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Russia: Mining Giant Coughs And Metal Markets Catch Fever

  • John Helmer



Moscow, 21 March 1997 (RFE/RL) -- Russia's troubled mining giant, Norilsk Nickel, one of the world's largest producers of nickel and platinum group metals, is negotiating against deadlines set by both workers and tax collectors.

So far, the process has had only one certain outcome: world prices for those metals have soared on speculation of Russian export cutbacks.

Production figures for platinum group metals or "pgm's" as they are called, are still state secrets in Russia. However South African expert Rene Hochreiter estimates that in 1995, Norilsk produced about 420,000 ounces of platinum -- 9 percent of world supply -- and 1.5 million ounces of palladium, 28 percent of the world total.

Last year saw a downturn in the company's overall production. This year, by contrast, company officials say they are aiming for up to 20 percent improvement in nickel production. They won't say exactly how much growth in pgm's they are projecting. But an RFE/RL correspondent in Moscow says there may not be any if the company can't settle its serious labor and tax disputes.

By the beginning of this month, the company owed its workers back wages of 900,000 million rubles ($158 million). It also owed the Krasnoyarsk regional administration a similar amount in overdue taxes, and the Federal government in Moscow even more.

The company has told all three they had better not press the goose too hard if they want any golden eggs.

Krasnoyarsk is the vast Siberian territory which includes Norilsk's mines. Early this year regional officials and the company agreed on a plan of payments and property transfers to relieve the company of much of its past local tax burden.

But Maxim Leshenko, spokesman for the regional administration, says the government has still had to set a deadline of March 20 for the company to pay off what it owes in taxes for last November and December. A further tranche is to be paid by the end of June, but even then, Krasnoyarsk officials concede, some 30 percent of the obligation remains uncovered. That portion is to be converted to a credit, and paid later by the company.

According to Leshenko, tax arrears for 1995 and the early months of 1996 totalling 600,000 million rubles ($105 million) are to be liquidated by transfer to the government of real estate and other assets, owned by the company, and soon to be valued by the Krasnoyarsk government assessors.

The company and regional government have also agreed on a long-term plan to reduce and ultimately end the company's obligations to pay for social and community infrastructure in Norilsk city and other settlements. This currently costs Norilsk Nickel 1.3 million million rubles ($228 million).

Sergei Vechenin, press spokesman for the company, said Norilsk "subsidizes the cost of infrastructure in the region, and it also pays taxes. This is double taxation, and it's completely unacceptable in the market economy."

The long term plan, which was adopted only last week, provides for a valuation of the costs of operating and maintaining social services; this will be completed by the end of 1997. In 1998, some service charges will be introduced into the regional budget, and by the end of 1999, it is agreed that the Norilsk municipality will have taken over the running of the social infrastructure from the company. Privatization of municipal housing is expected to help defray the new municipal budget obligations.

On the labor front, the company and the workers are still unable to agree on a wage repayment plan. A symbolic one-hour stoppage will go ahead on March 27, management and union spokesmen said in Moscow last week. But negotiators are still hoping to avert a threatened halt to production on April 2.

Leaders of the two unions representing 60,000 Norilsk Nickel workers have said that payback of wages is only one of the demands they expect the company to fulfill, before they will lift their strike threat. They are not at all happy with the terms the company and the regional government have reached on shifting the burden of social costs on to the miners themselves.

The two unions are the Independent Miners Trade Union, and the United Trade Union Committee. They have submitted a list of nine priority demands and our correspondent describes this list as a turning point in the strategy of Russian mining unions. Although the coal miners have been more militant, the Norilsk miners are the first to wage a campaign not only for wages, but also for management changes, and for a change in corporate strategy.

Their demands for instance include repayment of wage arrears immediately, and not according to the company's nine-month schedule; full disclosure to the unions of the joint stock company's accounts; and agreement between the company, regional administration and unions on new profit-sharing arrangements;

They are also demanding union participation in the distribution of funds earned from the tax sale of Norilsk metal; a halt to management plans to restructure the company's profit and loss-making units; and for the Russian government to declare Krasnoyarsk region an economic and ecological catastrophe.

Another of the unions demands, that for the dismissal of two senior company officials, has already been fulfilled.

According to Boris Kravchenko, an Independent Miners Trade Union official and others, the unions are also backing the seizure of metal by federal and Krasnoyarsk tax authorities, in the hope that the forced sale of the company's property can produce some additional funds to relieve the wage arrears problem.

On this issue, as well as on several others, the workers' position is not only at loggerheads with the management of Norilsk Nickel, but also with the regional administration of Krasnoyarsk. Regional officials say the seizure of production is "not in the interests of either the region or the company",
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