Stanislav Podvishensky,
Director,
Federal State Unitary Enterprise
of Non-Ferrous Metallurgy Economics
and Information Research Institute

O

ne can hardly overestimate the role of the unbiased information in making management decisions and maintaining regular information exchanges within any specific industry. These are the tasks, which are being accomplished in the Russian metallurgy by scientific centers of the federal level established as far back as the years of the planned economy. The Federal State Unitary Enterprise of Non-Ferrous Metallurgy Economics and Information Research Institute still remains the leading center of economic and information research in the non-ferrous metallurgy.
The basis for our work is made up by data banks of many years as well as current information on technical and economic indicators of performance in the segments of the non-ferrous metallurgy, at process stages and individual enterprises. Research works are being done in several directions:
- factors of upgrading enterprise stability and efficiency;
- tasks of expanding production and ensuring increased competitiveness of products;
- modernization of management system.
Maintaining an information exchange inside the industry is made possible by preparing and publishing analytical materials, reference and various other books on non-ferrous metals.
With the ongoing market reforms the institute has diversified its activity and, in particular, it has considerably extended the research focused on important problems of non-ferrous enterprises and allied industries. Working on problems of developing Russia’s non-ferrous metals market we have relied on world experience actively cooperating with companies of European countries and, above all, Great Britain and Belgium.
The most significant scientific research works having been done lately include:
- the analysis of market conditions and forecasts of developing markets of metal raw materials (in Russia, the CIS and world market), including working out proposals to increase competitiveness of specific enterprises;
- Russia’s new tax code and its impact on economics of non-ferrous metals enterprises;
- the analysis of the Russian metallurgical complex’ effect on the environment.
The institute took part in working out the strategy of Russia’s metallurgy development in the period till 2010. This work was being done on the basis of macroeconomic forecasts of the country’s economic development, including assessment of the Russian metallurgy’s production potential, trends in investment activities, prospects for developing metal product markets. Factors limiting development of the non-ferrous metallurgy were analyzed and principal innovation directions were substantiated.
Examining price dynamics, indexes of prime cost and profitability of basic products at non-ferrous metal enterprises between 1998 and 2001 the institute laid the necessary foundation to assess prospects for the industry’s mid-term development.
Among the most important problems of Russia’s non-ferrous metallurgy is a comparatively low competitiveness of production as well as products themselves. In this connection our institute proposed a complex of solutions having to do with technical and economic efficiency of production, energy-consumption level, consumer properties of products. They included recommendations on introducing advanced technologies and equipment, up-to-date systems of automation and control, certification of products in accordance with international standards adopted in the most important markets (the U.S., Germany, Japan, etc.).
I would also like to note such an important work as the comparative analytical assessment of investments in the non-ferrous metallurgy of Russia and industrially developed countries. This assessment not only deals with the investment process as it is but it also covers a whole number of problems linked to international financial relations, legal questions.
A comparatively high level of consuming fuel-and-energy resources at Russia’s non-ferrous metal enterprises was the subject of the special scientific research. The institute’s specialists analyzed retrospectively the structure of material resources’ consumption, including the share of fuel-and-energy resources in the total volume of consumption for making non-ferrous metal products. The analysis allowed to establish the clear interconnection between dynamics of prices for raw materials and quotation of prices for non-ferrous metals.
The institute regularly conducts complex analyses of the basic non-ferrous metals’ market (aluminum, copper, zinc, lead, tin), determines trends in world market conditions and gives short-term forecasts of developments in markets of these metals. The main goal of these works is to assist the industry’s foreign trade activity, to find promising markets for selling products of Russian enterprises.
The analysis of the export potential of the Russian non-ferrous metallurgy outlined the range of problems, solving of which would allow the industry to get integrated more successfully in world economy. In the opinion of specialists, the most important priority should be to stabilize mineral-raw material base, reconstruct the basic metallurgical cycle and modernize production facilities of process stage 4, increase products’ competitiveness. At the same time, it is not an accomplishment of specific business task that becomes a key to long-term success in international markets. More often than not, the key is the optimal use of various forms of international cooperation: attracting foreign investors, setting up joint ventures, participating in international associations and organizations, cooperating on a compensatory basis, processing customer’s raw materials (tolling), signing credit agreements, leasing, etc.
In connection with preparation for Russia’s entry in the World Trade Organization our institute conducted a number of research studies aimed at appraising the actual competitiveness of the non-ferrous metallurgy’s products and a possibility to reduce its prime cost. These studies included the forecast of prime cost of products at mining enterprises of the non-ferrous metallurgy and assessment of the impact of various factors of mining enterprises’ activity on the competitiveness of Russian metal raw materials and products of the subsequent process stages. They substantiated trends in the market of metal raw materials and analyzed main factors that influence the competitiveness of Russian metals in the world market rivalry between major producers.
Studies of enterprises’ managements structures and financial and economic activity were crowned with the work entitled "Elaboration of economic mechanism to form vertically integrated structures in Russia’s metallurgical complex". It contained the analysis of forming and operating financial-and-industrial groups with participation of the metallurgical complex’ enterprises, proposals on further structuring of enterprises’ production and management. There were also proposals on the complex of economic and normative-legal measures directed at encouraging establishing vertically integrated structures in the metallurgical industry.
The availability of the production full cycle in vertically integrated structures provides an opportunity to reduce price risks linked either to fluctuations of stock market prices for basic non-ferrous metals or to increase of prices for raw materials. These same factors should secure a sufficient competitiveness of products in world market.
Of practical value are our "Methodic recommendations" on planning, stock-taking and calculating products’ prime cost at main production facilities. The importance of this work is underscored by changes in the Russian tax laws and accounting system. These "Methodic recommendations" helped enterprises do management accounting on the legitimate basis and plan their price policy.
One of the directions of the institute’s activity is connected to appraising nature-protection measures in the non-ferrous metallurgy. In order to assist with solving ecological problems, we have made an ecological-and-economic analysis of re-equipping programs at a number of enterprises, determined their ecological efficiency and put forward specific proposals. Being oriented on mining enterprises this work has traced down the connection of nature-protection activity with ecological and natural resource payments. The information data bank has been established, which reflects the influence of production activities by the non-ferrous metallurgy on the environment and ecological priorities of enterprises.
As we are doing research on the industry’s most important problems, we are maintaining a close cooperation with enterprises, state bodies, international organizations. Thus, the need for important industry information and demand for specific kinds of scientific studies are constantly ascertained. Keeping this in mind the institute further diversifies directions of its research efforts.