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Putin intervenes to save jobs at metal plant

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Dec. 9, 2011, 11:29 a.m. | Russia and former Soviet Union — by Reuters

Russian Prime Minister Vladimir Putin speaks at a meeting of the Popular Front in Moscow, Russia, Thursday, Dec. 8, 2011.
© AP

Reuters

MOSCOW, Dec 9 (Reuters) - Russia's Prime Minister Vladimir Putin, facing a wave of voter outrage as he prepares a bid to return to the Kremlin, intervened to prevent an archaic 67-year-old aluminium smelter with 3,500 workers from closure, the government said on Friday. Putin, who served two terms before ceding the presidency to Dmitry Medvedev, is struggling to maintain business as usual over Sunday's parliamentary election, in which opposition parties say his United Russia party retained a majority through fraud.

The government website (www.government.ru) said Putin was informed at a meeting with his supporters on Tuesday that the smelter and the refinery could be shut due to high electric energy costs, also threatening the operations of a nearby automotive plant.

The Bogoslovsk smelter (BAZ), which came onstream in 1945, is in the town of Krasnoturyinsk in the Ural mountains Sverdlovsk region.

It was the second such crisis intervention in Russia's aluminium industry for the prime minister, whose political stock in trade is his image as a strong leader willing to stand up for Russians beset by economic difficulties in the turbulent transiton from Communism.

In 2009, when the aluminium industry was coping with a collapse in prices which prompted RUSAL to close 35 percent of its capacity, Putin ordered tycoon Oleg Deripaska, RUSAL's main owner, to restart production at an RUSAL plant, the Pikalyovo alumina refinery in northwestern Russia.

Hungry workers had blocked a motorway, protesting over unpaid salaries. They returned to work after the televised meeting in Pikalyovo, in which Putin flung a pen at Deripaska and ordered him to sign papers returning the plant to operation.

The scene boosted Putin's popularity among voters seeking protection against economic upheaval, and increased his power to project his will on Russia's tycoons in what become known as the "Pikalyovo effect."

BAZ sources raw material alumina from a local refinery, carrying the same name, produced 113,000 tonnes of aluminium in 2010. Its owner UC RUSAL, the world's top aluminium producer, shut down 35 percent of its capacity in 2009.

On Putin's orders, KES Holding, controlled by one of RUSAL shareholders, Viktor Vekselberg, will sell a local utility to RUSAL so that RUSAL could upgrade it thus cutting the energy costs, the government web site said.

Russian inter-regional power grid company MRSK will transfer part of its assets to the federal power grid system, which will assume their operation costs, it said.

Putin also told the regional authorities at a government commission meeting to start looking for ways to supply cheaper coal to the utility to cut the costs further.

"RUSAL is satisfied with the governemnt commision session," RUSAL said in an e-mailed statement, adding that it assumed the responsibility for upgrading BAZ, and guaranteed the maintenance of current production levels.
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Anonymous Dec. 9, 2011, 5:57 p.m.    

It makes more sense to buy cheaper metal from China, than from a old Soviet plant. Another microcosm on Russia's decline...

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