Weekly economic review
Azerbaijan's large metallurgical company, Baku Steel Company, once again faced a lack of raw materials this year.
The volume of the raw material decreases day-by-day. The company receives nearly 400-500 tons of raw materials instead of the 1400 tons necessary for production.
For this reason, a decision was made to cease the activity of the company from 2nd July for two weeks. "The work of the company will be re-established after enough reserves are collected," the Vice President said.
During this period, reconstruction work will be carried out, which had been planned for later and employees will take a holiday on 25% of their salary.
This comes as the second cessation of activities of the plant this year. The first occurred in January for the same reason. Then the company firstly decided to stimulate the collection of raw metal and secondly, increased prices of purchase of raw metal. Depending on the quality of raw material prices of metal was set up $115 per 1 ton without VAT, whereas last year the figure was $80-100. However, this measure did not justify itself and contributed partially.
At the beginning of 2007 the volume of production at BSC made up 300,000 tons and the number of employees exceeded 2,000 people.
The production capacity of the enterprise is 350,000 tons per year.
The company regards the purchase of raw material abroad as undesirable and inefficient, because in this case prices of products will be high and it might affect the solvency. IN its turn the Government urges that Baku Steel Company should itself resole a problem with insufficiency in raw material in production. It is not the fault of Government and the company itself should go out of the situation.
This situation with BSC considerably damages the Azerbaijan in terms of tax incomes and cut in poverty, as well as insufficiency in local raw material and weakening of the country's production sector.
Unless it is possible to increase the volume of raw material supplies, the enterprise will have to cease its activities for more than a month. Whilst the production is ceased, the BSC plans to hold repair and rehabilitation work at the enterprise, which was previously scheduled for a later stage.
Meanwhile, the practical scientific conference of Azerbaijani metallurgists under the organization of the Baku Steel Company (BSC) scheduled for the second half of July has been cancelled.
The organization of such a conference is considered to be inexpedient due to difficulties in the operation of the BSC caused by lack of raw materials.