"BSK" is preparing a plan to reduce investment, production and mass layoffs

Bashkir soda company continues to put pressure on the authorities of Bashkortostan. If she is not allowed to extract soda in the reserves, then in the coming years, Russia will remain without Bashkir soda.
The largest producer of baking soda in Russia - the Bashkir soda company (BSK) intends to prepare a plan to reduce investment, production and mass layoffs by the end of the year. BSK believes that it does not have a raw material base for continuing operations after 2022, and requires the development of natural monuments - the mountains of Tratau and Juraktau. The authorities of Bashkiria, who own a blocking stake in the company, refused to review the status of the mountains, considering that the company has other sources of raw materials that do not significantly increase the cost of logistics.

By the end of the year, the BSK intends to discuss the program of activities under the commodity crisis: the board of directors on July 27 instructed the management to estimate the feasibility of further investment in the production of soda ash and sodium bicarbonate by October 1. Options will be considered for reducing output and reducing staff. Six of the nine members of the board representing the controlling shareholder, Bashkir Chemistry, voted for the development of the program, against the director from the state investment company of Bashkiria, the Regional Fund.

BSK is Russia's largest producer of calcined (up to 1.8 million tons per year) and baking soda, the third manufacturer of PVC, one of the three in caustic soda. Bashkir chemistry has 57.18% of the shares, the region has 38.28%.

Reducing the release of soda is the only way to keep production in a working condition "for as long as possible in conditions of growing shortage of raw materials," the BSK noted. Apparently, the business plan for 2019 will undergo a correction. "The reduction of production of basic products is discussed to 60% within five years and the reduction of approximately 40% of personnel - from 9 thousand to 5 thousand people," a source from Kommersant reported to the board of directors. "This is in case the production of soda is not preserved ".

In the annual report, BSC noted that it is provided with raw materials until 2022. The enterprise raises the topic of depletion of the raw material base from 2015: the reserves of the Shakhtau deposit in Sterlitamak are almost exhausted. "The quality of the raw materials is deteriorating, as we extract from the water (the reserves are flooded." - "b"). There is a big risk that the situation will worsen, "- said the source" Kommersant "in the company. In 2016, affiliated with the "Bashkhim" JSC "raw material company" received a license for the Kushtau section of the mountain-shihan Kushtau. In 2017, according to the results of exploration, a report was compiled, but, according to the BSK, raw materials of poor quality are "a lot of waste rock".

BSK has long asked for access to the Shihans of Tratau and Yuraktau, but they have the status of nature monuments of regional significance. In 2015, the head of Bashkortostan, Rustem Khamitov, publicly denied the BSC in the removal of the protection status of the Shihans, citing the reluctance to go "to a conflict with society." This year, he confirmed the position, saying that the law does not allow removing the status. The head of the subsoil management department of Bashkortostan Alexey Gritzuk said on July 31 that the raw materials for the BSK remained for three and a half years, and the only opportunity to continue production is the development of Tratau. In 2017, the capacity utilization of BSK remained at the level of 96.3%, capex - 2.3 billion rubles. The volume of the investment program in the BSC is estimated at 3-5 billion rubles. in year.

In the government of the republic, Kommersant was informed that members of the board of directors of the BSC from Bashkiria appended their position to the decision of the council. The authorities of the region are still confident that the BSC "has alternatives that are similar in quality (from Shakhtau to Kommersant) and slightly increase the cost of delivering raw materials," for example, "UMMC is ready to sell limestone, which is more than enough for the BSC." A representative of the government of Bashkiria added that the Crimean Soda Plant "works with a much heavier leverage on logistics", and in general "the quality of raw materials is a matter of control over the production process." The republic does not see any grounds for adjusting its production volumes, and "as a shareholder is ready to proportionally divide the costs of delivering raw materials and possible reorganization".

Director of the expert group Veta Dmitry Zharskiy notes that the explanation of the actions of the BSK can be lobbying - drawing attention to the unemployment issue in Sterlitamak. But on the other hand, he continues, it seems that the shihans are the only alternative to BSK for raw materials: "If the status of the Shihans is preserved, the BSK will not have other options but to reduce costs and seek ways to more efficiently use sources of raw materials."