Vladimir Putin's introductory remarks:

Good afternoon,

Today, we are having a de facto traditional meeting, which we should conduct in the open, productive manner in order to look at the situation in this [metal] industry, and to analyse what is taking place today. We should look again at the anti-crisis measures we are taking at corporate, government, and regional levels. We should analyse what effect they are producing, and make some conclusions and adjustments.

All our previous meetings have been generally held in this manner, and I am confident that, during these times of crisis, they are now very important and well-received. But before discussing the industry's problems in general, I would like to congratulate Magnitka [Magnitogorsk Iron and Steel Works (MMK)]. I would like to extend my greetings to its owners, shareholders, workers and specialists, who have made a big step forward in developing its production. I would call it a spectacular step. All over the world, such projects as Plate Mill 5000 can be counted on the fingers of one hand. Its technological level is likely to be unprecedented altogether.

We often emphasise that Russia should become stronger and more effective after the crisis. This instantly leads to another question: "How should we achieve this?" We should take steps like this here. We were not scared to bring huge investment projects here to the successful completion. Plate Mill 5000 is not the only one.

To the contrary, [management at MMK] are using in a good sense their relations with foreign partners, as well as Russian contractors, and are quickly relocating their work force.

Of course, the situation in the metal industry and in the region in general is not easy. However, almost 1,900 people have been sent for retraining, and to complete their studies. If I am not mistaken, 757 of them have already resumed their jobs in a new capacity, having received additional education, another speciality, or having upgraded their skills.

More than 1,000 temporary jobs have been created. Importantly, they were created for those workers who have received new jobs, or even changed their specialities. I was told, for one, that they do not want to give up builders who are well adapted there, and have shown their worth. The mill is working well with the region as a whole. The regional authorities are paying special attention to this. True, this does not mean that all issues have been resolved, but on the whole they are moving in the right direction.

Today, the worst headache for metalworkers is low demand for their produce both at home and abroad. The domestic consumption has decreased by 40%-45%. Export shipments have dropped by 15%-20% in physical terms, and by 45% in value terms. Hence, we will continue increasing the market demand for metal to help the producers, and try to give contracts to builders, carmakers, and other end-users. This is exactly why we are developing the relevant programmes.

Here, Mr Kogogin (general director of the KAMAZ auto works) is nodding his head. I hope this helps you, too, at least to some extent. Needless to say, we cannot resolve every problem with federal funds, but we will try to adjust the system to support the demand so that they could keep the purchases of domestic metal at an acceptable level.

Yesterday, we again discussed problems of the budget, and agreed to allocate Russian Railways 50 billion roubles next year, as much as this year, despite all the difficulties. I hope that the producers of railway carriages, and, hence, metalworkers will also receive contracts from Russian Railways.

We must focus on our measures. For all their importance, systematic decision-making cannot turn into targeted aid in the implementation of concrete projects.

It is also necessary to encourage exports and provide requisite protection to our domestic market; we have already taken a number of serious steps in this direction.

Export support mechanisms have been introduced for ferrous metals. Experience shows that our industry needs this support. In addition, we need integral programmes for the support of the export infrastructure.

I know that some of you also wanted to talk today about port terminals, storage facilities, roads, and access routes. We can even consider drafting a special programme to this end.

We must pay particular attention to the protection of our producers in the foreign markets. Our metals are being discriminated against in many countries. Today, everyone is talking about inadmissibility of such actions, but in practice some countries are expanding this kind of protective economic policy. There are about 30 different restrictions on the exports of Russian metals. We must encourage our government bodies to work for their abolition, and for the prevention of new non-market restrictions.

On the other hand, we should not feel embarrassed about using instruments to protect our markets when we encounter outright dumping. Sometimes, it is the case.

As for changing export duties on the whole, we should seek a reasonable balance here. Protection of domestic metal producers should not inflict losses on their consumers, such as builders, and car and carriage makers whom I have mentioned.

Furthermore, bigger demand for metal production on behalf of natural monopolies can also be rather helpful.

Our legislation provides for preferences for the supplies of Russian goods for government purposes. I assume that natural monopolies and state corporations can also resort to this practice.

You know, it is possible to think about adopting a relevant law, but we should think about this thoroughly. Despite the crisis, you keep prices high. We cannot drive our infrastructure monopolies into the corner without any choice. This is why we are ready to consider a system of measures of additional support, but it should be well balanced.

I also hope that Russian private companies will give preference to domestic products, metals in this case, if they are of course competitive.

In the last few months, the Government and business communities have focused on countering the crisis and overcoming its negative consequences. But now that the first signs of economic recovery have appeared, attention should be switched to post-crisis development, and to the future.

In 2010, we are striving to achieve stabilisation, and at least a small growth of basic economic indicators. This should be done primarily through the introduction of modern technology. In other words, we must make the best possible use of the current pause for upgrading our plants and renouncing obsolete technology.

For this reason, I consider it essential to discuss at our meeting the implementation of the Strategy for the Development of the Metal Industry, and based on this discussion, adopt measures allowing metalworkers to continue the launched investment programmes, and make their products more competitive. Th MMK is a good example in this respect.

I am referring to a list of modern technological equipment, the export of which will be exempt from duties, for instance. I think that we have already done much in this direction, but if you have more proposals, let's discuss them today.

I am also referring to the introduction of modern standards of energy efficiency and environmental protection. Resolving these tasks is particularly important for ferrous metallurgy, which accounts for 28% of industrial emissions into the air.

Today, Mr Rashnikov (Chairman of the Magnitogorsk Iron and Steel Works Board of Directors) told us that the MMK also annually produced up to a million tonnes of emissions into the air. Now the relevant figure is a mere 200,000 tonnes, but even this figure is large for the industry.

On that note, I would like to conclude my introductory remarks. Now let's turn to our work.

Vladimir Putin's concluding remarks:

Vladimir Putin: Thank you.

Now that this meeting has almost finished, I think you will agree with me that it has been useful.

Today's meeting has been a ground for both an exchange of opinions and the adjustment of actual measures to support the metal sector and several other industries, including shipbuilding, the motor industry, pipeline transport and so on.

I see you also took part in preparing the draft of the protocol, and I would like to emphasise that we agreed that practically everything will be left as it is, with a few updates. This applies to granting, preserving and expanding state guarantees on loans, supporting export, countering dumping practices within Russia, prolonging, if necessary, the adjustment of import and export customs duties, as well as continuing, among other purposes, the modernisation of production facilities.

We have discussed in detail the VAT refund issue. As you understood, your proposals will be taken into account for the most part. We will most certainly develop a more transparent system, which could be applied to accelerate the refunding of the VAT we spoke about today.

We will also verify with others on issues following some of your proposals concerning railway transport. It is necessary to arrange this to eliminate a possible negative impact on the carrier. We will also look at this issue in more detail in due course.

Let me conclude on consumers of your produce who spoke about their problems today; in order to establish cooperation, we must be able to hear each other well. In this regard, I would like to draw your attention to what major consumers have pointed out. The home demand for your produce will grow, which is an obvious fact. During the current financial crisis, we will encourage your consumers to orientate themselves towards domestic producers.

But this will not last forever. You must take advantage of today's developments to modernise production facilities, and thus ensure the required level of your products' quality for a period ahead. You must also create new jobs to ensure adequate revenue volumes and to timely pay state taxes.

I wish you every success. Thank you very much.