Tag Archives: Russia

Would the last person to leave the smelter please turn out the lights?

For UC RUSAL, one simple act is crucial to reducing costs.
Bonuses for managers at the world's largest aluminium company
depend on the company's 75,000 workers heeding the message.
"We have to introduce a new culture: if you leave the
office, turn off the lights," Artyom Volynets, UC RUSAL's deputy
chief executive for strategy, said at Reuters Global Mining and
Steel Summit on Monday.
"We have 16 smelters, each with their own headquarters and
offices. We employ 75,000 people. If each one of them is
switching off the lights at the end of their shift, that would
help tremendously."
UC RUSAL embarked on a major drive to slash production costs
last year as part of an ultimately successful attempt to secure
Russia's largest ever private sector debt restructuring.
Easy access to Siberian hydroelectric power, compared with
relatively high-cost coal used to power smelters in other parts
of the world, affords UC RUSAL a distinct cost advantage when
making aluminium used in transport, construction and packaging.
In the first half of 2009, it cost UC RUSAL an average
$1,400 to produce a tonne of aluminium. The metal is now selling
at above $2,200 a tonne.
UC RUSAL has cut costs by sourcing cheaper raw materials of
better quality and improving throughput rates at its smelters in
Siberia, which account for about 80 percent of its total output.
But cheap power in Siberia had also led to complacency.
"Our smelters are located in probably the only remaining
major energy-long region in the world. Therefore, if you buy
power at 2 cents per kilowatt, you don't really care how much
you spend," Volynets said.
"For my colleagues on the operational side of the business,
their key performance indicators are 100 percent tied to cost
improvements," he said. "They will not be compensated if these
improvements are not implemented."
(Writing by Robin Paxton in Moscow)

Of bees, bribes and bureaucrats

Russian banking and aviation magnate Alexander Lebedev, owner of London's Evening Standard, estimates that Russian bureaucrats have pocketed $500 billion in bribes in the past four years and corruption and red tape make Russia one of the worst places to invest on earth.

On the scale of bureaucratic outrages, Lebedev hit a personal low when the authorities asked him to produce a 100 page report on bee poo. They claimed to be concerned about the excrement produced in the hives at one of his farms.

"The conditions for entrepreneurship in Russia are simply horrible," Lebedev told the Reuters Russia Investment Summit.

Lebedev has plenty of suggestions how to cure the disease. One of them would be to fire at least half the bureaucrats. "They are wealthy people. Let them go to Saint-Tropez," he said.

One could wonder how billionaire Lebedev gets away with criticism of the Kremlin while his peers who had dared to challenge authorities had to flee to London or are serving prison terms in Siberia, like the oil magnate Mikhail Khodorkovsky.

Lebedev, a former KGB agent like Prime Minister Vladimir Putin, says Putin is open to criticism and these are mainly mid-level bureaucrats who are causing trouble. "Putin is a hostage to the tradition of a corrupt country," says Lebedev.

But he says Khodorkovsky must be freed and often repeats "God Forbid" when mentioning other fallen oligarchs.

Perhaps having a critic like Lebedev is valuable for Putin -- if the prime minister does launch a fresh crackdown on corruption or major regulatory reforms, he will immediately have a cheering section. And without Lebedev, the Russian corporate landscape would be too dull.

Moscow: The least worst place for your money

   Russian investment bank Renaissance Capital was a big backer of Moscow's ambition to become a major emerging-markets financial centre, a bridge between European and Asian capital, a rival to Dubai.

    It not only trumpeted the idea, but was one of the first big local firms to take out offices in a sleek glass skyscraper by the Moscow River, surrounded by foundation pits and towers of naked steel girders that were to become Moscow's Canary Wharf.

    Then the financial crisis hit in September 2008, knocking back the city's ambitions.
    Renaissance Capital President Ruben Aganbegyan said, however, that other world financial centres were inadvertently helping Moscow's case despite its setbacks.
    "A lot of people in the world are doing everything they can to help us," Aganbegyan told the 2009 Reuters Russian Investment Summit. "Like the UK raising taxes."
    Russia instituted a 13 percent flat income tax rate in 2001 to stop rampant tax evasion. Earlier in the day, Finance Minister Alexei Kudrin told the summit that Russia would try to avoid raising taxes to cover budget deficits for at least three years