Mechel’s bloody ink

20.07.2010 — Analysis

The Ural office of Rostekhnadzor (the regulatory body responsible for ensuring compliance with all relevant legislation and technical standards) has cited the public corporation Mechel for illegally constructing a dangerous facility. The company is building an oxygen-converter facility at the Chelyabinsk iron and steel works, based on design documentation that has not passed state inspection.  These procedural violations have already led to accidents and human casualties at Mechel enterprises. Experts have told this columnist for RusBusinessNews that the problems with the design documentation demonstrate the incompetence of the management and will lead to further carnage.  

The Urals office of Rostekhnadzor has filed a claim in the Chelyabinsk regional court of arbitration against the Chelyabinsk iron and steel works, a public corporation, accusing the plant’s administration of remodeling a particularly dangerous and technically complex facility without a building permit. The company is faced with a possible court-ordered shutdown.

Mechel has made no official comment on this. Experts claim that they have nothing to comment on, since the overwhelming majority of construction projects in Russia are built without the consent of regulatory agencies and sometimes even without design documentation. Viktor Tyumentsev, the assistant director for construction for the Construction and Manufacturing Company Ural Metallurgical Assembly LLC, claims that it takes a very long time to get an inspection of working documentation, and that sometimes officials demand bribes to get this done. Thus, industrialists start construction projects at their own risk and complete the paperwork after the fact.

Given the flagrant disregard for the law common in today’s Russia, the qualifications of the design engineers are what really matter. And these qualifications, the experts claim, are not always the best. One can still find design engineering firms who do their documentation "on the back of an envelope." Viktor Tyumentsev claims that he is aware of cases when the regulatory agencies forced the builders to strengthen the structural steel inside large facilities, which, in the end, caused the construction estimates to double. It is possible that the desire to build cheaply and quickly was what prompted the industrialists to build first, and to later convince the regulatory agencies to sign off on the documentation.   

Those who do this claim that the officials can usually be persuaded.  They do not recall any time when construction at a large facility was stopped by a court order. "They live in this world, too," explains Viktor Tyumentsev. "The officials understand that getting the necessary permits is often just a formality. That’s why I don't think that the construction of the facility at the Chelyabinsk iron and steel works will be suspended. Mechel is building something it’s going to use itself, after all, so I assume they won’t skimp on the safety of their own workers."

This expert, however, overestimated the conscientiousness of Mechel’s managers. In March of 2010, there was an explosion in one of Mechel-Koks facilities, and then a fire. People died. A commission established by Rostekhnadzor found that coke-oven gas, which had leaked into a tunnel of a coke-oven plant, had exploded. Workers at the facility who had carried out the planned maintenance of the gas pipeline, "did a rush job." According to the commission, the managers and specialists at Mechel-Koks did not have enough control over the technical operations and did a poor job of organizing the manufacturing work.

They did not devote sufficient attention to industrial safety at the Mechel enterprises in the Kemerovo region. The South-Siberian office of Rostekhnadzor found more than 1,000 violations of rules and regulations during a series of inspections. The inspectors discovered that the proper work procedures were not followed and the design documentation was ignored during mining operations.  They found that underground fires were not effectively controlled and the equipment was not properly maintained. Rostekhnadzor claims that the miners used physically worn-out equipment, that was past its service life. 

This is the dangerous state of affairs at the Southern Kuzbass State Regional Power Plant, where the equipment has not been renovated in over 50 years. Making improvements in this power plant, so that it is in a safe, working condition, will require huge amounts of money, but there are currently no plans to modernize it, since electricity consumption in Kuzbass is declining. Mechel’s business plans calls for investment in completely different assets - in April of 2010, the company announced that it was purchasing the Laminorul SA steel plant in Romania, and in July they acquired the Turkish steel trading group Ramateks. This new capacity promised additional income for Mechel, which eclipsed any arguments about whether power plants were dangerous things, where a big accident could be very expensive for the entire region. Mechel’s managers respond to these arguments by saying that there has not been a single court decision to suspend the holding company’s operations.

Aleksandr Grazhdankin, an employee of the private company "The Scientific and Technical Research Center on the Problems of Industrial Safety," notes that under current Russian law, regional courts are the ones responsible for deciding to suspend work at dangerous facilities and that these courts are dependent on the surrounding corrupt economy. In addition, this expert claims that the legal arm of Rostekhnadzor is fairly weak, which is why Mechel got the court decisions they wanted. Thus, Aleksandr Grazhdankin has no illusions about stopping the illegal construction at the oxygen-converter facility at the Chelyabinsk iron and steel works.

The business doesn’t even find it necessary to invent a more or less plausible reason why they began the construction of dangerous facilities without a state inspection. Simply saying that the consultation procedure with the regulatory agencies over the design documentation is too long and complicated is not a convincing argument - all this took far longer in Soviet times but managers put up with it.

Aleksandr Grazhdankin claims that today's Russia has some of the world’s most lenient laws on industrial safety.  The requirements of American or Canadian regulations seem simply draconian in comparison. This expert is convinced that if Mechel’s management cannot prepare all the documents needed in order to undergo the inspection, it means that they are simply incompetent, or that they intend to ignore the regulations on industrial safety – and the weak, corrupt government cannot force them to obey the laws. That means there will be more blood shed at Mechel.  According to Aleksandr Grazhdankin, all the safety rules have been written in the blood of previous victims. 

Vladimir Terletsky