GOODS FROM RECYCLED MATERIALS PRODUCED IN KHABAROVSK

Private company "Loren" from Khabarovsk organized collection and utilization of domestic and industrial waste plastic materials for production of consumer goods.

Recycled plastic is used for producing containers of various size, funnels, sprayers, buckets, flower pots and other inexpensive items. Loren is currently executing an order for fishing net floats.

As spokesman for Khabarovsk city administration informs, Loren is still in the process of establishment and lacks advanced technologies for plastic waste utilization. In particular, it could recycle plastic bottles inundating local landfills. During his visit to Loren's production workshop, Khabarovsk mayor Alexander Sokolov promised assistance in purchase of state-of-the-art foreign-made equipment. - Yulia PROKHOROVA.

CHINESE WILLING TO BUILD TRADE AND EXHIBITION CENTRE IN VLADIVOSTOK

At their meeting with Primorsky Krai vice governor Viktor Gorchakov, visitors from Chinese corporation Gungda proposed to make investments in construction of an international trade and exhibition centre with a five-star hotel.

During their visit, Gungda representatives inspected possible locations for the proposed centre.

"We hope that Primorye will become a centre of international tourism, and establishment of necessary infrastructures will increase commodity flows from China to Siberia and Far East through Primorye," stressed Gungda president Chang Dacheng. By his words, it's quite practicable to build a trade and exhibition centre during a year and a half. The corporation built a similar centre in Harbin. - Irina DROBYSHEVA.

COLLAPSE AT MINING COMPANY

After management of Lermontovskaya Mining Company (LMC) submitted an application for bankruptcy, Primorsky Krai arbitration court appointed manager to this company in December. This was a logical outcome of LMC's decline predicted several years ago.

After the Soviet Union broke down and privatization was held in 1990s, Russia has only two companies out of former ten ore and tungsten concentrate producers - Primorsky GOK and LMC, both in Primorsky Krai. Established as an integrated complex they became separate companies in perestroika times.

LMC produces (now by stripping method) and enriches tungsten ore. Main tungsten consumers are hard alloy producers for the defense industry, power engineering, oil, chemical, aircraft manufacturing and space industries. Only 60% of tungsten concentrate (about 3,000 tons) is used domestically and the rest is exported. The world's leading tungsten exporter is China with 80%. Experts say that illegal tungsten deliveries from China and high competition among Chinese producers have resulted in that tungsten price level which has been existing in the tungsten market since mid-1990s.

Another factor is that the Russian government repeatedly released tungsten concentrate to the international market from state reserves. As a result of excessive supply, tungsten prices plummeted and tungsten production in Russia decreased to 6,000 tons from 24,000 tons in USSR.

By 2003, governmental policies toward the mining sector somewhat changed - quota restrictions and tungsten export duties were lifted. However, it was too late for LMC with its assets depreciated at 95%, and a sharp drop in production resulted in bankruptcy. Some believe that LMC management is guilty of this.

"Management is to blame," says Ivan Shepeta, representative of LMC's largest shareholder and chairman of board. "They did not pay taxes. They did not prepare ore stockpiles to keep production running. The mine develops tungsten-rich ores and, should management be effective, it could have been even more cost efficient than Primorsky GOK. There are all preconditions to raise profitability."

The question is why company management had not been replaced in the process of decline. As director general Viktor Mayorov said at one of meetings in late 2000, LMC owed 19 million rubles to the regional budget but Primorsky Krai administration supported LMC at that time.

In May 2001, nearly 34% in LMC was bought from Evrobank and companies close to Promstroybank by Primorsky GOK and Mining Company AIR, who have common management and single production cycle. There was hope that the companies, separated during privatization, will become one whole again.

Ivan Shepeta admitted then that Primorsky GOK was taking certain risk by buying such a large stake in LMC owing over $4 million to the budget and badly needing investments for mine construction. Primorsky Krai's Industry Committee supported GOK, because it was interested in survival of a local economic mainstay.

Recognizing importance of this event, neither regional officials nor other LMC's major shareholders agreed with the recovery programme proposed by Ivan Shepeta's team. In his opinion, priority in managerial decisions should have been given to restructuring LMC's debts. His candidates to the board - three from GOK and AIR each - were not supported and, as a result, the major shareholder has only two votes in the board out of seven.

"ZR" FILE: Besides Primorsky GOK and AIR, other major shareholders in LMC are Company Wolfram (Moscow) and Nalchiksky Hydrometallurgical Plant (Nalchik).

LMC's financial condition and possibility for its recovery without bankruptcy procedures was considered once again by the special economic commission under Primorye governor in late July 2003.

The commission agreed with LMC board's plan for several coming months, but 3 months later LMC management applied for bankruptcy procedures. According to "ZR" sources, Viktor Mayorov was not going to take this step and until recently assured creditors and shareholders that he will recover the situation. One of possible explanations could be that the regional administration denied further support to LMC management.

Why was bankruptcy initiated that way? Sources close to the regional administration say this is an attempt to gain control over the company through a court-appointed manager. This manager became Boris Medvedev, member of Pacific Self-regulating Organization established under the aegis of the regional administration. In this respect, regional officials took the upper hand over the territorial office of Financial Recovery Service, LMC largest creditor with 80%.

"ZR" FILE: LMC's debts totaled 190 million rubles as of 1 October 2003. Largest creditors are the budget and extra-budget funds (144 million), ZAO TD Lermontovsky (Khabarovsky Krai), OOO NPP DEO (Snezhinsk), raion administration, OOO MetalloKomplekt (Yekaterinburg), OAO KhabarovskEnergo.

Shareholders admit that their losses are irreparable. The total amount of debt makes possible recovery of LMC questionable. Besides debt repayment, at least $7 million will be needed to restart production: $2.5 million for equipment renovation, $1-2 million for working capital, $2-3 million for mining and preparatory works.

Some analysts believe that certain Moscow-based companies are eyeing LMC, but it is unclear how serious their interest is and whether they intend to keep its specialization. According to other sources, LMC may become part of RosConcern as compensation for debts to the government. - Nadezhda VORONTSOVA.

LAWMAKERS WANT TRUTH ABOUT BANKRUPTCY OF SOCIALLY IMPORTANT ENTERPRISES

Members of Primorsky Krai legislative assembly Adam Imadayev and Leonid Beltyukov announced at a press conference their intention to declare a hunger strike.

The purpose of this action is to highlight the need for investigation of decisions and circumstances related to bankruptcy and receivership procedures at socially important enterprises of Primorsky Krai.

An open letter to President Vladimir Putin, signed by lawmakers A. Imadayev, A. Mamoshin, L. Beltyukov and N. Markovtsev, was presented to journalists. These legislators require in their letter that a special federal commission be set up to inquire into bankruptcy of a number of Primorsky Krai enterprises, in particular, OAO Bor. - Yevgeny ITAROV.

MINING COMBINE FOR SALE

Far Eastern inter-regional centre of the Russian Federal Property Fund plans to put out at auction a state-owned stake in Yaroslavsky GOK (Primorsky Krai) in the first quarter.

In accordance with standard rules, 44.05% in GOK was evaluated at more than 40 million rubles. Interestingly, in January 2000 intended sale of 565 shares (18.5%) in GOK was questionable due to bailout procedures. Today, shares are being put out for sale despite receivership procedures announced in last year.

These developments were preceded by dismissal of bailout manager Viktor Korshunov who held this position since 1997. Analysts believe that he has done much during this period, however, there was a financial "vacuum cleaner" siphoning money out of the combine in recent time. This opinion is shared, in particular, but some of GOK's creditors including main buyers of its produce.

In 2003, GOK lost one of its largest clients, Halogen company from Perm, that ceased using fluorite in its production cycle. Perhaps, this was a critical point for GOK.

Serving receiver manager Viktor Gusarenko does not speak much and all that a "ZR" correspondent was able to learn is that the combine is being prepared for sale as a single piece of property. But nobody of shareholders, creditors or regional officials could tell who can be a potential buyer. Perhaps, he will be known after the governmental package in GOK is auctioned off. Still, there is much doubt that auction bidding will take place and it is not unlikely that the package will have to be sold at a baseline price.

Time will show how things will turn out later. Some believe that Yaroslavsky GOK could be of interest for investors, because protective import duties on Mongolian concentrate were imposed by Russia in last year and the combine may regain its position in the national market.

"ZR" FILE: Yaroslavsky GOK's total debt exceeded 500 million rubles as of late 2003, with 20% due to the federal budget. - Nadezhda VORONTSOVA.