From water bearers to cement kings. What's behind the Chinese project in Bashkiria

China has begun to design a cement plant in Sibay, although there is no great demand for cement in Russia

From water bearers to cement kings. What's behind the Chinese project in Bashkiria Photo: rb7.ru

Acting Head of Bashkortostan Radiy Khabirov has met with Sichuan Junhe Environmental Protection to discuss the construction of a cement plant in Sibay for 13 billion rubles. The representative of the Bashkir side in the project claims that a land lease agreement has already been signed. Meanwhile, experts believe that the Chinese project can help to develop the depressed Trans-Urals, but cement in Russia is twice as much as needed. Realnoe Vremya has investigated the situation.

''There is already a land lease agreement''

The Chinese investor – Sichuan Junhe Environmental Protection CJSC — again has reminded about its plans to build a cement plant in Sibay. The project worth about 13 billion rubles was discussed during a meeting with the acting head of Bashkortostan, Radiy Khabirov.

We must say the project for the construction of the cement plant in Sibay is not new. Chinese businessmen announced their intention already back in 2016. In Sibay there was even registered the legal entity – Sichuan-Sibay Industrial Park PLC, with the main activity — the production of cement and the authorized capital of 100,000 rubles. According to SPARK Interfax, at the moment the founders of the company are Sichuan Junhe Environmental Protection CJSC and Kontur PLC (16 per cent of the authorized capital). The only founder and director of Kontur — businessman Rinat Kuzibaev. The authorized capital of the company – 10,000 rubles. According to SPARK, she has no income — only expenses of 12,000 rubles.

We managed to reach Rinat Kuzibaev, who confirmed that Chinese investors still have intentions to build the cement plant, but there are no specific dates when the project can be implemented. According to him, at this stage the site in Sibay has been chosen and the design of plant is being developed.

The project worth about 13 billion rubles was discussed during a meeting with the acting head of Bashkortostan, Radiy Khabirov. Photo: glavarb.ru

''The negotiations are being underway, the desire is there. Some works are being conducted on the site and on the design. But they do not have strict deadlines yet. There is even a land lease agreement. I think that there is a shortage of cement in Russia. Cement is imported from the same China and nearby regions. On the contrary, it will be a good help in price and quality,'' says Kuzibaev.

Earlier, the Bashkir side in the list of founders of Sichuan-Sibay Industrial Park was represented by another legal entity — IST PLC. IST had four owners — Chairman of the Sichuan Association in Russia and the CIS Zeng Aiguo, Head of the Russian representative office of the China Machinery Import and Export Corporation Machimpex Zhen Gang, natural persons Artur Zinnurov and Olga Bogdanova. About Bogdanova it is known that she was a partner of family members of Deputy Prime Minister of Bashkortostan Ilshat Tazhitdinov.

We managed to reach one of the former founders of IST PLC, Chairman of the Sichuan Association in Russia and the CIS Zeng Aiguo. It should be noted that earlier it used to be him who most often represented the Chinese side at meetings with former head of Bashkiria Rustem Khamitov where the construction of the cement plant in Sibay was discussed. However, now Zeng Aiguo denies any relation to the project. According to him (and he speaks good Russian), he was only the intermediary between the investor and the Bashkir leadership. Along with this, Zeng Aiguo does not name the investor company.

''I do not know exactly [at what stage the project is] because they are doing it independently. Because they think themselves already, know everything. Many do so, so there is nothing wrong. We helped them in the beginning, we did everything, and then they separated themselves,'' said Zeng Aiguo.

As for the Chinese investor, the only company with the name Sichuan Junhe Environmental Protection, which could be found, is registered in the city of Leshan, Sichuan Province. Its legal address is the same as the address of Sichuan Junhe Environmental Protection CJSC. However, the company specializes in the sale of water filters.

Zeng Aiguo represented the Chinese side at meetings with former head of Bashkiria Rustem Khamitov where the construction of the cement plant in Sibay was discussed. Photo: bashinform.ru

''Cement is exactly twice as much as needed''

Market participants do not undertake to tell whether the investment project for the construction of the cement plant in Bashkortostan will be implemented in the end, but note that there is definitely no shortage of cement in Russia.

''From the economic point of view, this project is neither now nor in the next 5-10 years economically feasible and will not make a profit because we have excess of cement in the market. We have lost almost 20 million tonnes of consumption compared to the maximum level reached in 2014. The market is operating in the conditions of fierce competition, respectively, the emergence of a new player will not be favourable: it will worsen the situation of existing players and will not give an opportunity to recoup the invested funds to investors,'' said managing partner of SMPRO Vladimir Guz.

The expert does not agree with the opinion that a lot of Chinese cement is supplied to the country. According to Guz, in Russia cement is ''exactly twice as much as it is needed''. From myself I will add that the question whether a new production of cement is needed has had arisen in connection with another Chinese project — the construction of the plant Anhui Conch in Ulyanovsk. This May, the ministry of industry and trade even postponed the provision of the chalk deposit in Soldatskaya Tashle for use, arguing that in Ulyanovsk the surplus of cement production is 3 million tonnes.

The question whether a new production of cement is needed has had arisen in connection with another Chinese project — the construction of the plant Anhui Conch in Ulyanovsk. Photo: rupor73.ru

Co-founder of Cement Opttorg PLC Andrey Shishikin notes that investors' hopes may not be justified because the cement market is unpredictable and depends on the growth rates in the construction market, which are not always high. In addition, Sterlitamak already has one investment project related to the production of cement – it is the a branch of HeidelbergCement. Andrey Shishikin notes that his company also collaborated with HeidelbergCement.

''Heidelberg is a Sterlitamak plant, Russian-German company. We worked with them. Just two years ago they stopped cooperation with us for the reason that the delivery is expensive. They transport [products] to Kazakhstan, sell to the Southern Ural, Eastern Tatarstan, but not to Kazan,'' the expert says.

By the way, Andrey Shishikin is familiar with Sichuan Junhe Environmental Protection. They came to him to learn from the experience.

''From this company two representatives came to us, watched our plant, watched how the cement transshipment works. Cement transshipment is a railway where cars go and the car is poured into a bunker, the bunker has the same capacity as the car. That is, the car literally for 10 minutes is poured into the bunker, then it is pumped into banks. They don't have such in China. They asked permission to look,'' Shishikin remembers.

In Sterlitamak there is already one investment project related to the production of cement – the branch of HeidelbergCement. Photo: youtube.com

With the coming of the new head of Bashkortostan Radiy Khabirov, major investment projects can be implemented, political analyst and social activist Rais Taybugin believes. In his opinion, if the cement plant is built, it will develop not only Sibay, but all Trans-Urals. On the one hand, there will be new jobs, on the other — around such a large enterprise it will be possible to develop a cluster and attract local businessmen.

''The Chinese company has already done a good job, they have all the expertise, they are at the stage of obtaining an evaluation. In this regard, they will have no problems. Usually, if the Chinese come, they come for a long time. So before they come, they think carefully about all the pros and cons for a couple of years. For them, a political component is very important, the guarantee of stability and some assurance for the business,'' says Rais Taybugin.

At the same time, the expert notes that if before there was an unspoken instruction not to let the Chinese, then today attracting investment has become a necessity. According to Taybugin, it is important that the initiative of the national authorities is supported by local officials.

''In solving economic problems, the adoption of investment programmes, much depends on local personnel: if they are not ready to accept such a challenge, it is a failure. The Chinese are delicate investors. At the same time, we need to be on an equal footing with them and dictate our own conditions for the local population to actively participate in the project. For example, you can hold public hearings. We need the support of the public, it is important for today,'' political expert Rais Taybugin considers.

Chinese tractors in Blagoveshchensk

The construction of the cement plant in Sibay is far not the only Chinese project in Bashkortostan. The company Zhifang was going to start the production of tractors in Blagoveshchensk. It announced its plans in 2015. In January 2018, during the meeting of the former prime minister of Bashkortostan with the chairman of the board of the Jiangxi digital power energy company Zhifang and chairman of the Bashkir international company Zhifang, they discussed the possibility of obtaining preferential loans and other preferences from the Bashkir government.

The company Zhifang was going to expand the production of tractors in Blagoveshchensk. Photo: bashinform.ru

In April, the authorities of Bashkiria even allowed to lease two land plots with an area of 580,000 square metres in the Blagoveshchensk district of the republic without auction. Earlier, the ministry of economic development of Russia reported that the plant for the production of tractors is to be built for more than 5,6 billion rubles by about 2021.

It is known that Jiangxi Zhifang Numerical Control Power was founded in 2009 with the authorized capital of 100 million yuans. According to open sources, the company specializes in the development and production of diesel injection systems. We must say that Jiangxi Zhifang Numeric Control Power is part of the Chinese Corporation Wangshi, whose sphere of interest is incredibly large — for example, a significant part of the business is occupied by beekeeping and related industries.

By Gulandam Fatkhullina, Timur Rakhmatullin
Bashkortostan

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