Bentonite Managing company
Bld.12/1, Tverskaya St., Moscow
Tel.
+7 (495) 740 43 55

RUSSIAN BUSINESS. MINING INDUSTRY. GROWTH THROUGH COMPETITOR.

Bentonite production is one of the few businesses that were not affected by the economic crisis.

Last year in Khakassia there was a significant event for Siberian mining industry – the two largest producers of bentonite products in the country united, which created the basis for the emergence and development of a new industrial giant.

From 1999 to 2013, there were two competing mining companies at bentonite clay deposit in Khakassia - "Argillite" (a division of Group of Companies "Bentonite") and "Khakass bentonite" (part of the raw material division of "BaselCement", the holding company of Industrial Group "Basic element", since 2006). About two years ago, the owners of competing companies started speaking about resolving the hard competition with minimal losses. And then the shareholders of "Khakass bentonite" decided to sell its asset GC "Bentonite", non-core for "BaselCement".

As General Director of "Bentonite Khakassia" Victor Arlashkin recalls: "The actual mergence took place in April 2014, the legal mergence was completed last December. LLC "Argillite" joined the company "Bentonite Khakassia" which was the result of reorganization of JSC "Khakass bentonite" in August 2014 ".

Despite the economic crisis, the united company manages to increase production volumes.

The saving consolidation

Located in the south of the Krasnoyarsk Territory, in Khakassia, near Chernogorsk bentonite clay deposits "10th Khutor" was explored in the 60-ies of the last century. Then its total reserves were estimated at 10 million tons. Soon, on the basis of the deposit Chernogorsk Mud Powder Plant (CMPP) appeared for providing drilling enterprises of the USSR Ministry of Geology with bentonite mud powder. In 1994, as a result of privatization, CMPP was transformed into JSC "Khakass bentonite".

Until 2007, sales of "Khakass bentonite" remained at the level of 35-40 thousand tons per year. Since 2000, the company "Argillite" joined the extraction and processing of bentonite at this deposit. Within three years, its sales have increased to 140 thousand tons per year, and by 2007 they had reached 213 thousand tons. Then unhealthy competition between companies began, which caused a decrease in the market share and reduced the price index for bentonite products in Russia.

"Before the mergence "Argillite" and "Khakass bentonite" produced the whole range of products, which, of course, was uneconomical. . Hence, the companies had serious problems with the organization of production and quality problems. The mergence allowed to rationalize the production of bentonite in Khakassia, "- Victor Arlashkin said. Firstly, he said, it is possible to "process" both opencast mines. Although the total volume of mining operations increased by 15-20%, due to rational use of motor-vehicles and mining machinery all work is done on their own, without the involvement of contractors.

Secondly, the mergence allowed to use the whole range of types of clays more rationally, which resulted in improved product quality.

Third, it is possible to divide the production by product type: to produce and ship the activated clay in the clay processing area of the former "Argillite" (next to mine “Khakassia”), to produce bentonite powders for founfry and drilling industries at the factory of the former "Khakass bentonite". "This has allowed to utilize production facilities of the two objects more fully - from 60% to 90%, as well as free the factory of "Argillite" in Tasheba (Khakassia), previously producing bentopowders, to create a production of new products," - Victor Arlashkin says.

French discovery

The main component of bentonite clays is clay mineral montmorillonite, first described in 1847. Montmorillonite is named after the place of first discovery: it happened near the city Montmorillon in France. At the end of the XIX century large deposits of bentonite clays have been found in the US state of Wyoming in the "Fort Benton", from which the name "bentonite" that was first used in 1898 derives.

The main feature of bentonite clay, that determines its practical significance is the high adsorption capacity, especially applying to water, which it is able to absorb in quantities several times exceeding its weight. During it the clay swells, its volume increases by several times, and it acquires stickiness. Further moisture of bentonite clay transforms it into a state of viscous stable suspension with distinct properties to form a gel at rest. Moistened clay firmly holds the adsorbed water and can be used as waterproof material. The properties of bentonite clay determine its effective use as an adsorbent, a binder, a viscous gelling agent, waterproof material in many industries.

Today, the proven reserves of bentonite in Khakassia make up about 5 million tons. It is expected that they will increase by 2-3 million tons after the additional exploration of the deposit.

Distribution of roles

"Today, "Bentonite Khakassia" is the Russian leader in the production of bentonite products. Total sales in 2014 amounted to 320 thousand tonnes. The deposit "10th Khutor" belongs to the most high-quality deposits in Russia. We must admit the high heat resistance, strength and rheological properties of this bentonite "- Victor Arlashkin sums up.

Today the field "10th Khutor" is being developed by two mines. At the southern mine 8th and 7th layers of bentonite are processed, at the mine on the north – 6th, 5th and 4th layers. The existing production facilities are capable to process up to 440 thousand tons of bentonite per year, 330 thousand tons of which is activated clay and 110 thousand tons is bentonite gel powder.

The main consumers of bentonite products are enterprises of metallurgical, foundry, oil and gas sectors of the Russian economy. Among the largest customers in the foundry industry are  AvtoVAZ, GAZ Group; in oil and gas industry are more than 30 oil companies, including "Rosneft", "Gazprom", "Schlumberger". Iron ore mining companies (Mikhailovsky, Lebedinsky, Kachkanarskij, Karelian Pellet and others) also need this raw material. "The use of bentonite is expanding in the construction, chemical industry, agriculture, waterproofing, radioactive waste disposal, wine and a variety of other sectors", - the head of the "Bentonite Khakassia" stressed.

In addition to the LLC "Bentonite Khakassia" GC "Bentonite" includes several mining and processing enterprises: JSC "Bentonite" (mining, activation and the production of bentopowders from clay deposit "Zyryanskoe" in the Kurgan region, capacity is 174 thousand tons); Russian-Azerbaijani joint venture "AzRosPromInvest" (based on the Dash-Salakhly deposit in Azerbaijan, processing capacity of bentonite clay is 200 thousand tons per year); LLC "Glinopererabotka" (activation of bentonite clay from all deposits of GC "Bentonite"). In 2006, "Glinopererabotka" was totally reorganized for the production of granulated clay fillers for cat litter. Production capacity of the plant allows to process up to 20 thousand tons of bentonite products per year.

According to experts, natural sodium bentonite from Dash-Salakhly deposit is one of the best in the world, second only to the United States in the quality of the clay.

System problems

As a result of the rationalization of the production the financial and economic efficiency of the united enterprize began to increase, and has already achieved significant figures in extraction of raw materials and shipment of manufactured products. Typically, these mergences reduce the number of employees, but "Bentonite Khakassia" increased the numbers from 369 to 384 people. At the same time labor productivity increased by 30%, consolidated average wage increased by 13%. Contributions to the budget increase by 17%, which in 2014 made up 115 million rubles. "In 2015, we did not feel the drop in sales, the demand for bentonite is high. This April a record in the shipment of the manufactured product has been set – more than 35 thousand tons", - Victor Arlashkin says.

However, the united enterprise has a number of unresolved problems that hinder development. Firstly, the company barely handles with the shipment of products by rail. Insufficient capacity of the station "Chernogorsk Mines”, difficulties in organizing transportation by an intermediary between shippers and the station of the company "Promtrans", limited loading areas at both loading railway sidings of "Bentonite Khakassia ": the mine "Khakasskaya" and the station "Chernogorsk Mines" make it almost impossible to increase the volume of shipment. Secondly, because of the inconsistency in the actions of the federal and regional departments of the Federal Agency for State Property Management land parcels property rights for produced and planned activities cannot be registrated. Third problem is the excessive growth of tariffs and rates. During inflation payment for electricity increased on average by 14%, fuels and lubricants - by 14%, railway transport - by 10%.

Investments in life

Among the priority plans of the company is the construction of a plant for the production of bentonite pellets, the raw material for the cat litter box filler and bentomat (innovative waterproofing product), on the site of the plant for producing bentopowders in Tasheba. "Simply In short, bentomat is a kind of gasket material which doesn’t leak anything.

It is often used in environmental and construction, - Victor Arlashkin says. - Unfortunately, in Russia this trend is weak, for example, covering dumping ground with granular bentomat first and then filling it with waste is widespread practice abroad." Therefore, the soil does not absorb harmful substances, bentomat prevents it. Here a plant for the production of cat litter box fillers will be built.

The company has not yet decided exactly whether they build a plant for the bentomat production in Tasheba or Chernogorsk. "In any case, the entire complex for the production of new products will be in the Abakan-Chernogorsk agglomeration", - Victor Arlashkin said. During the first stage of construction it is planned to purchase and install equipment totaling 60 million rubles with the production capacity of 30 thousand tons of pellets per year. During the second stage the capacity will increase to 60 thousand tons, and by the completion of construction this figure will double.

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