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By John Helmer in Moscow

Russian miners’ union confident of gaining strike demands as Rusal postpones legal action.

Striking bauxite miners at the Rusal-owned Severuralsk mine, in central Russia, have called off their occupation of one of the mine shafts, on signs that Rusal is ready to make wage, welfare, and other labour contract concessions.

A spokesman for the striking miners, Oksana Sgibneva, told Mineweb that a court hearing, convened last Friday on Rusal’s move to call in police and marshals, was postponed until April 8. “Everything now depends,” she said, “on the condition of the case.”

Severuralsk (“North Ural Bauxite Mining Company”, Russian acronym SUBR ) operates five shafts, and all have been shut down since the day after miners at the Red Riding Hood mine refused to come to the surface, when their shift had ended on March 26. The miners then circulated a list of 11 demands. Rusal warned that the strike was illegal, and promised court action to put an end to the occupation.

This ended at the start of the weekend, when an all-night negotiating session between managers and the underground miners agreed on a temporary negotiating document. In exchange for returning to the surface, the miners secured Rusal’s undertaking to open formal negotiations on the 11 demands, starting today. The union spokesman told Mineweb “work is still suspended at all 5 mines. At the moment, a working group [for negotiations] has been created. It includes representatives of strikers from both unions, representatives of Rusal, and the managing director of SUBR. Rusal has already announced that it is ready for negotiations.”

Rusal has yet to acknowledge the strike on the company website, and Rusal’s spokesman refuses to respond to questions from Mineweb. Instead, the company sent out a selectively addressed email, claiming that work at the Red Riding Hood mine and the four others at SUBR is planned to resume soon.

Union sources say they do not expect to get agreement from the management for the full 50% of salary increase they demanded ten days ago. However, they are confident of gaining between 20% and 30%. In addition, a demand for Rusal to restore company funding of sanatorium and recreational programmes, which were cancelled on January 1, has already been accepted. “At the last round of meetings,” Sgibneva said, “Rusal announced that, because aluminium prices have gone up on the world market, they were intending to revive the social programmes by themselves.”

The Severuralsk strike is the first by unionized workers against the powerful aluminium group, controlled by Oleg Deripaska. Workers at other Rusal plants, such as the Krasnoyarsk smelter, have complained at payroll cuts and elimination of the welfare programmes that were a traditional part of the production plant’s obligation to its workers during the Soviet period. Strike action has been rare, however; and an effective strike rarer still.

One reason in this case is that the Independent Union of Miners, which appears to have initiated the wildcat action, has drawn solidarity from the other unions at the mine, and from the local town. News of the strike has also spread across Russia on television, prompting considerable sympathy for the wage claims, and little for Deripaska, who is reported to be first or second among Russia’s wealthiest oligarchs.

The economics of the strike appear also to have weighed with Rusal. Severuralsk produces about 3.5 million tonnes of bauxite per year, or 20% of Rusal’s global bauxite total. Inside Russia, it is the second most important supplier of bauxite to the Rusal smelters. The 10-day halt to production already accounts for more than 96,000 tonnes of bauxite. This is equivalent to the production of almost 24,000 tonnes of primary aluminium. At the prevailing LME fix, this is worth more than $68 million to the privately owned Rusal. The longer the stop-work continues, the more expensive it becomes for Rusal.

By contrast, the wage and welfare demands sought for the 3,000 miners of Severuralsk, if granted by Rusal this week, stand to cost the company less than $20 million for this year.

Despite boom conditions in the domestic Russian economy, and significant growth reported in average real income this year to date, there remain substantial lags for wage earners in pockets of the economy, moving east of Moscow and St.Petersburg, and outside the oil, gas and steel sectors. By contrast, independent measurement of spot prices for bauxite, alumina, and aluminium (in the international market) suggest that bauxite has grown in price by 20% since 2003; alumina by 63%; and aluminium by more than 200%.

Keeping the lid on the bauxite price has been a key Rusal objective, but without auditied published financial data it is not clear how it has been able to do this in Russia. In the two cost breakdowns Rusal has published — one in February 2000, and a second in June 2007 — bauxite is reported to amount to 43% of the cost of alumina production; labour cost just 6%. In the cost of aluminium, Rusal has estimated that 46% is accounted for by alumina, while labour comprises between 6% and 9%.

Electricity is significantly cheaper in the Russian aluminium production cycle, compared to the international average, and Russian labour is also relatively cheaper.

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