Russia's copper industry is slowly but surely being consolidated into two groups, each controlled by a Yeltsin-era oligarch.

The dominant copper producer remains Norilsk Nickel, which is controlled by Vladimir Potanin's Interros group. The group is steadily expanding its control over downstream copper production companies. Analysts estimate that Norilsk Nickel produced just over 340,000 tons of copper last year.

The second largest copper producer is the Urals Mining and Metallurgical Co. This is controlled by Iskander Makhmudov, who is allied with others, including Oleg Deripaska, in expanding their control over the metallurgy sector, including aluminum, molybdenum, steel, coking coal, and rail transportation, in addition to copper.

In the copper sector, Makhmudov has assembled majority shareholdings, as well as blocking equity stakes and debt holdings, for 16 separate plants that are now considered to be within the commercial sphere of influence of Urals Mining. The largest is copper producer Uralelectromed; others include Sredneuralsk, Gaysky ore-enrichment plant, Kirovofradsky copper smelter, Safyanovskaya Med and the Mednogorsk copper and sulfur combine.

The group's leading plant, Uralelectromed, says it produced 311,000 metric tons of refined copper last year. This was the best result since 1934, and a gain of 2.9 percent from 1999. This year, Uralelectromed plans to produce about 340,000 tons of copper. Production of copper wire-rod will be about 70,000-75,000 tons. This is roughly the level of 2000.

The plant also says it plans to increase production of copper electrolytic powders in 2001. In 1999, output of these powders amounted to just 3,100 tons because domestic consumption of powders was just 1,500 tons per year, and export sales too low to justify work at full capacity. The situation improved in 2000, when Uralelectromed says it managed to increase export sales to Germany, Italy, the United Kingdom and China.

The plant is the sole Russian producer of copper powders. Output this year is planned to reach 4,500 tons. Modernization of filtering and packaging facilities will enable Uralelectromed to produce products of greater purity in more consumer-friendly packaging. In January of this year, the plant told The Russia Journal it produced 26,026 tons of copper in ingots and cathodes; that is an increase of 22 percents from January last year.

Output of copper powders for the month was 494 tons, a gain of 106 percent over January 2000. Refined copper production was 2,482 tons (up 3 percent), and copper wire-rod volume was 808 tons. This was reflected in the seasonal falloff in orders that are concentrated mostly in the summer period.

The nonferrous alloys subdivision of Uralelectromed said that output of lead alloys reached 8,000 tons last year. This year, the plant will concentrate on aluminum alloys, and plans to raise output from 10,000 tons in 1999, and 12,000 tons last year, to 18,000 tons this year. Investment in facilities to reprocess aluminum scrap will add capacity, with a long-term target of producing 30,000 tons of aluminum alloys at the plant.

Last year, according to Urals Mining officials, the group's Sredneuralsk ("Mid-Urals") Copper Smelting Plant (SUMZ) produced 27 percent more copper last year than in 1999. This, the sources said, was "due to active investment in technical modernization, and the absence of any problems with raw materials supply."

In all, SUMZ produced 103,065 tons of nonrefined copper; this was the first time since 1992 that the plant had broken the 100,000-ton limit. The company also produced 412,706 tons of sulfuric acid, a gain of 14 percent from the year before.

In BRIEF ...

SUMZ output rises

YEKATERINBURG – Russia's Sredneuralsk Copper Smelter (SUMZ) said its 2000 blister-copper output was 103,065 tons, up 26.7 percent from 1999. Production of copper concentrate fell 38.4 percent to 6,267 tons, SUMZ, part of Russia's second biggest copper firm, Urals Mining and Metals Co., said.

PRICE pessimism

TORONTO – Norilsk Nickel Chairman Yury Kotlyar said that the Russian metals giant would hold nickel output at current levels but admitted he was not optimistic about the outlook for global prices. In an interview with Reuters, the head of the Russian company said he expected nickel prices to stay between $5,500-$6,500 a ton this year unless the market was hit by an unexpected event – like a strike – that interrupted supplies. "I am not too optimistic about the market this year but everything depends on new production facilities coming onstream," he said during a meeting with Canadian mining suppliers.

U.S. may help fund study

The U.S. government will grant $850,000 to finance a feasibility study for the construction of an aluminum smelter near the town of Sosnovy Bor in the Leningrad Oblast, the vice governor of the region announced, according to a story in Kommersant.

Gold mines on the market

The natural-resources committee of the administration of Primorsky Krai reports that three gold mines will be offered for sale in 2001, according to RosBusinessConsulting. The mines are the Porozhistoe, Progress and Krinichnoe deposits.

Volgograd steel output up

Volgograd Steel Wire and Ropes Plant in January raised output 68.5 percent year-on-year to 6,305 tons, Interfax reported. The company said sales rose 92.8 percent to 79.8 million rubles. VSZ forecast that core output will increase 36 percent this year to 80,000 tons vs. 58,900 tons in 2000.

Sberbank-MMK deal

Russia's Sberbank and Magnitogorsk Metallurgical Combine (MMK) signed a deal on a $54 million loan in ruble equivalent for five years, according to a report by Interfax, which cited Kommersant. The funds are to be spent on building a continuous galvanizing facility.

MMMZ new products

Magnitogorsk Metals and Metalware Plant (MMMZ) of the Chelyabinsk region said it plans to put seven new products online in 2001, Interfax reported. They include metal products for the Chelyabinsk Tractor Plant, copper-coated welding electrodes and filter mesh. The project will cost hundreds of millions of rubles, which the company will find itself.

– Reuters