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Deep fall for Russian miners as trouble for industry mount

Miners and industrial workers in Russia face dismissals as companies optimize production.

Industrial companies in the country in 2013 fired more than 30 thousand workers. A significant number of them live in the Barents Region.

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Five of Russia’s leading mining and metallurgy companies last year alone dismissed close to 35000 people in a bid to optimize production and save costs. The companies Evraz, Magnitogorsk Metallurgy Company, Severstal,  the Novolipetsky Metallurgy Company and Mechel all face serious economic hardships following lower demands and raw material prices.

The job cuts are expected to continue. In an interview with newspaper Vedomosti, Severstal leader Aleksey Mordashov confirms that the ”optimization of the number of workers will continue” and that the company ”does not see any major social consequences connected with the development”. Severstal owns plants both in Murmansk Oblast and the republics of Karelia and Komi. Since 2006, the company has reduced its total number of personnel by 25 percent.

Workers at Rusal’s plant in Kandalaksha is shrinking rapidly, company representatives confirm.

And the five companies are not alone. A number of more big Russian industrial enterprises are making major staff cuts. Among them is Rusal, which in 2013 annouced plans to close four plants, one of them in the Republic of Karelia. At its plant in Kandalaksha, Murmansk Oblast, the company has over the last five years cut staff from more than 1500 to less than 900.

A similar trend is unfolding in Phosagro, the major phosphor producer, which controls the Apatit company in the Kola Peninsula. In 2013, the company reportedly started a wave of mass dismissals in Apatit which ultimately would include 3500 workers, or about one third of the total company staff in Murmansk Oblast. The company itself, however, argues that the personnel is not being fired but rather transferred to other company units, as well as granted early retirement, Murman.ru reports.

Several of the companies also struggle with major debts. Rusal alone by late 2013 owed creditors more than $10 billion. During the financial crisis of 2008-2009, the federal government granted the industrial majors solid economic support. Today, the situation is different and the companies will have to handle the crisis more by themselves.

As displayed by Patchwork Barents, the industrial companies in the Russian part of the Barents Region have over the last years struggled to uphold their production levels. With the exception of the Komi Republic, all the regions have after 2011 experienced negative industrial growth.

The same trend can be found in the Barents mining index, a regional mining overview elaborated by BarentsObserver together with Patchwork Barents. Most of the key extracting sectors in the region have over the last years experienced only minor growth.