Kazakhstan is ready to help ENRC, Kazakhmys, Kazzinc in crisis conditions

/REUTERS, Astana, Raushan Nurshaeva, Maria Gordeeva, October 28, 08/ - The authorities in Kazakhstan believe that the world economic crisis affect the performance of three major producers of steel products and are ready to help by making changes in management and providing financial support. However, not all the company's outlook is shared by the government. On future challenges in the metallurgical industry the Minister of Industry and Trade of Kazakhstan Vladimir Shkolnik told on a government meeting on Tuesday. According to him, Kazakhmys halts a number of industries, and mining and metallurgical holding company Eurasian Natural Resources Corp Plc and the largest producer of zinc company Kazzink could reduce the 2008 production. "The sharp fall in prices on non-ferrous metals world markets is forcing Kazakhmys take a series of temporary measures to halt some production units and re-up, while the corporation does not intend to reduce the number of staff - said the Minister on Tuesday during a meeting of government. The State owns a minority share in ENRC and Kazakhmys. Directly Kazakhmys has still 25.02 % stake in holding ENRC, which brings together several steel companies, including Kazchrome, Aluminum of Kazakhstan, Kazakhstan Aluminum Plant, Zhayremsky GOK, SSGPO, Eurasian Power Corporation. KAZAKHMYS EXPECTATIONS AND ENRC PLANS The head of Kazakhstan unit of Kazakhmys Eduard Ohio said that the company does not intend to reduce the volume of industrial production in 2008. "We have no plans on declining in production this year as well as further the market will behave, and will plan. We hope that as well and will stay at these volumes," - he said. Kazakhmys is the world's ten largest copper producers. It produces reined copper, non-ferrous and precious metals and engaged in coal mining. "According to the Ministry, there is possibility on deterioration of situation till the end of the year. Output at all ENRC subsidiaries will be reduced" - Shkolnik said. ENRC announced in August on waiting good results in the second half of 2008. However the company doesn't exclude that revenues will be under the pressure next year also, especially in major subdivisions. At the end of the day ENRC admitted the information on decreasing production volumes at the end of 2008. "We reduced production of iron ore for the Q4 and expect the whole production volume over the year will be lower than that of 2007 - the representative of the company telephoned from London. - We expect ferro alloys production to be at the level of that of 2007, excluding Serovskiy plant". Metallurgic group ENRC is the major ferrochrome producer worldwide. The company also produces alumina and aluminum. According to the Ministry of Industry, Kazzinc, Kazakhstan zinc producer shouldn't expect good time - which is also suffered from world price fall. "While further price decreasing on metals to 40-45 % from the forecast ones, the company will be forced to full or partial suspensions of production, as received yields wount cover the current expenditures" - Shkolnik said about Kazzinc. The company was available for comments. GOVERNMENT IS READY TO HELP Shkolnik said that the government intends to help mining industry in crisis and can provide government support "in money squeeze conditions". Kazakhmys announced that it is not required help yet. "We are not required yet. And I think, I hope won't require. The situation still allows living decent" - Ohio said. The Minister of Industry promised metallurgists-exporters easing in transfer pricing issue. The new law provides published in sources prices as a market price and doesn't admit any frictions. Shkolnik offered to include changes in the law and admit the price in the contract with final consumer as a market one. "The law on transfer pricing this time should consider the situation when demand and prices on the market are not stable and change almost every day...We suggestЕ, to set flexible, considered and even approaches while determining the market price during instability" - he said. "Except these systematic measures we should accept stabilization activity on every large enterprise of ore mining and mining industry" the Minister added. Authorities when prices on majority of aluminum plant had fallen lower than expenses will abolish export tax on aluminum. Taxes should be effective since the beginning of 2009. Besides, the government will examine the possibility of "stabilization of railway tariffs during instability on world markets". Metallurgists approved the steps, made by the authorities. "I think it is a well-timed and right support...for mining companies" - Ohio said. [2008-10-29]