Modernization and increasing the competitiveness of the titanium-magnesium industry
Table of contents: The Kazakh-American Free University Academic Journal №2 - 2011
Author: Kurmangaliyev Аrman, Kazakh-American Free University, Kazakhstan
The joint-stock company “Ust-Kamenogorsk Titanium-Magnesium
plant” can be considered an industrial complex (JSC “UK ТМP”) that reflects the
pace of industrialization of independent Kazakhstan. After the disintegration
of the USSR its biography has begun practically with a blank page. At that
time the enterprise was integrated with accessory manufacturers in Russia and
Ukraine and it found itself without raw materials and without a market for its
products. Today, however, the industrial complex makes more than 14% of the
world’s volume of the titanium. Over 17% of the metal that JSC “UK TMP” delivers
is used in the international aerospace sphere.
When suppliers of raw materials – factories of Russia and
Ukraine – remained abroad, the commodity market was oversaturated by warehouse
stocks of titanium in state security reserves and military-industrial
complexes, JSC “UK ТМP” remained helpless. Their options become clear: either
lie down and die or struggle for life as they could.
It took almost one and a half years to work out a program
for the development of the titanium-magnesium industry of Kazakhstan. The
program provided for the creation of a domestic raw-material base, raw
materials processing in titanic slag, increase in individual capacity of the
metallurgical equipment, certification under the international standards of
production, and a reduction in technological pressure on ecology. It was
necessary to organize some repartitions: reception of titanic slag, then
titanic ingots and alloys and final products with a high added cost.
With that beginning, together with geologists, three
deposits of raw material stocks in Kazakhstan have been confirmed. All three
areas have made trial installations and have received the first party of an
ilmenite concentrate. Then, construction of a manufacturing site for titanic
slags took place. The President of Kazakhstan, Nursultan Nazarbayev,
personally took part in its start. This is a factory of 64 hectares, consisting
of 28 facilities. For the first time in Kazakhstan, ilmenite has been received,
titanic slag has been processed, and the factory has passed certification under
all requirements of international standards, including the certification by
consumers – the aerospace companies.
The majority of technological processes were developed
independently because there was no desire to share methods of operation with
anybody in the world. And when for the first time they presented to the world
market their titanic sponge, its quality corresponded to international
standards. It also became the main "admission" to the international
The first stage of certification involved foreign firms in
the years 1994-1995. More than ten auditor checks were conducted by space
companies, having confirmed with certificates their satisfaction with the
quality monitoring systems of the industrial complex production. In the year
2000 the industrial complex obtained the certificate of compliance of quality
control system under the international standard ISO 9002, and in 2002 – the
conformity certificate to the American space standard AS 9100.
Such famous companies as «Pratt and Whitney», «General
Electric», "Snekma" became consumers of production of UK ТМК. The
industrial complex has turned out as the largest integrated manufacturer of
Working with the consumer of the titanium is a difficult
business which had a beginning, but has no end: it is constantly necessary to
confirm its level of quality. It is a high enough lath and there is severe
market competition. So to keep the quality at the necessary level is possible
only by considerable efforts.
After the disintegration of the USSR, many Soviet
instructions, specifications, and laws had become outdated and didn't answer
the realities of the arising market economy. And then the President of
Kazakhstan has published the whole block of decrees which have allowed the
enterprises to rise faster from their knees.
Today in Kazakhstan bases of a mineral and raw-material base
of titanic branch are already created: stocks of three deposits are
reconnoitered and confirmed. It is Shokash in the Aktyubinsk area, Obuhovsky in
Akmolinsky and Satpaevsky in Eastern Kazakhstan area. The additional
prospecting works spent by the Kazakhstan and Japanese geologists, have allowed
increase reconnoitered on last of them stocks almost twice.
Since 2002 the ilmenite concentrate of the Satpaevsky
deposit on metallurgical repartition of the enterprise has started to arrive.
Thus, the problem put by the President of the country before a management of UK
ТМК, is executed – the Kazakhstan ilmenite concentrate for the first time has
High level of the high technology technological processes
developed and introduced at industrial complex is confirmed by award to group
of workers of enterprise state of the award.
Modernization is the use of new approaches, assistance to innovative
development and introduction of innovative thinking. To innovations give one of
key roles in scale modernization which is connected with a diversification.
These categories are inseparable from each other: the diversification sets a
development direction, and modernization helps to create conditions for
performance of tasks in view.
In the Messages of the President communication of
modernization of social sphere with modernization of economic life of a society
is shown. «We have created successfully working market economy and have started
to live better», – Noursultan Nazarbayev underlines. So, following the results
of 2010 the country has occupied 50 place in the international rating of
national well-being, having outstripped thus all CIS countries. Since 1994 the
size of a monthly nominal salary at us has grown in 45 times. For 10 years the
share of the population with incomes below a living wage was reduced more than
in 4 times.
For last decade expenses for education and public health
services have grown almost in 10 times. The advanced innovative economy will
steadily raise well-being of the people. By the yearv2016 Kazakhstan should
enter into group of the countries with high level of the income from gross
national product per capita not less than 15 000 dollars. For this purpose
economy of the Republic of Kazakhstan will have annual growth not less than 7
For years of formation of independence of Kazakhstan it is
possible to allocate modernization of the first and second stages.
Modernization of the first stage has begun since 1991 and
proceeded practically one and a half decades.
Since the year 2005 modernization of the second stage which
assumes a principle of maximization of resources has begun. It first of all the
maximum use of an energy potential of the country – extensive territory of
Kazakhstan, rich minerals and social resources. For the short period of time in
this direction it was possible to spend successful transformations to system of
social and economic relations. National economy is characterized by achievement
of macroeconomic stabilization and an exit on a trajectory of economic growth.
Since 1993 the volume of gross national product of
Kazakhstan has increased almost in 12 times. Gross national product volume has
per capita exceeded 9 thousand dollars. Kazakhstan is included into number 50
of the states on level of the international reserves. Together with actives of
National fund they reach almost 63 billion dollars. Kazakhstan became the full
participant of world economy. For 19 years in economy it is involved about 122
billion foreign investments.
System modernization assumes modernization of managing
subjects – the enterprises which are dictated by those problems, as
deterioration of fixed capital, a lack of the qualified personnel corresponding
to new technical requirements are revealed. In vanguard of modernization there
should be averages and small enterprises, and also mainly power, oil refining
and mountain-metallurgical enterprises that is especially actual for the East
Kazakhstan area. The accepted program "Productivity-2020" is directed
on the decision of specific targets on perfection of administrative
technologies and modernization of operating and new manufactures. A vivid
example of introduction of modern technologies is JSC “UK ТМP”.
The next stage of realization of development
titanium-magnesium industry has begun a few years ago. It is the project on
creation of repartition with higher added cost, allowing departing from a raw
orientation: manufacture of titanic ingots and alloys. Project investment
hasn’t been stopped, despite known complexities because understood: who in days
of crisis puts means in manufacture perfection that will rise on feet faster.
Capacity of new factory – 11 thousand tons in a year of ingots
of double fusion. This project was included into a republican Card of
industrialization. In the beginning of September, 2010 in the presence of the
President of the country Noursultan Nazarbayev the factory is started in
operation. It is a historical stage not only for the enterprise, but also for
all Kazakhstan as the republic was included thereby into the annals of the
world titanic industry, creating possibility of cooperation with the European
and American enterprises for the further processing of ingots in finished
Creation of joint venture with the French firm Aubert and
Duval – the largest world supplier of metallurgical production became first
signs of realization of this possibility.
On June 24th, 2011 companies EADS and UKAD, joint venture
Aubert&Duval and JSC “UK ТМP” signed the long-term agreement on delivery of
titanic semifinished products for shod details and fixing products under the
programs realized EADS, including for manufacture of planes Airbus. The given
agreement signed in Paris on June, 24th, 2011 on avia-show by Lja Burzhe,
provides delivery of titanic production of JSC “UK TMP” till 2022.
In addition to the Memorandum signed in 2010 of cooperation
the new agreement is directed on creation of completely integrated system of
delivery of the titan between companies Aubert&Duval, EADS and JSC “UK
ТМP”, thus UKAD is responsible for processing of titanic ingots of UK ТМК in
semifinished products, and company Aubert&Duval is responsible for
manufacturing of shod details which are necessary for manufacture of components
Besides the given strategic agreement company EADS and JSC
“UK TMP” have agreed about the conclusion of the new long-term agreement which
will provide delivery of titanic raw materials in UKAD, and also to other
suppliers EADS till 2022. Company EADS is interested in effective work of new
factory on manufacture of titanic ingots and alloys on JSC “UK TMP”. Signing of
these agreements confirms increasing importance of UK ТМК as the key supplier
of titanic raw materials for all companies of group EADS.
Titanic alloys are widely used for manufacture of planes
owing to their smaller density, high durability and anticorrosive properties.
Thus, the development of titanium industry was realized
That is everything that the Head of the state on vectors of
development of the domestic industry offers, the industrial complex carries out
in practice. In the end of the last year JSC “UK TMP” became the winner of the
special award of the Head of the state in a nomination «Industrial break» at
national-wide competition. This award became worthy end of the long-term
program "The Titan" who developed and has been carried out under the
aegis of the President.
On small in scales of the country JSC “UK TMP” is obvious a
joint-stock company example that the purpose of the strategic program
"Kazakhstan-2030" – is included into number 50 of the most developed
states of the world – is quite feasible, if each of us puts knowledge, will and
Despite promising prospects of branch, metallurgy of
Kazakhstan experiences serious difficulties and can face a number of problems.
Some branches prevail manufactures of low repartition, manufacture with high
repartition and as result, the high added cost are absent. At almost full export-oriented
metallurgy such state of affairs, according to experts, leads to
short-reception by the budget of the country of means, a commodity and trading
disbalance, absence of employment and, as consequence, professional growth of
shots in more high technology branches.
Causes alarm and structure of the property of the
enterprises. The most part of the companies of branch is in a legislative field
of the country-registration and a foreign share platform that means absence of
the long-term plans connected with Kazakhstan, and solicitous attitude to its
labor, natural and other resources. Leaders of branch quite often lobby
favourable innovative programs (for example, orientation on "base"
metals). Such consumer relation leads to that active dredging only rich layers
of ores is made. And it can quickly settle stocks and leads to low integrated
approach of extraction of minerals. Investments in raw-material base
reproduction are far from norms.
Investments into development of technologies on reduction of
losses of accompanying metals in sailings aren't made, volumes of a technologic
waste continue to grow (are estimated for today in 25 billion tons) and occupy
the huge areas. Investments into building of processing manufactures also are
carried out reluctantly, frequently as the compromise between the Government
and the company in exchange for «indulgences and indulgences», and never at the
expense of own means (positive influence on structure of the capital of the
financial lever here isn't discussed).
Reinnovation and modernization of fixed capital passes in a
format of slight repairs. And they are spent only after property complexes come
to full unfitness. Reduction of domain manufacture and transition to
electrometallurgy isn't observed. And this with the fact that the majority of
industrial complexes is created during the Soviet period and is technologically
Not the smaller alarm is caused by an educational level and
preparations of special and administrative shots in the country. Top-managers
as leaders of branch, and small enterprises of a steel or the veterans of the
branch who has "got" in the inheritance to new proprietors together
with factories, or representatives of proprietors who sometimes understand both
manufacture a little, and in management and have accurately definite purposes –
to squeeze out of factories as much as possible in the short-term period.
Areas, in which metallurgical industrial complexes and
extracting manufactures are located, became for a long time areas of ecological
disasters as metallurgical manufacture is the extremely dangerous and toxic.
Thus not all companies have intentions to invest capitals in the technologies
raising safety, and prefer to pay penalties which are incommensurably small in
comparison with ecological know-how. And provided that ecological standards and
norms considerably concede it in Kazakhstan to the European.
Undoubtedly, in branch there are companies as, for example,
SAT which "are adhered" to Kazakhstan, are opened and transparent,
conduct the thought over, complex, long-term policy of investment in production
with the high added cost, support and develop personnel potential of branch.
Other company of branch – "Kazzink" – tries to introduce actively
expensive technologies on increase in level of ecological safety, but remains
are information closed, with the majority share belonging to the foreign
investor. There are also other examples, but they, unfortunately, are
individual and aren't the standard practice.
It is necessary to notice that decisions offered by many
experts or are far from a reality, or aren't stimulated with supervising
bodies. However all are uniform in opinion that it is necessary to increase the
researches directed on replacement of old technologies of extraction,
enrichment and processing, to conduct system geological researches and
development, to create manufactures on complex extraction of a material and
working off of a waste, to establish quotas on remaining parts of metal made in
the country for development of research-and-production business are valuable
and useful to branch. But ways and preconditions for their realization aren't
present because all it is in opposite from interests of the companies to the
Today more than ever it is required to develop the rational
policy of branch reflecting balance between today's incomes and tomorrow's
benefits, in a complex to develop metallurgy of Kazakhstan, to realize its
potential and for ever to say goodbye to the status of a raw appendage fixed to
Necessity of state regulation of metallurgy
and direct participation of the state in programs of development of branch are
inevitable also for the reason that investments into building of metallurgical
complexes make some honeycombs millions dollars. To master them without state
support to the small enterprise not on a shoulder, to stimulate internal
consumption of production of high repartitions and at all a problem excessive. Branches-consumers
of production with the high added cost (aerospace, electronics and electrical
engineers, and etc.) in Kazakhstan for the present aren't present mechanical
engineering, and investments into creation of such high technology manufactures
exceed investments in metallurgy repeatedly.
In Kazakhstan all the same there are the companies, to one
of which successful examples is joint-stock company «UK ТМP» which moves not
only desire multiply the capital, but also professional interest, care of image
of the country and the company, requirement for creation something a
significant and useful for today's and future society. And it means that there
is a chance and hope of reforms in metallurgy.
1. The message of the President of Republic Kazakhstan of
N.A. Nazarbaev to the people of Kazakhstan «New Decade – New Economic Lifting –
New Possibilities of Kazakhstan» from 1/29/2010.
2. The message of the President of Republic Kazakhstan of
N.A. Nazarbayev to the people of Kazakhstan “Through crisis to updating and
development” from 3/6/2009
3. Strategy of industrially-innovative development РК
4. The report of Government RK on results of social and
economic development for 2009 (www.government.kz)
5. Strategy of territorial development of Republic
Kazakhstan till 2015
6. The message of the President of Republic Kazakhstan of
N.A. Nazarbaev to the people of Kazakhstan from 1/28/2011 «We will build the
7. The report of Government RK on results of social and
economic development for 2010 (www.government.kz)
Table of contents: The Kazakh-American Free University Academic Journal №2 - 2011