The first stage of polyethylene terephthalate PET plant will be commissioned in the Moscow Region

It is expected that next January-February the first stage of polyethylene terephthalate (other names polyester or PET) plant will be commissioned in the Moscow Region. Isn’t it an event? It sure is. This is an event that can rightfully become a leader for newspapers and a topical issue for TV news. There has been no new industrial facility built in the new Russia “from the scratch”. There were industrial projects that had been started back in the Soviet times, and there were “screwdriver” assembly facilities of foreign automobile concerns, as well as various carbonated water and chips production facilities. None of them could be classified as genuine industrial production. This new plant will be the first.

Although the forthcoming event has poor coverage in Federal mass media small press-releases and articles have been published in specialized national and foreign press. Some issues are still pending coverage, and to get comprehensive information on the issue we addressed our request for an interview directly to Mr. Koshevoi S. Yu., Director General of ZAO SENEZH New Polymer Plant.

Please, tell us about SENEZH New Polymer Plant project. What was the role of the EUROPLAST Company in this project? The press has no unequivocal information on this matter.

The EUROPLAST Plant, a major in this industry, has always advocated import substitution in its development strategy. Over the recent five years EUROPLAST management has been informing through the press-releases of its strategic plans, and the PET production facility was one of the major projects under these plans. EUROPLAST top managers initiated the project and encouraged investment organizers to realize the individual project connected with construction of SENEZH Plant in Russia. In April 2004 MDM Bank and COMMERZ BANK AG signed an agreement to invest in construction of the plant, and later in October the project was approved at the meeting of the Moscow Region Government.

Three years of various approvals and authorizations preceded this event. For our production we use the state-of-the-art technology and unique equipment that has no analogues in Russia as well as in the rest of the world. Apart from being extremely time consuming and laborious business, issue of necessary permits and approvals for the project took much more time than usual. Our bureaucratic system – it’s something! Just for fun we’ve tried to make the count and found out that over 280 signatures of various officials of every breed had to be obtained for this project… That’s what the experience of EUROPLAST experts was used for to the best. That was the role.

What is the inauguration date for the project and what is the working capacity of the SENEZH Plant?

We’ve installed and assembled necessary equipment. Soon we are planning to commence start-up and adjustment work to continue for one-two months. Tentatively, commissioning is scheduled for late January 2006. Unlike the builders in the past years we have nobody to set the terms for us – be it the First of May or the anniversary date of the militiamen beating the Polish troops. The quality of the construction work is the sole concern for us.

Production capacity of the first stage of the plant will make 90 thousand tons annually. Although, considering the market situation and our own potential as early as at the SENEZH Plant project development phase it was resolved to increase the production capacity. Preparatory work and development of infrastructure for the second stage has begun this May and is nearing completion now. Next spring we shall invite bids of engineering and machine building companies for supply of equipment. Tentatively, the second stage will start production early in 2008. Then, the total production capacity of the SENEZH Plant will reach 180 thousand tons annually.

You will have to compete with such foreign companies as Shell, BP or Dow. You are going to compete with them in quality, aren’t you?

We shall outdo them in quality! Investors would not invest such big money without a careful study of the project. We’ve traveled across the world studying similar plants in operation. We’ve made thorough research, including lab and pilot plants studies. Now, think, we all have the same raw material, while our plant is the world newest. By the way, a Korean brand, one of the most popular among Russian consumers, is produced at the plant that is 10 years old. The third element is the personnel, the specialists who will operate this world’s best equipment. Believe me, selection was the toughest, like for the Olympics. I may guarantee that in terms of quality ROSPET (that’s the name of the plant’s produce) will successfully compete with the Asian and the European products.

Well, now about specialists. There exists an opinion that there is a lack of qualified personnel in Russia, especially in the sphere of new technologies. Are you satisfied with the qualifications of the university graduates? How have you solved this problem?

Unfortunately, school graduates have no idea of the modern chemical production. The public has a stereotype of the petrochemical industry as something associated with smoke, soot and offensive smell. Modern technologies destroy this stereotype. What are the sources the young people use to make the idea of this or that trade? This can be the family with several generations engaged in the same trade or TV broadcasts. Today, though TV deals mostly with such things as “becoming a singer” or “joining a “Gang”. A graduate is not that stupid and he or she goes to the sphere that is assumed to offer more money and benefits in the future – today there are too many willing to become a manager or a lawyer upon graduating from the university. But such choice is nothing but assumption. The country has too many managers, enough and to share. The laws of the market say that soon manager qualification will not be in deficit. Generally, university students for our profession do not come from Moscow or Moscow region. These are mainly young people from the traditional centers of petrochemical industry – the Volga region and Siberia. So, we had to take the burden of training, re-training and developing necessary living standards for the personnel. Along with a handsome salary we offer a hostel facility for all personnel. In the nearest future are planning to build a multi-storey apartment house for the personnel and their families. Key specialists of the plant have additional training in Switzerland and Germany.

I think that the shortcoming of the modern higher school is that the officials of educational institutions have poor contacts with the enterprises operating in respective industry. We had to screen the auditoria ourselves looking for promising young specialists.

Is a new surge in PET consumption possible? How do you see this market development prospects?

Currently, PET market is growing more slowly than previously, up to 5% annually. We assume that import substitution can be quite promising. We have quite good standing for the start – a friendly target market represented by the EUROPLAST Association member-enterprises. These are nine plants that have tough requirements applicable to the quality of purchased raw material.

Your produce is designed for manufacturers of plastic packing. On the other hand, PET as poly ester is also widely used in the textile industry. Is conversion to production of textile raw material possible at your plant?

The technology used by SENEZH offers such opportunity. Our equipment can produce bottle-grade as well as textile PET granules to be further processed into synthetic fiber, commonly known as polyester.

Unfortunately, today Russian textile industry is all but destroyed, and the main suppliers of textiles are China, Turkey and other Asian countries. The whole cities once developed as textile centers have no jobs. These cities have long history of their own, traditions and qualified labor potential. In the environment of the so-called open market the enterprises of these cities can not compete with cheap Asian imports. Neither can the European manufacturers. Foreign press is full headlines urging anti-dumping duties and regulation of China textile imports to Europe. Look at our Government - swords drawn, and go, go – to joint the WTO. In respect of the textile industry and some other industries Russia has to pursue the policy of protectionism. This is the only way to make the utmost use of our major resource. I’m not speaking of oil or gas; I mean the human labor, the inexhaustible resource of any nation.

On my part I want you to believe that as soon as our textile industry has any prospects of growth we’ll increase our production capacity and support development of this industry. We guarantee that prices will be lower than for bottle-grade PET. Dear textile workers, you may cut this article out, keep and produce it to me to have a pretty good discount. I’m quite serious about it.