The Krasnoyarsk Non-Ferrous Metals Plant named after V.N. Gulidov is the world’s only manufacturer, which takes all the existing types of raw minerals to process them into eight precious metals: platinum, palladium, rhodium, iridium, ruthenium, osmium, as well as gold and silver. OAO Krastsvetmet refines about 50% of Russia’s gold and 98% of platinoids. The company’s outlook is described by its General Manager Igor Tikhov.

Igor, how much grounded is the affirmation that your plant is leading in refining Russian precious metals?

Today OAO Krastsvetmet is the biggest enterprise in the precious metals business not only in Russia, but in the entire Eurasian continent. Krastsvetmet is well-established in all major segments related to processing precious metals and obtaining other high-added-value products on the basis of these precious metals, the so-called high-tech products. Our enterprise is processing and refining 99 percent of Russian platinum metals, one half of Russian gold, and approximately 60 percent of Russian silver. We are collaborating with all major operators of the gold, silver and platinum markets. Regarding platinum metals these are Norisk Nickel and Amur; regarding gold these are Polyus and Polymetal; and regarding silver this is Polymetal. From Magadan in the North and the Khabarovsk Territory in the South of the Far East and further up to the Urals we have suppliers of fresh raw materials. Speaking of recoverable resources, our “geography” spreads over all Russia.

Every year we are significantly increasing the scale of processing. Today, silver refining is dominating in terms of growth rates. This is a comparatively new and promising market for us.

What is the reason behind the fast growth of silver refining?

We may point out three basic reasons for this phenomenon. In the first place, silver deposits, which earlier stayed out of sight for investors and developers, were put under development. Primarily, this refers to the Polymetal Company, which had come to this market before the world silver prices went up.

In the second place, mining operations are currently on the upswing in gold ore fields of the so-called Silver Belt piercing the Far East area from North to South and then extending westwards up to Central Siberia. Accordingly, silver content in gold and silver dorè alloys supplied to us for refining by gold mining companies is increasing.

Finally, the third reason is related to world silver prices, which rose three times during the last three-four years due to the wantonly growing demand for silver particularly from Korea, China and India. This metal is more significant for industrial purposes than from the point of view of jewelry. It is used in energy related industries, in catalysts, wire terminals, photographic materials, and so forth. Since economies, especially in Asia, are developing, the demand for silver is growing along.

In the 1990s your plant was processing raw materials from South Africa on the give-and-take basis. Do you maintain such contacts now? Is there any role played by foreign components in committing the refining facilities of Krastsvetmet?

At present we are working over recoverable materials for factories in many countries. These include the U.S.A. and the countries of the European Union and Eastern Europe. Belarus is one of the CIS countries, with which we work most closely. As a rule, under such contracts we process raw materials, which are complex in terms of their content and refining techniques and contain both minerals associated with precious metals and basic platinum metals. We have had no contracts with South Africa for a long time. However, today it may be said that our contracts with South African companies are renewed and this year we shall again start to work over their raw materials. Altogether, foreign contracts bring up to 15 percent of our refining proceeds.

Russia’s entry to the WTO is being delayed, but it will nevertheless happen in some foreseeable future. Is your plant ready for fast integration into the world market of precious metals? Will Krastsvetmet be able to become a core for shaping up a transnational refining company?

Virtually, we are such a company even today. This is especially true in terms of processing platiniferous products. As a rule, the precious metals business is divided into gold refining as a separate industry, silver refining as a separate industry (or gold and silver refining merged together), and platinum metals refining also as a separate industry. However, we actually happen to be the only enterprise in the world, which is engaged in processing all the eight precious metals. This is why our services are attractive. Currently, other parties are working with us on plans to enter the Asian refining market. Particularly, we are negotiating with China a possibility to process their beneficiated products, platinum concentrates at our plant.

What kind of complicacies may encounter Russia on its way to join the WTO? The market of precious metals in this country is substantially overregulated. It is controlled by the state. There are an enormous number of enactments limiting the possibilities to use our capacities for processing foreign raw materials. The state represented by both federal and regional authorities has always met our needs halfway. Thanks to this, we manage to do business with foreign companies too, always staying within the frames of law. There is no doubt that after Russia will join the WTO our company will be absolutely competitive on the world market, of course providing that the limitations set for the precious metals market by the Russian legislation will be reasonably removed. If the market will stay overregulated for Russian operators and free for foreign operators, certainly we shall be in a complicated position.

Historically it happened so that your company emerged 65 years ago as a refining enterprise. However, in the mid-1990s the company set a course for diversification of its production. How successful was the move?

Now it is clear that without diversification we could not stay in the market and turn into the trouble-free enterprise, which we are today. The point is that the refining market was undergoing substantial changes, behaved differently and was very competitive. Nowadays, due to the completion of a diversification program we are virtually not afraid of any competition on the Russian market.

What is included into the diversification program? Our enterprise was initially established for processing platinum metals of the Norilsk Mining-and-Metallurgical Integrated Works and accordingly was precisely keyed for refining the Norilsk raw materials only. In the mid-1990s we came out to the gold refining market. This was a very correct decision and today we are working over one half of Russia’s gold.

Within the frames of diversification we started to produce consumer goods and to develop jewelry production – now this yields about one third of our revenue.  We also turned to hi-tech production and in due time bought a Johnson Matthey license for manufacturing super thin platinum wires and catalytic systems. Now this production line renders a substantial part of our income. Besides, on the basis of those knowledge and skills possessed by the plant in the early 1990s we built a facility to produce chemical and petrochemical compounds and autocatalysts. Today about 25 percent of our income is yielded by refining, 30 percent by jewelry production, 15 percent by metalworking, i.e. by fabrication of wire and catalytic systems, and 5 percent by other activities.

As it appears, you are not any more dependent on a sole supplier of raw materials?

Not any more. However, I should make myself more precise. Refining is the basic business for us, covering the group of platinum metals, metalworking and compounds as a whole.

How successful is the silicon production line at the plant?

The know-how of producing silicon, which is in great demand on the market, boils down to the necessity of initial fabrication of technical silicon from pure quartz sand, then turn it into trichlorosilane, trichlorosilane into polysilicon and the latter into monosilicon. Monosilicon is widely used in electronics and helioenergetics. Our production facilities are keyed to obtaining monosilicon from polysilicon. We are the only enterprise in Russia which is still able to manufacture electronic grades of monosilicon. However, so far we occupy mainly the helioenergetics niche. We are processing tolling raw materials supplied from abroad. Unfortunately, during recent years in this country there did not appear any polysilicon enterprises and we are actually put on a foreign-raw-materials drug needle. We are anxious about polysilicon production lines set up in Russia to use them for further substantial expansion on this market. We have every possibility for this end: personnel and technologies. But we need Russian raw materials.

How great is the demand for monosilicon on the world market?

Monosilicon is mainly used to produce solar batteries. Helioenergetics is being actively developed in the countries of the European Union; not so long ago China started its state program of helioenergetics; India is quickly moving in this direction, as well as all Arab countries. Generally speaking, the monosilicon market is virtually unlimited. The only limitations are at the bottom – there are no domestic raw materials.

Can this problem be solved in the nearest years?

We still hope that investors will brace up and bring to completion at least one of the factories designed for polysilicon production. There is a favorable outlook in this respect. The mining-and-chemical integrated works has already started to produce first amounts of polysilicon; its production is soon to begin in Ussolye-Sibirskoye; finally Basel is building a plant in the South of Khakassia. If domestically made polysilicon will appear on the market, it will give a new life to our silicon production.

In a broad sense, it appears that our plant has such a destiny – its luck never turns away. We started to develop silicon and the solar silicon market started to grow. We started to develop production of chemical compounds and immediately the petrochemical industry went upwards substantially expanding the autocatalysts market, because on the one hand there came a substantial tightening of ecological standards and on the other hand the automobile industry was breaking all sales records. We developed compounds for catalysts used in the gas chemical industry and coal chemical industry, and here again the result was immediate. On August 28, it is scheduled to put into operation the factory belonging to Johnson Matthey, a 100-percent-British-capital company. This factory has been built on Krastsvetmet’s area and it will be a direct consumer of our compounds considered the best in the world.
Finally, we started to develop jewelry production and the jewelry market started its uninhibite expansion.

What are you doing to strengthen your position on the jewelry market?

First of all we are getting ready to issue new collections, particularly those of hollow chains. This is a new line in Russia. We are also preparing platinum collections for youth, diamond and platinum jewelry for the young generation and middle class. We are going to release palladium collections. I would like to remind that in 2000 we were the first to say that palladium should regain its noble face and that palladium should become a jewelry metal. Formerly palladium was used only to fabricate watch cases. Now up to 30 tons of palladium are used to produce jewelry. It has turned into a fashionable metal. China is using it in great quantities. Even the British, who were opposed to palladium as a jewelry metal, have now even issued a booklet in support of jewelers using palladium.

To strengthen our positions on the jewelry market we also started a rather difficult job of promoting our jewelry brands. We have two brands. The first one – Krastsvetmet – is conceivable for wholesale traders. However, if we shall not enter our brand into retail sales, if we shall not be recognized at the level of shop windows, it will be difficult for us to promote our jewelry products. This is why we have developed a new retail brand – Krasberry.

In Krasnoyarsk there was held an international conference called “Precious Metals Market of Russia – a Look into the Future.”  Your company was the organizer of this conference. What were the results of this event?

The intent of this conference was to give people, who came to us to celebrate the 65th anniversary of the plant, a chance not only to be present at the festivities, but to use this opportunity to communicate with each other, to discuss the problems existing in our industry. The conference was joined by the representatives of Russian and foreign mining and processing companies, by the representative of companies consuming products made of precious metals and of course by the representatives of government authorities.

Virtually, the industry of precious metals is a component part of many other hi-tech industries. Catalytic systems we are making are used to produce nitric acid; nitric acid is indispensable for producing fertilizers. In recent years, the production of fertilizers is growing at a stupendous rate. We are an important component part of this growth. Our chemical compounds are used to make autocatalysts necessary to clean exhaust fumes of automobiles. In Russia the demand for cars is growing by leaps and bounds; and it is now clear that in 2009 our country will become the largest automobile market in Europe. The growth of the automobile industry is also our growth.
Platinum metals are used to produce glass-melting crucibles. Fiberglass and light-carrying fiber are used to fabricate materials for the construction industry so vehemently growing in Russia. Accordingly, we are a component part of this industry too. What is the meaning of thermocouple wire, solder, contacts, silver and gold wire which we are making? They mean the markets of electric engineering, military-industrial complex and energy. We are turning out compounds for the petrochemical industry. Our platinum catalysts are used to transform petrol into gasoline, diesel fuel and other petroleum products. Platinum metals are also used as catalysts in the coal chemical industry and in the gas chemical industry. The pharmaceutical industry is partially also based on our compounds. No a small role in developing the consumer market is played by jewelry products.

For a long time the precious metals industry was predominantly targeted at export. However, today its products are becoming more and more required on the domestic market. And this means that the time is coming when the mining and processing companies of this industry, possessing quite sizable investment opportunities should turn their face to Russia and start working for the inner market facilitating new jobs right here in Russia. It’s time to work in Russia. This was the main motto at the conference.

Krasnoyarsk - Moscow