Petr Sumin
Governor, Chelyabinsk region

    Metallurgy is the bread-and-butter industry for the economy of the Chelyabinsk region. A quarter of all Russian metals is produced there. We account for 14.6 % of all Russian pipes, 65 % of zinc, 60 % of ferroalloys and 12.6 % of pure copper. The industry’s enterprises provide jobs for 162,000 people or 14 % of all the working population in the region. Our metallurgy is responsible for almost two thirds of the production’s total volume and over half of revenues of the region’s consolidated budget. Nonetheless our region is feeling the bite of the current crisis in metallurgy through the Russian Federation.
Being the head of this industrial region I cannot but worry about problems of the industry. At a session of the Russian government in May we put forward a number of proposals to overcome the crisis in metallurgy. We hope that they will be included in the final version of a metallurgy development program effective till 2010. These proposals were formulated with the participation of leaders of the largest metallurgical enterprises in the Urals’ South, including Magnitogorsk Iron & Steel Works JSC (MMK), Mechel JSC, Chelyabinsk electrolyte zinc smeltery and other mills.

P    R    O    F    I    L    E  Petr Sumin, was born in 1946 in the Chelyabinsk region. After graduating from the department of metallurgy of the Chelyabinsk polytechnic institute in 1969 he got a job at the Chelyabinsk metallurgical mill. From 1971 to 1991 he worked as an elected party official and business manager always closely maintaining ties with production workers. After the dissolution of the Soviet Union Petr Sumin worked as a vice president of the investment holding company Choice. At the beginning of 1994 he took an active part in organizing a mass political and social movement in the region called «The Urals Revival». He still remains its leader. In December 1995 Petr Sumin became deputy to the State Duma of the Russian Federation. He was a member of the Duma’s committee on budget, taxes, banking and finances, participated in activities of the independent deputy group Sovereignty of the People. Petr Sumin’s landmark year was 1996: he won the election in the Chelyabinsk region becoming its governor and member of the Federation Council. In December 2000 he was reelected for a second term. Member of the State Council and National council on pension reform. Crazy about hunting and fishing. Married. He is proud of his two daughters and two grandsons, especially by the one of them, who is a goalkeeper of the Tractor hockey team.

The Chelyabinsk enterprises of ferrous metallurgy have one extremely important problem in common: our region does not have sufficient reserves of mineral resources, iron ores, chrome, nickel, manganese, coking coal. Fortunately, we are receiving many of these vital resources from friendly neighboring Kazakhstan. This is a mutually advantageous cooperation. The foreign trade balance of the Chelyabinsk region is in the black. On the whole, we are satisfied with these bilateral ties and we are interested in their expansion. But it is very important to reduce as much as possible their dependence on outside factors. It will be of benefit to both sides.
Metallurgical enterprises of Russia and Kazakhstan have the same need to assert their interests in the world market. In particular, it is true of the situation with anti-dumping investigations started by China, the U.S.and member-countries of the European Union. In these conditions it becomes necessary to protect our domestic markets from unfair competition.
But it goes without saying that this problem cannot be solved by protective measures only. There are other possibilities to do it without harming good partnership relations. There is a concentration of capital going on in steel industry all over the world. Today Russia’s largest metallurgical enterprises are uniting in holdings. Taking into account the severe world competition it becomes clear that this is the right direction.
There is a holding in our region, which apart from MMK includes sizing and hardware plants. One more holding is being formed now: Mechel JSC and Yuzhny Kuzbass are joining hands with the Beloretsky integrated metallurgical mill and Orsk’s Yuzhuralnickel. The Chelyabinsk tube-rolling plant is establishing cooperation ties with Severstal JSC, Vyksa steel works and Chusovsky metallurgical mill.
Positive results of this process are evident in all instances. New technological possibilities are emerging, production costs are being reduced, orders are being distributed in a more rational way.
It seems that the integration may cross national borders as well. Anyway, the world experience proves that it may be justified from the economic point of view. There are positive examples of integration in relations between Russia and Kazakhstan. Our MMK, for one, has a direct economic interest in maintaining normal operation and business capital of the Sokolovsko-Sarbaisky Mining Production Association. At the same time we do not regard investment relations with Kazakhstan as a one-way street. The Kazakh capital has to have equal opportunities for making investments in our economy.
We are always open to a correct business partnership. Our colleagues in Kazakhstan hold the same view. For example, today leaders of the Magnitogorsk Iron & Steel Works JSC are conducting negotiations with their colleagues from Ispat Karmet, Kazakhstan’s largest steel concern, which is placed third in the rating of the world’s steel companies. It incorporates the Karaganda Steel Mills and the Karagandaugol association, which has always been considered MMK’ reliable partner in terms of coal concentrate shipments. And, by all indications, this is just the beginning.
I am convinced that the integration at the enterprise level through forming cartels and holdings, among other things, is a natural and promising process. It provides both Russian and Kazakh industrialists with bigger opportunities in world markets. Ultimately, all this does influence integration of countries in the post-Soviet space and contribute to creating favorable conditions for the development of economics and the humanitarian sphere in the XXI century.