President of JSC Sokolov-Sarbai Mining and Processing Integrated Works (SSGPO) Bereke MUKHAMETKALIYEV:
THE COMPANY IS ABLE TO COPE WITH ECONOMIC DIFFICULTIES
Reduction of the global iron ore market led to a decrease in production and sales by SSGPO. The company’s main task today is to keep the production running and to save the jobs for its employees. SSGPO President Bereke MUKHAMETKALIYEV told Interfax-Kazakhstan in an interview about the company’s anti-crisis programs and future plans.
- 2015 was a difficult year for SSGPO, as well as for the global iron ore industry. A reduction of the global iron ore market led to a decrease in production and sales by the company. For instance, SSGPO had to cut output by 20% last year, as steel production fell in China. The company’s sales dropped to 11 million tonnes in 2015 from 15 million tonnes in 2014.
- What is your forecast for 2016?
- We do not expect the situation to become any better in 2016, nevertheless this year we plan to produce over 28 million tonnes of ore and to ship over 11 million tonnes of iron ore feedstock to our customers: seven million tonnes in concentrate and four million tonnes in pellets.
– What is the current trend in iron ore prices?
– At the moment the prices are stable. We do hope that the prices have already hit the bottom.
- What were the export destinations in 2015 and where do you plan to export products this year?
- We have a contract with OJSC Magnitogorsk Metallurgical Plant for 2016. We plan to export 8.5 million tonnes of products to Russia.
China is one of the key players in the global metal market. Today, exports to this country have reduced, as the global prices for iron ore feedstock tumbled. However, SSGPO constantly monitors the Chinese market, keeps in touch with its longstanding partners in China and is ready to resume shipments to the Chinese companies at any moment.
Our sales inside Kazakhstan remain stable. Moreover, we plan to increase our sales of pellets on the domestic market to 1.6 million tonnes this year compared with 1.3 million tonnes last year.
- What has changed for the company after Kazakhstan joined the Eurasian Economic Union and the World Trade Organization?
- The procedure for procurement of goods and services has not changed significantly, for Kazakhstan's accession to the EEU and the WTO necessitates, in the first place, changes to the legislation of the Republic of Kazakhstan and, consequently, to the rules for procurement of goods and services.
The international regulations provide for measures to support domestic producers. At the same time, I hope that the Kazakh producers will enter the international markets and will learn to play according to the WTO rules by supplying high quality products at a reasonable price.
– How did the crises impact on the company?
- The decreased demand for our products adversely affects the company’s competitiveness and performance. Our main task today is to keep the company running and to save the jobs for our employees. Our efforts are being supported by the management of Eurasian Resources Group (ERG). We are now implementing an anti-crisis plan: we have developed programs aimed at improvement of production and labor efficiency and optimization of costs. Also, we have started to provide repair and maintenance services to other business units of the Eurasian Group, which now offer such services to each other.
For instance, SSGPO has stopped contracting services for strip mining operations. We have introduced quite a new approach to equipment repair and maintenance. All scheduled repair and maintenance, which used to be done by contractors, are now performed by the maintenance teams from SSGPO or other ERG’s business units. We have developed a long-term program, which now includes an expanded list of repair and maintenance work that will be performed by our personnel. By doing so, we will increase the Kazakh content.
SSGPO has launched production of cathode blocks at its rolling mill. We have already produced a pilot batch of 24 tonnes. The new product has already been successfully tested at the Kazakhstan Electrolysis Plant. SSGPO has been able to expand the range of its products thanks to the ERG’s special project called 10% Cost Reduction, which helped the business units of ERG to develop mutually supportive cooperation. The cost of current conducting wire produced by SSGPO is almost half the price of the wire that we used to buy from China. In today's difficult situation the ERG companies are boosting cooperation between each other: they find ways to reduce dependence on external suppliers, thus increasing the share of Kazakhstan-made goods in the domestic market.
– What are today’s directions for production development?
– There are a few directions in SSGPO for production development. The first direction is concerned with development and maintenance of the resource base. Second, we plan to keep the production of the ore-preparation complex at the current level and to improve the ore concentration and palletization methods. Also, we plan to start producing new products in the future.
– Are there any new projects in the company?
– SSGPO launched the Arrow Program on April 1. This is a strategic initiative of the Eurasian Group aimed to transform the business and to introduce the Enterprise Resource Planning (ERP) system. This is a software that provides an integrated view of core business processes in real-time. The system will allow us to better control the company’s operations and to make right decisions at the right moment.
- Thank you for your time!
May, 2016
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