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 certification.

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 titan spongy.

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 been received.

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 articles.

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 of aircrafts.

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 today.

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 work.

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 obsolete.

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 party.

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 the country.

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.

RESOURCES

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 future together!»

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

  
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