Q&A: Valeriy Kaplunat chairman of Omsk Carbon

ERJ interviewed Valeriy Kaplunat chairman of the board of directors Omsk Carbon about the company’s ambitions in the carbon black market

ERJ According to your company data - in 2013 you had 41.7 percent of the carbon black manufacturing market in Russia. How much further can the company grow its already large share of the market, and how will it achieve this?

VK We will increase our share of the carbon black manufacturing market in Russia by 10-12 percent by putting into operation new facilities at our Volgograd carbon black plant. By the end of this year, we will add another production line with the actual capacity of virtually 40 kilotonnes, bringing the overall potential capacity of the Volgograd plant to 200 kilotonnes. We expect to actually meet this production target in two years.

VK Recently, your company announced it has begun construction of aplant in Belarus - which should be ready in 2017. Any update on this project and what future plans does the company have to expand its operations?

The plant in Belarus is being constructed, and everything is on schedule. We intend to launch the first production line in December 2015 in order to start acceptance. Within another two years, we will raise the capacity of the Belarusian plant to practically 150 kilotonnes of carbon black. In the long term, a modular growth to 200 kilotonnes is planned, i.e. the entire basic infrastructure is being designed and constructed for such volumes.

ERJ Russia ranks third in terms of global carbon black production. What are the main challenges and strengths for the carbon black producers in the country?

VK The strength is obviously Russia’s rich raw materials resources, primarily from the petroleum production point of view. Russia has large oil fields, which ensures we are supplied with feedstock – petrochemical products.

Unfortunately, so far we have seen stagnation in metallurgy in terms of coke chemical feedstock, which is a derivative. Hopefully, programs for chemical processing of coal will be launched in Russia, and we will have potential in this direction as well, all the more so because Russia ranks 1st in terms of coal reserves. In this respect we see virtually no serious problems with the feedstock base – these are our strengths.

Our main challenge is the geography. We attempt to cope with long distances and logistics costs using the advantages of the manufacturing locations. Actually, our Volgograd plant was purchased for the very purpose of being closer to South East Asia, to the southern direction. Naturally, Belarus was chosen for the construction of our new plant for this very reason as well. Today it is virtually the westernmost point in the Post-Soviet zone.

ERJ   In a press release last July, Omsk Carbon Group said the situation in Ukraine has not had an impact on the market. Do you think this will change and do you think your company could ever be affected by sanctions on Russia?

VK  Yes, we really said so, but we have to admit at that time there was a little bit of bravura in that statement – it was a wishful thinking. But in the last month or two, there naturally have been some issues, mainly related to feedstock deliveries from Ukraine. But generally speaking, throughout the year 2014 there basically were no problems with carbon black sales to Ukraine and transport corridors provided by this country. Thus, economic interests still prevail, even in Ukraine. War is one thing, and economy is another thing. Still, there was some fever.

But we are ready to use additional routes. And we are now more worried about sanctions applied to Russia on the whole. However, unlike Russian companies that have been sanctioned, we do not fit any sanctions criteria; our company does not fall under that category. Should there ever be any sanctions pending, we will probably be the last company to be affected. We will be the last enclave. But I believe it will not run to that.

ERJ What are the challenges and strengths of Omsk Carbon when it comes to exporting carbon black to European markets?

VK The European market is the most demanding, the most competitive and the most science-driven. These are the challenges. Our competitors are prominent, and we have to response to these challenges by making our products fully competitive. No one will take you seriously unless increasingly stringent requirements are met. But we accept this as a dialectical aspect and try to rise to the challenges at hand.

Our strengths are in our competitiveness. More than 5 plants have been closed in Western Europe in the last year as they could not withstand the competition taking into consideration all the factors, including logistics. Opening the Belarusian plant means strengthening our positions and becoming even more competitive.

ERJ: This year is your 70th anniversary - what will the next 30 years bring?

VK (Laughing) Hopefully, we will live long enough to see the changes first hand. We want to become one of the top 5 carbon black producers. To this end we should obviously continue to improve both our technological processes and organization structure. We want to become a truly world-class company.