new sources of raw materials and opening up new iron ore and coking coal deposits as quickly and effectively as possible. There are still a number of problems in this area, for example numerous administrative barriers and inadequate infrastructure in new mining areas such as the Republic of Tuva, where a railway must be built for access to a very large coal deposit.
Second, there are the changes due to the introduction of the Customs Union of Russia, Belarus and Kazakhstan. We need to learn to use the provisions of the Customs Union to protect our three countries' common market against unfair competition from foreign manufacturers.
The metal-processing industry and other manufacturing industries must clearly understand who will consider their applications, what the deadlines will be, and how relevant decisions will be made.
It is also essential to take advantage of the benefits of the Customs Union to establish closer partnerships and make our steel companies more competitive.
Third: stability in domestic metals markets. We have discussed this issue on many occasions, especially two years ago or so. The government has repeatedly issued orders supporting long-term contracts between the largest metal manufacturers and consumers, and worked to establish a transparent and economically sound formula for determining prices for such contracts. This is the fairest way to distribute possible risks and benefits among contractors in the event of fluctuations on the world market.
Furthermore, we need to completely eliminate uncivilised business practices such as the termination of supplies in case of disputes. Business partners should settle disputes at the negotiating table or, at worst, in court, and not by upsetting their partner's operations and thus jeopardising entire communities.
I would like to hear from representatives of relevant government agencies as to what is being done to solve the problems I have mentioned.
But before we move on to the discussion and exchange of ideas, I would like to hear from our colleagues from other parts of Russia. Let's see what is going on in the entire Russian metal-processing industry.
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Vladimir Putin's concluding remarks:
This is what I want to say by way of conclusion. I think this was a useful meeting. We have heard each other's opinions, and people from the metal-processing industry have heard the desires of their main clients - to increase import duties on coke and all the rest, reduce import duties on finished metal products, streamline taxation on the industry and establish order in pricing. Have you gotten this all? Yes.
We did everything we could to support you, especially during the downturn. Mr Sergei Shatalov just told us about the efforts on the part of the Finance Ministry. The Ministry of Economic Development was also actively involved.
There was strong resistance at the start, and I was forced to twist some arms because many believed that the crisis would not be so bad and there was no need to provide support. It turned out, however, that we were doing the right thing, and I am not sorry we did it. Why would Mechel not do a good job? I remember the verbal attacks on Mechel, and I can only regret that this caused the company's capitalisation to fall by 20%, if I am not mistaken. Anyway, Mr Zyuzin (Mechel CEO Igor Zyuzin), I want to thank you for everything you did and your continued respect for domestic consumers and Russian law.
This industry has powerful allies in the government, who want to support this industry, which is undoubtedly one of the most critical industries for the national economy. But if we see that the measures that are now part of the law are not enough to ensure that industry upholds the law, then we will have to tighten the measures. Why should we? But I want to say that we will do this if we do not see the appropriate response.
Take the current investigations. What are they all about? We know perfectly well that these investigations could take years. How long have you headed the investigation, Igor?
Igor Artemyev: As things really are, we are constantly working on this, and every investigation takes no longer than three months. But the same issues keep coming up.
Vladimir Putin: That's it! The same issues keep coming up. What's the explanation for this? People think they can just go through the motions, and then the matter will get buried in court. But if this kind of thing just gets stuck in court or disappears in somebody's office, let me repeat that we have other measures that will prove effective.
If the things we are now seeing are happening, it means government measures are not effective. They cannot guarantee law and order. If you think we are overdoing it, come and say so. We are open to new ideas. The Ministry of Finance is open to new ideas, so is the Ministry of Industry and Trade, and so are the Tax Service and the Ministry of Economic Development. But if you recognise that these measures are appropriate, you must comply.
I ask that we work together. Here I am primarily talking to the shareholders and top executives of our largest steel companies. We have every opportunity to work out the rules of the economic game together, especially since the steel industry is, as I have said, a pivotal, strategic industry.
On the whole, the situation is good, I think. The industry is developing at a good pace.
We have seen today how many major, ambitious investment projects we have. I see that shareholders and experts are interested in implementing them. Frankly, I very much hope for us to join forces as we deal with all the drawbacks we have mentioned today, and move on to new frontiers.
Thank you very much. Goodbye.