State Seeks to Keep Peace in Pikalyovo

A truce brokered in June by Prime Minister Vladimir Putin in Pikalyovo, where hundreds of unpaid factory workers blocked a highway, appeared to falter Thursday, with two of the main companies signing a contract that worked well for neither.

The ongoing conflict there highlights the dangers for the government of micromanaging complex business disputes, but after Putin’s high-profile intervention, authorities may feel obligated to stay on as arbiters.

Officials from the Industry and Trade Ministry and Federal Anti-Monopoly Service were present at the negotiations Thursday.

BaselCement, which has production facilities in Pikalyovo, signed a supply agreement with PhosArgo for nepheline concentrate deliveries through October at a price of 850 rubles per ton, a PhosArgo spokesman said, declining to give his name in line with company policy.

Separately, Eurocement, which also has production facilities in Pikalyovo, won the right to buy 30 percent less raw materials than it had before June, prompting PhosArgo to say it could suspend the supplies.

The town’s main plants are all owned independently, but they rely on one another for economic survival.

After Putin intervened, the anti-monopoly service and consulting firm KPMG jointly calculated a “fair price” for all the participants in the Pikalyovo production chain. They had recommended that BaselCement and PhosArgo sign a deal until the end of 2009.

“BaselCement … may go bankrupt in November, so we decided to sign the contract for only two months,” the PhosArgo spokesman said.  

The spokesman referred to a bankruptcy charge filed by Analitpribor against BaselCement for not paying undisclosed debts. The hearing is Nov. 2.

“There is no talk about bankruptcy, we have paid out part of our 1 million ruble [$31,500] debt and will soon settle the question about paying the rest,” BaselCement spokeswoman Svetlana Andreyeva said by e-mail.

Eurocement agreed Thursday that it would buy around 30 percent less mud, made by BaselCement from the nepheline concentrate, a source close to the talks said. Eurocement spokespeople could not be reached for comment.

“For more than 40 years, [Eurocement] has been buying the same volume of 1.1 million tons of nepheline concentrate per month. What has happened now?” the PhosArgo spokesman said.

“As Pikalyovo begins to buy less, we become more unprofitable. We’re losing 50 million to 70 million rubles per month when we sell concentrate at 850 rubles per ton. We may pose a question about suspending the supplies.”

Denis Davydov, deputy head of the anti-monopoly service’s industry department who was present at the talks, said he accepted the argument that Eurocement did not have enough capacity. PhosArgo could be profitable at that price if it redistributes profit as the anti-monopoly service recommended, he said.