Civitas successit barbarum
Civilization succeeds barbarism
In the early 90s the Russian aluminium industry was in a tight spot. Hyperinflation along with the elimination of the budget financing halted the smelters’ operations, while the collapse of the Soviet was forced to cut aluminium consumption by almost nine times. The only way for the Russian aluminium industry to tackle the crisis was to shift its focus towards the export markets.
British Trans World Group, which in the first half of the 90s gained control over the major part of the aluminium operations in Russia, successfully campaigned to introduce an infamous tolling system in the country. The scheme involved a tax-free regime for both raw materials import and aluminium export. The arrangement fuelled the owners’ profits, yet limited the operations expansion.
1993 was marked with the start of the Russian aluminium industry privatization. At the same time the industry became a target for organized crime groups, which were attracted by the lucrative profits, driven by the tolling system. At first, the criminals established control over the seaports, forcing companies to pay «duties» for export deliveries. Apparently, this wasn’t enough as the criminals also began stealing aluminium from the smelters.
It wasn’t too long before the crime groups took an interest in the plants’ shareholder capital. In their efforts to grasp control over the industry, the criminals were blackmailing, intimidating and murdering those who were unwilling to cooperate with them.
Yet, in spite of the chaos that dominated the country at the time, in the mid-1990s the industry started to emerge back to life. Oleg Deripaska, then the owner of the Sayanogorsk aluminium smelter, soon Aluminium group, owned by Mr Deripaska, grew into a large vertically integrated company with substantial production capacity and its own sales network.
In the late 90s the crime boom in Russia started to fade away due to the strong concentrated efforts of the Russian government. In 2000 the tolling system was revoked and replaced by the export duties civilized path and its disparate assets started to get consolidated.