Enterprises of the Pikalevo industrial complex are being driven into joint ventures

Last Friday, without waiting for the decision to create a joint venture between the participants of the Pikalevo site in the Leningrad region "Bazelcement-Pikalevo" (owned by Basel), Metakhim (UK SevZapProm LLC) and Pikalevo Cement (Eurocement group) ), the Federal Antimonopoly Service (FAS) ordered companies to sign contracts at fixed prices until December 31, 2009, by Monday. According to Kommersant, all three enterprises are ready to extend contracts at prices that, in the opinion of the FAS, should ensure profitability for all participants. However, for the main supplier of raw materials, PhosAgro, the price offer is unprofitable. Experts are confident that the creation of a joint venture is excluded; the existence of a production chain is possible only under the terms of long-term contracts.

On Friday, a meeting was held at the Ministry of Industry and Trade, chaired by Deputy Minister Denis Manturov, on the prospects for the work of the Pikalevo production complex. Exactly a week ago, at a similar meeting, the head of the FAS, Igor Artemyev, said that in order to avoid a repeat of the situation at the beginning of summer (when workers at shutdown enterprises in the city of Pikalevo blocked the St. Petersburg-Vologda federal highway. - Kommersant), the companies need to create a joint venture. On August 31, the contracts signed in June expire. However, over the course of a week, the participants did not take a single step towards creating a joint venture, so on Friday the antimonopoly authority proposed extending the contracts until December 31, 2009.

By August 31, Baselcement-Pikalevo, Metakhim, Pikalevo Cement and the supplier of raw materials OJSC Apatit (PhosAgro) must sign contracts taking into account the prices proposed by the FAS Russia. “The prices were calculated based on the principle of positive profitability of all enterprises of the Pikalevo production complex,” the ministry said in a statement. “FAS Russia has determined the following level of fair prices for products: for nepheline concentrate supplied by PhosAgroAG CJSC to the enterprise of BaselCement-Pikalevo CJSC - 850 rubles per ton. For nepheline sludge supplied by JSC BaselCement-Pikalevo to JSC Pikalevsky Cement - 520 rubles per ton without VAT and transportation costs. For carbonate solution supplied by JSC Baselcement-Pikalevo to JSC Metakhim - 1050 rubles per ton." The FAS has calculated that at these prices the level of profitability of enterprises will be as follows: Pikalevo Cement - 10%, Metakhim - 5% (about 80% when potash supplies are resumed), Baselcement Pikalevo - 7%.

According to KPMG (which audited four enterprises), “the complex has historically been profitable, but the distribution of profitability between the enterprises of the complex (individual segments) has been and remains uneven.” “The center of cost accumulation is largely alumina production. Thus, throughout the entire period of our analysis, alumina production was unprofitable,” the company said in its materials.

Press secretary of BaselCement LLC Svetlana Andreeva says that the company regards the prolongation of contractual relations at FAS prices as an opportunity to continue the work of the enterprises of the Pikalyovsky production complex and reduce the level of social tension. “The prices proposed by FAS allow Baselcement-Pikalevo to reach the level of zero profitability,” she notes. “Our company, understanding social responsibility, is ready to sign contracts. In the future, we hope that with the assistance of the Ministry of Industry and Trade of Russia, a long-term work model will be developed complex, which will allow all enterprises of the complex to operate with equal profitability." According to Kommersant, no agreement has yet been signed. However, the press secretary of the company "UK SevZapProm" LLC, Maria Nikolaeva, stated that the agreement between the company and JSC "Bazelcement-Pikalevo" was signed on Friday. According to her, the proposed prices are acceptable for the company. She added that by November all participants must decide how to work further - switch to a permanent contract or create a joint venture. Eurocement Group spokeswoman Elena Rudovskaya confirmed that the company is ready to sign a contract.

PhosAgro declined to comment. However, according to Kommersant, the company is less satisfied than all the participating parties with the FAS offer, since the price at which Apatit must supply nepheline concentrate to Baselcement-Pikalevo has been reduced by almost half, which could lead to losses for the supplier.

According to Marina Alekseenkova from Renaissance Capital, there are enterprises in the production chain for which the product inside is an additional product, not the main one (on which they make money), so it is easier for these enterprises to come to an agreement. “It’s probably the hardest thing for Baselcement: they need to get out of the hole, and they’ve been given preferences in pricing,” says the analyst.

Deputy Managing Director of the Lenmontazhstroy Investment Company Denis Demin says that the activities of the Pikalevo enterprises are ensured by the supply of Phosagro nepheline concentrate below cost. In his opinion, ultimately, either the ownership structure of the Pikalevo complex of enterprises or its production scheme will undergo changes. “The issue of unprofitability of individual production facilities will not be resolved by merging them with profitable ones: in this case, they will most likely be folded within a single company,” says Denis Demin. According to Marina Alekseenkova, a joint venture is unlikely; long-term contracts and state-regulated prices for products in the chain are more likely.

At the end of September, representatives of the companies of the Pikalevo production complex will have to meet again to determine the work procedure and prices for the entire 2010.

Irina Bychina

FAS is authorized to impose