Andrey Melnichenko, the main shareholder in the international fertiliser manufacturer EuroChem and the coal energy company SUEK, reveals priority industrial investment areas
According to the Five-Year Leading Fixed Assets Investors rating compiled by the Expert magazine, Andrey Melnichenko (EuroChem, SUEK, SGC) is the top Russian private investor in the national industries other than oil and gas.
The investment made by his companies account for 20% of the total investment by all non-oil-and-gas Russian companies over the past five years.
Over the past 15 years, Andrey Melnichenko's companies have invested around $21 billion , which is a record figure for non-oil-and-gas industries in Russia.
Andrey Igorevich, you are the most active private investor in non-oil-and-gas Russian industries. What industrial investment areas are now of top priority for you?
The companies where I have a major stake are EuroChem, a manufacturer of fertilisers and other chemicals, SUEK, a coal producer, and SGC that produces electricity and heat. Each of these keeps growing at a fast pace.
Concerning EuroChem, the formal opening ceremony of our new plant in the Leningrad Region will take place at the SPIEF tomorrow. This is a serious project dealing with millions of tonnes of ammonia. Tomorrow we are also going to sign the papers initiating the construction of another our future facility, which will produce ammonia, urea and methanol. It will be built here in the Leningrad Region – same site, new story, and $2.5 billion. These are two major project EuroChem is about to launch. As for other news concerning this company, it continues the construction of potash plants in Perm and Volgograd, with a total investment of up to $7 billion. And that’s about how one company is doing.
SUEK is actively developing coal mining in the regions where it operates and going through a major mining equipment upgrade. We are constructing new facilities and expanding our port on the Pacific coast of Russia as part of a project already under way. We will bring our shipment capacity from 23 to 40 million tonnes. This is our second story.
SGC is an active participant in the programme for the development and upgrade of energy facilities – that’s big figures – we also participate in modernisation of the heat supply systems of our cities. Overall, we continue our work across all areas.
What is the planned output for the two new facilities?
If you mean St. Petersburg, tomorrow we are adding one million tonnes of ammonia. The announced construction project and relevant memorandums to be signed with the Ministry of Industry and regional authorities will add another 1.5 million tonnes of ammonia and urea and 1.7 million tonnes of methanol.
Another major area you are active in is environmental protection. Could you tell us in more detail about what you are working on from the ecological standpoint?
It so happened that the chemical and coal industries are the two main business areas of mine. Both of them, of course, have to deal with a lot of environmental aspects, because when you try to imagine something really anti-eco, probably, the first thing that comes to mind is chemicals, coal plants, etc. So, naturally, we ought and want to put to rights the assets we have inherited, so to speak. As for the new facilities we build as part of new investment – these construction projects – we go by with the best possible standards.
And by ‘inherited’ I mean this. For example, the plant in St. Petersburg to be opened tomorrow is new, but it has been built next to the old one constructed in the pre-war years or around that period.
Of course, over all these years a number of issues have arisen. Modern technology and regulatory requirements are very different now in terms of quality and environmental impact. So we have to put to rights whatever we have got, and we are actively engaged in that. New production facilities are another story. For example, the new EuroChem ammonia production plant takes wastewater from the old facility. Previously, this wastewater used to end up, in some form, in the Gulf of Finland, but now we will take up to 75% of the wastewater at the new facility. So you see, this is not about improving the quality of our wastewater, this is about eliminating it. This is a straightforward environmental protection process: we had a volume X of wastewater, and we reduce it by 75%.
Beside environment, another area of sustainable development for major companies is charity. Could you tell us about your support of projects for children?
Indeed, we have about a hundred thousand employees and most of them work outside the big cities like St. Petersburg or Moscow, but rather in the small towns and settlements where industrial facilities were once constructed. Our key priority is, to the extent of our abilities, to create an attractive environment for the people who work there, because otherwise they will leave their jobs and go somewhere else.
One kind of action we take – there are many, but one we take is provide our employees’ children, along with the children of other people living in these territories, with the opportunities that are comparable with the ones they would have got in a big city.
That is, we can create a kind of post-secondary education system, additional education, so the parents know that their children will grow up in a similar environment as children in some other city, with all its pros and cons.
We enjoy doing this and will keep it going. This is one area within our large-scale programme aimed to improve what can be improved in the regions where we operate.