Russian manufacturing sector continues to grow

Since the beginning of the year, the Russian manufacturing has grown by 8.8%. Companies are successfully meeting the challenges posed by the sanctions and are even using them as an opportunity for further growth. At the same time, however, they are not exempt from the high modern standards of production and environmental responsibility.

In Russia it is common to reflect on the fate of the mighty Soviet industry, of which nothing was left at the beginning of the new century. Indeed, in the 1990s Russia experienced significant changes in the economy: the transition to a market model, lack of investment, controversial reforms, crises and other factors led to a significant decline in production. In 1998, the volume of industrial production in monetary terms, taking into account inflation, was 30% lower than in 1990.

However, contrary to popular belief, many factories did not close during the 1990s. Having survived the most difficult years for the country's economy as a whole, they were no longer able to cope with the modern challenges and tasks that have arisen in Russian industry over the past decade.

And it's frightening to say that this is good news for Russians: some of them should be closed, voluntarily or by force, at least for environmental reasons.

At the same time, there are those who have chosen to modernise and go green. And they have benefited.

The Baikal Pulp and Paper Mill is one of the closed enterprises. It had a "dirty" reputation even back in the Soviet years. The mill was built in 1966 to produce high-grade, super-strong pulp, used mainly in the defence industry.

"Comrade Khrushchev acted like a hooligan by building a plant on Lake Baikal. Even then, there were no particular technological reasons for it . Similar cellulose for fighter jet tyre cords was produced on the Mississippi River in the US, the most turgid river in the world. And nothing - another plant was built at the mouth, water was treated, the water was purified and high-quality cellulose was boiled," academician of the Russian Academy of Sciences Mikhail Grachev, who for many years headed the Limnological Institute of the Siberian Branch of the Russian Academy of Sciences, told journalists.
Of course, the pulp and paper mill was equipped with a powerful wastewater treatment system, but the plant was never able to completely stop discharging into the lake. An attempt in 2008 to switch to a closed water cycle, which had previously been successfully implemented at a similar plant in Selenginsk on the Buryat side of Lake Baikal, resulted in a two-year shutdown due to unprofitability.

The company had accumulated debts and failed inspections. According to RIA Novosti, 12,499.79 thousand cubic metres of inadequately treated wastewater were discharged into Lake Baikal in 2010, and 26,526.59 thousand cubic metres in 2011.

In February 2013, the Russian government made a decision to gradually close the Baikal Pulp and Paper Mill and transfer production to other companies.
However, some of the plant's problematic legacy has not yet been resolved. For example, the waste from the Baikalsk pulp and paper mill, concentrated in storage tanks, has not yet been removed. As the media have written on several occasions, this is a potential environmental disaster for Lake Baikal: if a mudflow comes down from the Khamar-Daban mountain range, it could be washed into the lake.

The second anti-hero from the Irkutsk region is Usolyehimprom. The chemical giant was founded in 1936 and for many decades was the only producer of chlorine and caustic soda outside the Urals. The range of products was constantly expanded to include detergents, paints and varnishes. But in 2017, the company, which occupies almost a third of the city (its water intake and treatment facilities are also located here), went bankrupt.

In November 2018, a state of emergency was declared in Usolye-Sibirskoye due to an environmental threat: the plant's territory was contaminated with hazardous chemicals. The possible environmental consequences have been compared to Chernobyl.

In the summer of 2020, the then acting governor of the Irkutsk region, Igor Kobzev, appealed to Russian President Vladimir Putin to solve the problems at the plant, pointing out that all production facilities, including the soil and groundwater, were saturated with dangerous chemicals.

Only then did the process begin, and in March last year all hazardous substances were finally removed from the site.

According to media reports, part of the unprecedented fine of 146 billion roubles imposed on Norilsk Nickel for an oil spill in 2020 was earmarked for the removal of waste from the Baikal pulp and paper mill, the Krasny Bor landfill and the Usolye-Khimprom plant.

Chelyabinsk has traditionally not left the top of the list of Russia's dirtiest cities, and the local industry has a lot of "merit" in this. In February this year, Vladimir Putin ordered the closure of polluting production at the Chelyabinsk Electro-Metallurgical Plant (CHEMK) and its relocation outside the city.

The history of the company dates back to 1929. Its closure for environmental reasons has been discussed on more than one occasion, but the issue only moved forward after the President drew attention to the problem.

In March, the plant stopped producing electrodes "with the greatest environmental impact", which, according to Governor Alexei Teksler, "will radically improve the environmental situation in Chelyabinsk". "Then, in time, ferroalloy production will be established at a new site, taking into account all modern environmental standards," Teksler said. However, in an interview with RBC in June, he noted that the complete transfer of ChEMK production outside the regional centre would take about seven years.

The uniqueness of this project lies in the fact that we are talking about an operating company and a major employer, rather than a closed and abandoned company in bankruptcy. But in Chelyabinsk, which has suffered from the effects of industry in the past, even the prospect of the future is seen in a positive light. "The appearance of the city needs to change, the existing scheme is quite archaic - factories are mixed with residential areas. Everyone suffers from this - both residents and businesses, because they cannot develop," Sergey Gordeyev, a member of the Public Chamber of the Chelyabinsk region, told local media.

However, there are also positive examples of companies actively modernising and voluntarily closing down outdated and dirty production facilities.

"We have been calculating the National Environmental Rating since 2007. This means that we have been monitoring the environmental situation in the regions, including the impact of industrial production, for more than 17 years. So we can clearly see positive changes, the overall rating of all regions is increasing, and of course the situation is changing for the better.
A real breakthrough in this area began in 2017, the national project "Ecology" and the federal project "Clean Air" were launched, which initially involved 12 cities, and we can clearly see significant improvements in the environmental situation," said Roman Pukalov, director of environmental programmes at the all-Russian public organisation "Green Patrol".
According to him, today it is simply not profitable for companies to remain non-environmental: firstly, the fines for exceeding emissions and discharges are significant, and secondly, they are interested in the image of environmentally friendly companies. Despite the sanctions, many companies continue to work for export, and it is important for foreign companies to know under what conditions this or that product was produced.

Successful cases include Norilsk Nickel's projects in Norilsk and on the Kola Peninsula.

The company, which is almost 90 years old, owns factories that were built in the Soviet era with completely different environmental requirements, or rather, with no environmental requirements at all.

At the same time, the company has long been on a modernisation course. For example, in the course of reconfiguring its technological chain, Norilsk Nickel created a refining centre for the whole company based on Kola MMC. This made it possible to stop smelting at Monchegorsk in 1998. And in 2020 the smelter in the village of Nikel wasl be closed. In 2021, Norilsk Nickel also liquidate the metallurgical shop - the former copper shop - also on the Monchegorsk site.

All this was done primarily to reduce emissions of sulphur dioxide, the main air pollutant from Norilsk Nickel's operations (this is the specificity of processing sulphide ores). By the end of 2021, emissions in the Murmansk region had already fallen by 90% (compared to the base year of 2015), or from 155 thousand to 16 thousand tonnes per year. And they have continued to fall since then.

In Norilsk, where all of Norilsk Nickel's pyrometallurgy was eventually concentrated, the company had to act differently. Here, in 2016, the nickel plant that had produced its first metal in the war year of 1942 was closed - its environmental modernisation was simply impossible. As a result, emissions into the air have been reduced by 380,000 tonnes per year. At the same time, the nickel chain had been completely transferred to the more modern Nadezhda Metallurgical Plant (NMZ), which is now the only producer of copper-nickel converter matte in the Norilsk Oblast.

Norilsk Nickel planned to modernise both NMZ and the Norilsk copper plant (MZ) in order to increase the capacity of its main production. For example, a new flash smelting furnace is being built at NMZ (to replace the one that has already been dismantled). To address environmental issues, the company launched a large-scale "sulphur programme", which eventually became the largest component of the federal "Clean Air" project. As part of this, Norilsk Nickel added to the NMZ a chemical plant that converts sulphur dioxide into sulphuric acid, which in turn is neutralised into harmless gypsum.

The first technological line of this complex, in which the company invested around 200 billion roubles,( $2 billion) was commissioned at the end of last year. And it has already proved the efficiency and viability of the chosen technology. By the end of this year, two more lines will be commissioned at NMZ. As a result, the plant's emissions will be reduced by half next year, and then by a factor of ten.
We estimate that air pollution in Norilsk has been reduced by 30% with the closure of this plant (nickel plant - editor's note). And then the sulphur programme was launched at the Nadezhda Metallurgical Plant. It is difficult to overstate the importance of this project. Once the modernisation is complete, the company promises to reduce emissions by 1 million tonnes a year - in some regions less than that. Nothing more grandiose has ever been implemented in Russian industry," Pukalov added.

A similar project was planned for the Norilsk copper plant. However, recent events have changed the concept - it has been decided to stop smelting in the next three years and move it to China.

All these decisions will allow Norilsk to be removed from all ratings of the dirtiest cities in Russia and the world.

It is important to note that the company itself has planned the processes down to the last detail - both in terms of employing the redundant workers (most of whom will generally remain with the company) and in terms of a complete 'clean-up' of the industrial sites. The latter will not only be dismantled down to the last brick, but also reclaimed. And in place of the old metallurgical workshops, says Norilsk Nickel president Vladimir Potanin, "modern buildings will be built where people in white coats will be involved in high-tech production": "from modern transshipment points, concentrate drying points, its preparation and storage, to high-tech 3D printing of various parts for equipment needed for the NPR" (including for other companies now actively developing Taimyr).
Another positive example is the Moscow oil refinery. The plant dates back to 1938. Politicians and environmentalists have repeatedly called for its closure on environmental grounds.

"In recent years, major projects have been implemented. For example, the modernisation of the Moscow oil refinery. The plant was given rather strict conditions: either modernise or move out of Moscow. Gazprom Neft chose the first option. And today, for example, Biosphere wastewater treatment plants have been installed there, which I have not seen anywhere else in the world. Similar facilities are now being built at the Omsk oil refinery," Pukalov noted.

The large-scale modernisation of the plant began in the early 2010s after it became the property of Gazprom Neft. The work is scheduled to be completed by 2025. The aim is to achieve the highest standards of production efficiency and environmental safety. Essentially, a modern production facility has been built on the site of the old plant. Obsolete facilities will be gradually decommissioned and modern industrial complexes will be built.

According to media reports, the investment in the modernisation of the plant is estimated at more than 500 million roubles.

"A large-scale reconstruction of an oil refinery is under way in Moscow. Actually, it is not even a reconstruction, but the construction of a new plant on the site of the old one. As far as I know, there is nothing left of the old plant here. Over the years, since 2011, we have come a long way," Moscow Mayor Sergei Sobyanin told journalists.

In particular, the accumulated waste - more than 180 thousand tonnes - has been eliminated.

From 2011 to 2020, the first two of three stages of modernisation were carried out, as a result of which the company reduced its environmental impact by a factor of four.
For example, the Biosphere wastewater treatment plant was built to replace the old ones, which were completely dismantled. The new system provides complete wastewater treatment and returns up to 80 percent of the water to the production cycle.

As reported in the media, the plant built or modernised gasoline hydrotreating units, catalytic cracking and light naphtha isomerisation units, and also reconstructed a diesel fuel hydrotreating unit.

The implementation of these projects enabled the company to switch to the production of Euro 5 environmental class fuel in 2013, 2.5 years ahead of schedule, which allows car engines to emit five times less sulphur compounds than Euro 4.

In 2020, the construction of the high-tech Euro+ oil refining complex will be completed.