August 2, 2022

At a meeting on metallurgy, Putin spoke about the principles thrown into the trash

By Azlyrics

Residential buildings will now be built using modules from metal structures

Deputy Prime Minister Denis Manturov presented Vladimir Putin with a plan to save the metallurgical industry, which is going into a peak under the pressure of sanctions. It includes a reduction in the tax burden, as well as measures aimed at stimulating domestic demand. “In the short term, companies plan to keep jobs, but the margin of safety is not infinite,” the vice premier warned the president. More than 500 thousand people work in the metallurgical industry, many of them live in single-industry towns. If these people are fired, there could be a powerful social explosion.

In Russia, there is already a hotel built from metal structure modules, located in Voronezh. Photo: Social networks

Vladimir Putin already held a meeting in April on the development of the metallurgical industry. However, the situation has only worsened since then. Denis Manturov reported that in the second quarter, exports fell by 20%, while the workload of enterprises fell from 93% to 80%. But this is on average. For example, the famous Magnitka works only at 60% capacity. Steel companies are forced to shut down their blast furnaces because there is nowhere for finished products to go. The Russian market will not “eat” so much. Europe is not buying. And the turn to the East is going slowly, because there are enough of their own producers. As in the case of oil, products have to be sold at a large discount. “At the current exchange rate of the ruble, external supplies are unprofitable, and somewhere they are completely economically inexpedient,” Denis Manturov complained.

Vladimir Putin once again repeated that the collective West is to blame for all the current problems, which makes politically motivated decisions without being interested in the well-being of its own citizens and the situation on global markets. “I'm not talking about such things as adherence to the principles of the World Trade Organization – they are simply thrown into the trash,” the president noted in his hearts. At the April meeting, Putin asked officials to “carry out a comprehensive assessment of the legitimacy of the decisions of Western counterparties” in relation to Russian metallurgists and submit an updated strategy for Russia's actions in the WTO by June 1. However, the government, apparently, considered butting with the international regulator futile and focused on fulfilling other instructions of the president. In particular, as Manturov said, an updated (taking into account the preservation of sanctions. – “MK”) strategy for the development of the industry until 2030 has already been prepared. The emphasis is on systematically reducing the excess fiscal burden and stimulating domestic demand, which also fell sharply after the suspension of automobile and railcar factories.

According to the Deputy Prime Minister, housing construction will help increase the consumption of metal products within Russia. The idea is that instead of concrete panels and a monolith, from which residential buildings are traditionally built, developers use modules made of metal structures. Such housing outwardly will be completely devoid of any architectural delights. But on the other hand, it is being built very quickly (the frame of one section of a ten-story building in 22 working days). Manturov said that by 2030, up to 30% of mass housing will be built from metal modules. However, he did not specify how builders are motivated to switch to new technologies, and Russians to buy apartments in such new buildings. Citizens themselves will certainly be wary of “metal” houses. Moreover, their disadvantages are not limited to their unassuming appearance.

In addition to the housing sector, a “capacious” demand for metallurgical products will be generated by a program for the modernization of housing and communal services. As well as major infrastructure projects – the expansion of the Baikal-Amur Mainline, the construction of highways, new oil and gas pipelines that are planned to be built in the direction of the Asia-Pacific region. While these areas will be promoted, Manturov suggested that the president buy excess metal products for the state reserve. “Subsequently, the formed reserves can be used for intervention in the domestic market in case of rising prices, as well as in the event of a shortage of products from metallurgical plants in Donbass to restore the infrastructure of the region,” the Deputy Prime Minister said.

Judging by the voiced priorities, the state budget will have to save the metallurgists both now and in the future. However, the matter is not limited to orders and purchases. Manturov said that an exorbitant fiscal burden should also be removed from the enterprises of the industry. Last year, when prices grew by leaps and bounds, metallurgists were actively “dispossessed” – an excise tax on liquid steel was introduced at a rate of 2.7% and the severance tax was revised. “Now the situation has changed dramatically,” Manturov emphasized. According to him, both taxes need to be adjusted in accordance with current realities. Otherwise, the negative consequences that the Kremlin most of all does not want to allow will not be long in coming. “In the short term, the management of enterprises plans to save jobs, but the margin of safety is not infinite. Therefore, it is necessary to promptly support the industry,” the Deputy Prime Minister emphasized.

It was not by chance that the issue came to the level of the president. In the government, the abolition of taxes, as always, is opposed by the Ministry of Finance with all its might. This money has already been taken into account in the budget, which means that we will have to look for some alternative sources. And where to get them? However, the stake is too high: the metallurgical industry is a huge team of people who need to be supported somehow. Therefore, the fiscal burden on metallurgists is likely to be reduced: in exchange, the authorities will require companies to maintain employment by any means.