Russian mine town seeks way to survive Decades of waste have taken toll

November 10, 1993|By Kathy Lally | Kathy Lally,Moscow Bureau

NORILSK, Russia -- In this bleakest of Russian cities, 200 miles north of the Arctic Circle, a brutal past is about to confront an uncompromising future.

Josef V, Stalin made the first, most savage mistake. He sent slave workers here in 1935 to hack a city out of a frozen, supremely inhospitable landscape. Ever since, Norilsk's people have been exploited as ruthlessly as its deep deposits of nickel -- the world's richest.

A monster grew here. The factory ballooned into one of the old Soviet Union's most powerful, employing 200,000 workers in its mines, smelters and vast infrastructure. Norilsky Nickel owns it all: a port, railroad, dams, stores, hospitals, schools, apartments, buses and taxis.

The voracious, wasteful Soviet industrial machine turned out nickel and cobalt, copper and platinum without regard to cost -- human or material. Now the years of profligacy are showing.

Local residents and the nation are slowly coming to terms with the awful environmental disaster created in this city sealed off from the rest of the world until two years ago. They are beginning to understand that building a city here was madness, that the expense of maintaining it unmercifully drains away profits generated by the natural resources.

And now, when they need the factory most, when they need millions of rubles from it to restore the environment, install competitive technologies and relocate people, Norilsk's residents must come to terms with the worst. The factory is in deep financial trouble.

The problems are nearly insurmountable, said Anatoly Filatov, general director of Norilsky Nickel, but somehow they must be solved.

"If we don't find any way out, there will be only one plan -- to shut down the enterprise," he told local labor leaders at the end of October.

Looking for a way out

Mr. Filatov and the Russian government have tried to find a way out by reinventing the sprawling empire. Over the next few months, they plan to privatize it in the biggest, most complicated project since economic reforms began two years ago.

"Well, we are going to capitalism not knowing what it is or where we're going," said Mr. Filatov, "but we're going, full steam ahead."

The vast holdings are valued at 30 billion rubles, according to Alexander P. Andreyev, head of industrial privatization for Russia.

The government will control 51 percent of the shares; 25 percent will be given to workers and management will get another block. The formula to distribute the remaining shares is still under study, but with workers and pensioners, there will be 300,000 shareholders.

Norilsky Nickel owns a college in St. Petersburg, factories and mines hundreds of miles away from its home office, pensioners' apartments in distant Russian towns and resorts for its workers in the far-off Black Sea town of Sochi.

Ultimate factory town

In Norilsk, the factory is the town. Pick up the phone -- the factory runs the system. Turn on the lights -- it's the factory, once more. Buy a dress or a pound of meat -- the factory has shipped it and subsidized it.

Not only must the factory's disparate holdings now change hands; its relationship with its city and workers must undergo a profound shift. And in the real world of profit and loss, this means life in Norilsk can only become worse -- at least in the short-term.

"Most people have not paid attention to this," said Mr. Andreyev, "but we're making a revolutionary change with privatization. It's not just a change in ownership. The whole purpose of the plant will change. The workers were always told it existed to satisfy the needs of the people. Now its main aim must be to make a profit."

The plant, Mr. Filatov said, can no longer afford all the "social benefits" considered routine until now. Social benefits in Russia can mean anything from free medical care to the right to an apartment. Mr. Filatov said apartment construction would be the first to go.

Costs will be tracked, he said, and unprofitable operations will be brought to bankruptcy and new ones created with the help of outside capital. Spending will be centralized, and controls tightened.

'We'll try to survive'

"Our policy will be thus," he said. "During the fourth quarter we'll try simply to survive."

The mistakes inherited from the past, however, appear nearly impossible to undo.

The region's 250,000 people, 130,000 of whom work for Norilsky Nickel, endure the ugliest and unhealthiest of surroundings. They live under smokestacks that spew out 2.5 million tons of pollutants a year, most of it sulfur dioxide. This is the world's largest source of sulfur dioxide, and it turns into acid rain that has destroyed more than 125,000 acres of trees and polluted the air as far away as Canada.

"There is a whole cocktail of poisons in the air," says Nina Mezentseva, deputy editor of Polar Pravda, the local newspaper. "The medical experts say it's not so bad, and we try to believe them."

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