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Prosecutor’s Broom for Evraz Group

Prosecutor’s Broom for Evraz Group

21.06.2010 — Analysis

The Russian government decided to put a squeeze on oligarchs. Following the Federal Antimonopoly Service, which brought an action against a number of enterprises in ferrous and non-ferrous metal industries, the public prosecution stepped into the industry audit. It did not take it long to find out that absolutely all requirements set forth in safety regulations were violated at mining enterprises. However, mines will not be closed down: as the "RusBusinessNews" observer has found out, in Russia businesses are wound up only if criminal doings of top managers cannot be covered up. 

The public prosecution office of the Sverdlovsk Region announced the results of the audit performed at the mining and smelting enterprises of the region; the audit was commenced after the explosion of methane in the Raspadskaya mine, during which 90 people died. The prosecutor's data confirm that compliance with rules and regulations specified for life-threatening operations is not among priorities of Russian companies. For example, at the Vysokogorsky mining-and-processing integrated works (Evraz Group), miners use winding cages that have not been properly inspected and locomotives that exceed their operating life. At the enterprise, nobody checks serviceability of self-rescue equipment used by miners and no one urges installation of back-up electric motors on the fans of the main ventilation system.

It is not the first time that public agencies have discovered violations of laws at the enterprises of Evraz Group. In April 2010, the Ural Agency of the Federal Service for Environmental, Technological and Nuclear Supervision (Rostekhnadzor) performed an audit at the Kachkanar Mining and Processing Integrated Works, which supplies raw materials to the holding's smelters. The auditors found more than 80 violations of a vast array of rules, regulations and specifications on the part of the personnel. The hazardous waste handling ranked first in the auditors' list of criticism.

Ecology is a bottleneck of Evraz Group. Alexei Agureev, PR Vice-President of the company, stated that the holding sees environmental protection as one of its top priorities and does its best to reduce adverse impact of metallurgical production on the environment. However, audits prove that the applied efforts are far from being satisfactory. The Kachkanar Mining and Processing Integrated Works has no sanitary protection area, though drilling and blasting operations, excavation, loading and transportation of ore cause tremendous dust emission. Sanitary inspectors say that its quantity exceeds 5-6 times the allowed limits, thus resulting in increased illness frequency among the residents of the town.

The situation at the Siberian production facilities of Evraz Group demonstrates the same gloomy picture. The holding's managers assured that in 2010 the company would spend 14 million rubles to drive down emission of hazardous substances resulted from the operations at the Novokuznetsk Metallurgical Works and polluting local reservoirs. In the meantime, Nina Vashlayeva, Head of the Natural Resources and Environment Department, informed the press that old industrial wastes account for the largest portion of water contamination in the region. Many years ago, chemical substances got into the soils, and they are regularly washed out to the rivers. The waste water treatment is very expensive: according to the official, only the storm drainage project, which was performed in one residential neighborhood of Novokuznetsk, cost 30 million rubles. The program of water treatment required for tributaries of the Tom River is estimated in the amount of 350 million rubles. In 2010, 70 million rubles were allocated from the federal budget and 30 million rubles were granted from the regional budget for the required water treatment. Incredible as it may seem, but it was (and still is) the metallurgical works that polluted water reservoirs; however, the government cleans them, using budget funds.

The attempts to lay damage at the party in fault were not rewarded by any sizeable success. Back in 2006, the Novokuznetsk environmental prosecutor's office made a claim on the Evro-Aziatskaya Energeticheskaya Kompaniya Limited Company (Evrazek) and Zapadno-Sibirsky Metallurgicheski Kombinat Company (members of Evraz Group) for suspension of discharges of untreated surface run-offs to the tributaries of the Tom River. The Novokuznetsk Metallurgical Works, whose run-offs Evrazek discharges into rivers, faced a threat of suspension of production.

Evraz Group asked for extension of time, having promised to start the 2.4 billion-ruble environmental program. Two years later, it was found out that the Zapadno-Sibirsky Metallurgicheski Kombinat reduced discharges of chlorides, aluminum, zinc, and fluorine, but Evrazek actually ignored the environmental program, having spent on it only 5 million rubles out of 300 million rubles, and continued discharging untreated water to the Aba River and Konobenikha River. In spring 2008, the Federal Service for Supervision of Natural Resource Usage (RosPrirodNadzor) made a claim against this Evraz Group's enterprise for 141 million rubles to indemnify for the damage caused to the environment. The arbitration court of the Kemerovo Region satisfied the claim only partially, compelling the holding to pay 38 million rubles.

Experts are sure that the court's decision was influenced in part by the opinion of the regional administration, which in the person of Vladimir Kovalyov, Vice-Governor for Natural Resources and Ecology, announced that if the environmental legislation were obeyed, then not only metallurgical, but also all the industrial enterprises would be closed down. As V. Kovalyov put it, "we cannot do it"; therefore he declared RosPrirodNadzor's legal requirements a "publicity move", or, in other words, the drumbeat designed to conceal the true intentions of the government authorities.

Interestingly, but a year before the owners of Evraz Group announced the closedown of the Stal NK Limited Company for much less serious reasons, and the administration of the Kemerovo Region buttressed that decision. According to the official line, the production at the subsidiary of the Novokuznetsk Metallurgical Works was shut down because Evraz Group failed to sell the enterprise and did not want to upgrade its out-of-date facilities. Almost 3 thousand people were laid off - and, despite such unprecedented number of the redundant personnel, nobody in the team of Governor Aman Tuleev made a public statement that "we cannot do it".

Meanwhile, there is an unofficial story about the shutdown of the steel-making outfit of Evraz Group. A number of the Internet-media state that the reason was connected with environmental problems. The allegation was that "there was scrap metal that contained radioactive cesium and that was burnt in the furnaces of the NKMK smelter. The fact caused large panic in Novokuznetsk; however, the scandal was smothered up. Even the criminal case initiated by the environmental prosecutor's office was dropped under the pressure of the regional authorities. As a result, the metallurgists buried quietly 215 tons of radioactive waste on the territory of the slag dump".

The sympathetic understanding between the authorities and the owners of Evraz Group actually resulted in the tragic explosion at the Raspadskaya mine. Nikolay Prischepa, a prosecutor of the department for supervision over execution of laws in environment, transportation and the defense sector of the public prosecutor's office of the Sverdlovsk Region, informed press representatives that in the underground mines the inspectors had found twisted bare electric cables, unserviceable fire-fighting equipment, non-compliant with safety regulations trolleys for transportation of explosives, and even open fire and smoke that could get into the shaft floors where people worked.

Nevertheless, the found violations endanger nobody but miners: if none of the Evraz Group top-managers was punished heavily for the radioactive contamination of the territory in Novokuznetsk, there is no sense talking about safety performance in mines...

Vladimir Terletsky

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