Kazakhstan Aluminium Smelter (KAS), ENRC’s flagship of the Kazakhstan aluminium industry, is launching its own anode production. The presentation of the new facility is scheduled as part of the Nineth Forum of Inter-regional Cooperation between Russia and Kazakhstan, to be held in Pavlodar on 19 September 2012. Felix Vulis, ENRC CEO, updates us on how this fits into ENRC’s strategy.
Mr. Vulis, as far as we know, KAS anode plant will be commissioned at the end of this year. Can you tell us about the project? What will the project implementation give to the Alumina and Aluminium division of ENRC?
Putting the plant into operation will allow us, first of all, to eliminate our dependence on external suppliers – ensuring that the production of aluminium by using local anodes will reduce cost. As a result, the competitiveness of our products will rise. The anode plant will operate exclusively using domestic raw materials, and this will be yet another contribution of the Group to the development of local content.
The plant, built at a cost of $240 million, will be able to produce 136,000 tons of products a year. The pre-commissioning of the plant, with participation of President Nursultan Nazarbayev, is scheduled for 19 September as part of the Ninth Forum of Inter-Regional Cooperation between Kazakhstan and Russia. The commissioning of the plant will take place in December, as previously stated.
The plant is equipped with cutting edge equipment from international suppliers. When designing the plant, special attention was paid to environmental safety issues. For example, the gas treatment unit installed at the plant will capture 99.8% of gas emissions.
Of note to the local community, the plant will create around 500 new jobs, and Russian specialists are currently conducting training for future employees. In addition, Pavlodar School No.7, with which we work closely, introduced a new subject module Production of Baked Anodes and Pavlodar Polytechnic College a course on Anode Production. Both of these programmes will help educate and train future employees of the plant.
What other investment projects related to modernization and setting up of new productions are under implementation at the moment?
First of all it is the construction of new ferroalloys plant at Kazchrome, with a capacity of 440,000 tons of high-carbon ferrochrome a year. This $750 million project is a core part of ENRC’s capital expenditure programme in Kazakhstan.
The President, Nursultan Nazarbayev, stressed the uniqueness of the plant, which will be at the forefront of the industry worldwide. He personally laid the symbolic capsule in its foundation in September 2009. The plant area covers 47 hectares and includes four 72MW Direct Current furnaces, currently the most powerful in the world. A complete production cycle will be created, from the delivery of the charge materials to the shipment of finished products. It is estimated that the plant will start operating in late 2013.
The project is innovative in the sense that the fine ore, which was earlier considered a waste, and reduced carbon will both be used in the furnaces. This will lead to a considerable reduction in production costs and, importantly, will increase the percentage of the Kazakhstan local content.
The plant will also increase the export potential of Kazakhstan in terms of production of high-carbon ferrochrome by 16%, and that of the Aktobe region by 46%. Due to the innovative nature of the plant, labour productivity is expected to increase by 3 or 4 times. The power consumption and the amount of dust produced will be reduced and the slag will be disposed of.
About 30 workers will take part in the specialised HR and leadership training, and further 400 will develop their skills in the training centre of the Aktobe Ferroalloys Plant.
Implementation of large-scale projects requires the access to power, while finished products require transportation. Here, the availability of their own base – Eurasian Energy Corporation and ENRC Logistics – is a competitive advantage of ENRC. What are the prospects for increasing the capacity of these facilities?
Since 2001 we have been implementing an ambitious programme of stage-by-stage reconstruction of the eight power units of the EEC electric power plant. Last year the fully restored Power Unit 2 was put into operation. We are also working on the reconstruction of the Power Unit 6, with capacity of 325 MW. The total cost of the project is $265 million, and it is due for completion in 2013. The project will see the replacement of main and auxiliary equipment, boilers, electrical system, control system, generators, and block transformers. The installation of a five-course ESP guarantees ash collection of 99.6%. The major part of work is already done, and a turbine, generator and boiler have all been installed.
The development of an efficient logistics system is also one of our key priorities. ENRC Logistics is a diversified transport group, which operates as a global logistics operator of the 3PL class. ENRC Logistics constantly works to optimize the transportation process, be it the carrying of ferroalloys and aluminium, the increasing of the deliveries, the optimal choice of sea ports, or the creation of an automated traffic management centre, amongst many other initiatives.
The company provides a wide range of transportation services, able to reliably transport finished products to consumers, as well as provide the transportation of raw materials and equipment to external markets. Given the existing shortfall of railway rolling stock in Kazakhstan, we have invested more than $250 million in setting up of our own fleet. As a result, we currently own more than 10,000 railcars, containers and railway platforms. We are planning to acquire new railcars by the end of this year. This will allow us to transport over 70% of our cargoes using our own Logistics. We also seek to find the best way of creating public-and-private partnerships. This has already been done with Kazakhstan Temir Zholy, with whom we successfully implemented joint projects to develop the transport infrastructure of the Tobolsk railway junction and the Zhelezorudnaya, Zhinishke and Don railway stations, amongst others.
Sophisticated production and innovative projects require highly skilled personnel. What are the future plans of ENRC for the development of human capital?
About 25,000 people are trained every year under our training programmes, comprising of 30% of ENRC’s total workforce The annual cost for training and professional development of the staff is about KZT500 million, which we believe is money well spent, because it allows local people to become the future of our business.
We believe that every employee has to have an opportunity to improve his or her skills and apply his/hers knowledge and skills to day-to-day work. It is not by chance that in February 2010 at the Fifth International HR Conference in Astana our Managers Training Programme has won The Best HR Project award.
The Group’s existing system of training was the basis for the development of ENRC’s Global Personnel Management Programme. This has placed the emphasis on creating a leadership pool for the company through the training, development and career advancement of employees holding approximately 150 key positions in ENRC. In addition, a ‘talent pool has been created, through which we will encourage the most creative young employees to both improve their management and technical skills.
It is an important component of our strategy for us to engage with and attract young professionals, mostly the graduates of technical universities in Kazakhstan and educational institutions in the CIS and foreign countries. A possible partnership with the Nazarbayev University is under discussion. Selected applicants will have an opportunity to undertake one year probation work in the regions where ENRC operates.
Our Global Personnel Management Programme is set to launch in September or October this year. As you can see, it aims to motivate people to become more proactive, efficient and responsible.
Recently, ENRC has increasingly placed more emphasis on sustainable development. What exactly is embedded in this concept and how is it implemented in practice?
ENRC is a world-class company and, of course, we strive to meet the highest international standards of corporate governance. At the recent International Conference on Sustainable Development, Rio +20, which was attended by our representatives, we confirmed our ambitions in all areas: production, social policy and environmental issues.
Already, under the Programme of Waste Processing in the Production of Ferroalloys, our company disposes 100% of its slag. Moreover, we recycle the waste that has accumulated in previous years.
Year by year we are also reducing our consumption of natural water, and now, through recycling and reuse, over 90% of the water used in our production is in constant circulation. We also aim to use as little energy as possible, and have developed a corporate programme of energy saving, which covers not only the production facilities but also provides energy efficient transport, buildings and even works with employees to reduce their carbon footprint.
ENRC also supports initiatives aimed at conservation of biodiversity. For example, the Eurasian Energy Corporation annually breeds thousands of young fish which are then put in the Irtysh River. We also work to make the territory of Kazakhstan green – hundreds of thousands of trees were planted by ENRC employees.
In recent years, ENRC has implemented a number of large-scale environmental projects, which have cost more than $400 million. Our $2.2 billion investment in the upgrading of our facilities has also significantly reduced our impact on the environment.
I am proud to announce that we were the first company in Kazakhstan to benchmark our technology at an international level, and this year ENRC published its first Sustainable Development Report, dedicated to social issues and environmental protection. Our membership of the World Business Council for Sustainable Development, which unites more than 200 major international companies, also gives us impetus to strive for further improvements in this area.
ENRC demonstrated consistent results in the first half of 2012. We showed good growth in Kazakhstan, and we will strive to continue this growth. ENRC's focus on more efficient, safe and sustainable production activities will not only benefit the company, but also the country in which we work, and the people who live in it.