Dear colleagues,

 You are about to begin reading the Association “RusChlor” performance report summing up its achievements and setbacks over the past year and this year’s first quarter.

Let’s start from brushing up a few suggestive macroeconomic facts and numbers. The Russian Chlor-akali industry’s facilities had been steadily functioning at the capacity utilization rate's averaging out at above the level of 80% for the reporting period in the first place.

Compared to the data of the year 2017, the industrial production index amounted to 102.7% for the Russian chemical industry last year, which falls in between the 102.9 percent’s worth of the last year’s overall industrial production index value and the 102.6 percent’s worth of the index shown by the whole Russian manufacturing industry last year.

The good news is that the chlor-alkali sector has turned out to be performing even better than the whole chemical industry for the reporting period.

In so doing the output had risen by 3.3% and more than 6%  in the caustic soda and PVC production respectively for the reporting period compared to the analogous figures as of the year of 2017.

The commodity chlorine output amounted to only 92243 metric tons last year though, which falls short of the previous year’s analogous parameter by 7% The consumption of the commodity chlorine had also dropped by 11% for the reporting period.

There are still slightly rising the prices for the products of the chlor-alkali subindustry in the Russian Federation.

The annual output of PVC has amounted to more than 950 000 metric tons of the product for the year 2018, which exceeds the analogous parameter of the previous year by more than 6%. It is worth noticing in this connection that in so doing all the Russian producers of PVC have raised the production rate.

At the same time the domestic consumption of PVC has risen very little in the Russian Federation.

S-PVC accounts for the major part of the domestic demand on PVC while the annual amount of the domestically processed S-PVC have been staying at the level of approximately 800 or 1000 thousand metric tons a year for the last three years in a row including the year 2018. Therefore, the import of PVC is still functioning as a major regulator at the domestic market.

If the Russian PVC-makers operated in a balanced and troubled-free manner, the domestic demand for S-PVC could be almost fully satisfied by the Russian producers. This is why the overall amount of the S-PVC imported into the Russian Federation during the period spanning the years of 2017 and 2018 had fallen for the first time in recent years while the same product's export from the Russian Federation had been indeed rising.

As to the domestic market of the emulsion PVC, its behavior is directly driven by the state of this product’s import into the Russian Federation, which situation has been stubbornly resistant to changes for a number of years. The E-PVC has been produced at the only chlor-alkali facility in the Russian Federation. The facility is both owned and operated by JSC “RVL” (RusVinyl). The plant’s annual production capacity amounts to only 30 thousand metric tons a year in the E-PVC.

There is currently widely expected a rise in the consumption figures of the E-PVC in the Russian Federation. The expectation is mostly accounted for by a rise in the production of the subfloor materials and wallpaper. All in all, if there are not erected any new production facilities in the Russian Federation, the reliance on import will be here to stay for a long time.

It is particularly worth mentioning the following all-industry problems out of all those tackled by Association “RusChlor” last year:

1. NORMATIVE-TECHNICAL REGULATION

Association “RusChlor” considers it of a key-importance that RusChlor should participate in works on improvement in the field of statutory and regulatory Modalities. That line of activity has become even more important since the President and Prime Minister of the Russian Federation announced late last year that there would be performed a reform in the field of State control and supervision. The reform has been said to involve the so called “regulatory guillotine” initiative so that there should be totally overhauled all the currently enforced system of obligatory norms and rules so as to lessen the burden currently shouldered by the private businesses subject to obligatory taking into consideration all the grave risks such as the ones of loss of life, damage to health etc. The most intriguing feature of the reform being considered is though that it is said to be performed in just a year and a half.

Needless to say that the reform will inevitably impact on the Russian chlor-alkali industry. Suffice it to say in this connection that the industry is routinely manufacturing, storing, and transporting a few millions of tons of highly toxic substances a year. Therefore, the Russian chlor-alkali industry desperately needs modern, unequivocal, matter-of-fact, harmonized rules to rely on in governing the handling of chlorine and its derivatives.

It is worth noticing in this connection that regulation “Safety Rules for Production of Chlorine and Chlorine-containing Substances” an integral part of code "Federal Rules and Regulations for Industrial Safety” is still used to being considered the backbone standard in the field of technical regulation of the chlor-alkali industry even though it is being regularly revised by the State Regulator i. e., Federal Service for Ecological, Technological, and Nuclear Supervision of the Russian Federation (ROSTEKHNADZOR).  In so doing a radically updated version of Safety Rules was first approved by the government in 2013 and then came into the legal force in 2014. There was included for the first time ever into the renewed Safety Rules a principally new paragraph aimed to impose the safety requirements on the processes of production and use of the sodium hypochlorite. As to the sodium hypochlorite’s commercial turnaround, it is currently measured in hundreds of thousands of tons while steadily rising in the Russian Federation.

There were again introduced a few changes into the Safety Rules at the request of the industry in 2017.

When participating in a session of the Science and Engineering Board (SEB) of Federal Service for Ecological, Technological, and Nuclear Supervision of the Russian Federation (ROSTEKHNADZOR) in 2018 Association “RusChlor” offered for consideration of SEB a few considerations on further bettering of the Safety Rules. In particular, the RusChlor experts featured the necessity to radically reduce requirements on the technological processes arguing that there could simultaneously exist so many equally reasonable engineering solutions that it would make it impossible to name them all in the Safety Rules not even speaking of that such a listing would not fall within the standard’s mission’s scope. RusChlor further suggested that the emphasize should be switched to the imposition of requirements on the results of the technological process instead. Therefore, RusChlor is in fact already implementing the abovementioned “regulatory guillotine”.

Let me now brief you on cooperation of RusChlor with Federal Agency for Technical Regulation and Metrology (ROSSTANDART).

RusChlor is a member in the Agency’s Technical Standards Board No. 60 (TK 60 “Chemistry”). Unfortunately, when working under TK60, instead of developing new better standards RusChlor had to devote all its efforts last year to the task of suspending GOST R575568 “Aqueous Solution of Sodium Hypochlorite” from the legal force in which it was introduced on February 02, 2018. The point is that the aforementioned notorious GOST was developed without any participation of either any members in TK60 or RusChlor or even any representatives of the chlor-alkali industry.

The GOST that RusChlor is now vehemently opposing to has never been agreed by the industry in any form whatsoever, which possibly accounts for the many wanton mistakes' having been imbedded into its text not even speaking of minor inaccuracies. All the above considered, the government has initiated at the joint initiative of RusChlor and the industry the formal procedure under which the GOST in question is to be suspended from the legal force so that the GOST should be further corrected and approved by all the sides concerned.

2. EQUIPMENT CERTIFICATION

 The issue of certification of the equipment, instruments, and measurement devices that are supposed to be functioning at the hazardous productive facilities is of a great importance. It is still a common memory that until recently there has been allowed to operate at such facilities only the equipment, instruments, or measurement devices that had been formally authorized by Federal Service for Ecological, Technological, and Nuclear Supervision of the Russian Federation (ROSTEKHNADZOR) to be operated there. Unfortunately, in abandoning the said procedure of applying for and obtaining the operational permits from the State Regulator the procedure's key element i. e., expert examination as to the compliance of the technical devices with the relevant standards and requirements specified by the Regulations of Federal Service for Ecological, Technological, and Nuclear Supervision of the Russian Federation (ROSTEKHNADZOR) has been also made unnecessary, which has impacted the safety of the production facilities adversely. Suffice it to say in this connection that nowadays it would only take one to have only a certificate of compliance or declaration of conformity for a piece of equipment to have the right to lawfully operate the equipment at the hazardous production facility. In so doing both the certificate and declaration would be developed taking into consideration the requirements of only GOSTs. Any analysis for compliance of the equipment with any requirements specified by any Rules of the State Regulator or any other piece of the former legislation has been deemed irrelevant.

This is why Association “RusChlor” has been running a so called “voluntary certification system” for a few recent years in a row so that a piece of equipment or device could be checked under the system against the possibility for the piece of equipment or device to safely function at the chlor-alkali facilities. The system has been officially registered by Federal Agency for Standardization and Metrology under the codename "RusChlorCert” along with a few analogous systems run by such giant companies as OJSC "Gazprom", LLC "Atomprom", LLC "Neftehimprom", OJSC "AK 'Transneft", LLC "Fuel and Energy Company" etc. The point here is that having realized the adverse impact of the abandonment of the former operational permit legislation on the technological safety of their production facilities these companies have started emphasizing to the equipment vendors the companies’ desire that the vendors should  supply them with only the equipment that is certified under the corresponding system of voluntary certification. As to the chlor-alkali industry, among the types of the equipment that is of a key importance one should in the first place name electrolysers, dryer towers, stop and safety valves, warning devices, level gauges, flow meters, burner plants, capacitive equipment.

The most recent certificate has been issued under system “RusChlorCert" for chlorine tank-container T-50 of series TCW – 1-1,7-1, which makes up a turning point in practice of both transportation and logistics of chlorine because until now the liquid chlorine has never been transported in the Russian Federation with the use of tank-containers. With this in mind RusChlor is also in parallel developing suggestions about the changes that should be made to the National Standards so that they would adequately govern the use of the new type of the movable chlorine containers.

3. industrial production of chlorine and its derivatives

The formidable task that the Russian chlor-alkali industry has been facing for a number of recent years is to both modernize the industry’s  already functioning facilities and erect a few new modern ones.

Association “RusChlor” is a member in the Management Committee of the World Chlorine Council (WCC).  World Chlorine Council is in its turn an umbrella union of all the noticeable manufacturers of chlorine from all over the world spanning both Americas, Europe, Asia and Africa. Its membership in WCC provides RusChlor with an access to the experience gathered by the rich countries in developing their chlor-alkali industries, which makes it possible for RusChlor to soundly assessing the pros and cons of various electrochemical technologies offered by modern manufacturers of electrolyzers and other key equipment designed for the chlor-alkali industry.

It is worth noticing in this connection that almost all the Russian chlor-alkali facilities have already developed modernization plans in regard to the diaphragm electrolysis techniques. By the same token all the Russian facilities where there is still run the mercury cathode electrolysis technique there have long developed sophisticated, thorough, and detailed plans for conversion which in turn has become an even more acute a problem compared to the modernization of the diaphragm electrolysis owing to the Minamata Convention.

Naturally, Association “RusChlor” has ever been sparing no efforts in facilitating those works of the facilities at their request. Needless to say that in so doing we are used to leaning heavily on the Western experience especially in advising the facilities on what choice they should or should not make in purchasing the technologies and equipment.  In consulting the Russian chlor-alkali facilities about the relevant technologies and equipment we always try to emphasize to them the differences existing in the requirements that are currently imposed on the design, project, and accompanying documents in Russia and abroad.

 The point is that these differences are worth taking into account as early as at the stage of signing the engineering and procurement contracts because it will otherwise turn out too costly and difficult for the facility to correct both the engineering solutions and accompanying documents on the plant’s own.

As to the aforementioned mercury cathode and diaphragm electrolysis technologies, as of now Russian LLC “Chemical machinery Works ‘ZARYA” and Italian “Dе Nora Italy S.r.l.” have turned out most successful at performing the modernization projects at the Russian market.

The number of the chlor-alkali plants that are operating only the membrane electrolysis technology in the Russian Federation has recently amounted to 7. Here are the plants' names:

JSC “Sayanskkhimplast”, Sayansk, the Russian Federation;

LLC “RusVinyl”, Kstovo, the Russian Federation;

LLC “Soda-Khlorat”, Berezniki, the Russian Federation;

LLC “Novomoskovskiy Khlopr”, Novomoskovsk, the Russian Federation;

JSC “WTE SÜD-OST”, Moscow, the Russian Federation;

LLC “Skoropuskovskij Sintez", Sergiev Posad, the Moscow Region, the Russian Federation;

LLC “Sevkhimprom", Sebastopol, Republic Crimea, the Russian Federation.

As a matter of fact, each of the abovelisted plants is unique in the combination of that plant’s electrolyzers’ manufacturer and vendor identities. Therefore, it normally takes a long time to repair any of those electrolyzers as the repair involves dispatching the electrolyzer to the manufacturer’s facility.

This is why Association “RusChlor” at the request of the plants is now looking for ways to somehow optimize the procedure currently followed in repairing the Membrane Electrode Assemblies. Unfortunately, the latest talks conducted by Association “RusChlor” and Irkutsk company “Hyprochlor” Ltd., on the one hand, and Italian company “De Nora”, on the other hand, has shown with absolute clarity that “De Nora” rules out for at least the time being any possibility for it to raise in the Russian Federation any industrial facility for performing the repair works on the electrolysis equipment including the reconditioning of the anodic coat. The Italians suggest that there should be supplied the new Membrane Electrode Assemblies to Russia from Italy instead. Parallel to courting and schmoozing “De Nora”, RusChlor has considered the experience gathered in contracting the Chinese for performing the repair works on electrolyzers including the aforementioned works on reconditioning the anodic coat. In so doing a team of experts summoned up from Association “RusChlor”, “Hyprochlor”Ltd., and LLC “Chemical machinery Works ‘ZARYA” visited the site of the facility run by the Chinese company “ANCAN TECHNOLOGY” Co. Ltd. The plant is located not far from Shanghai. The Chinese colleagues are said to be performing the repair works on the membrane electrolyzers of all the types known in the world. All in all we have managed to substantiate a few ways to cooperate with the Chinese company.

If the aforementioned Russian chlor-alkali facilities get interested in raising any repair shop at the assistance and in cooperation with the Chinese company, RusChlor will resume the corresponding communication work.

4. TRANSPORTATION OF CHLORINE

Providing for the safety in all the transportation acts of the chlor-alkali products makes up a formidable task for the industry.  The Russian chlor-alkaly industry's annual output of the basic products amounts to approximately one million tons in chlorine and a little more than that in caustic soda. All that is transported over the country mostly by rail. This is being done in compliance with the provisions of TDG Regulations (Regulations for the Transport of the Dangerous Goods by Rail) approved by the CIS Railroad Council.

Association «RusChlor” continued last year with its long-standing work with both the Ministry of Transport and Federal Railway Transport Agency (FRTA) of the Russian Federation on updating the aforementioned TDG Regulations. This time though the corrections were made to the Regulations in the course of developing “Multi-level system for monitoring and managing the transport of dangerous goods by rail using the GLONASS/ GPS/ GALLILEO systems”.

RusChlor considers the possible introduction of such a system into practice in the Russian Federation a good opportunity for the RusChlor-backed changes to be made to the currently enforced Rules for Transportation of Chlorine at the very least to the extent of abolishing the most notorious practice of sending the manned sorties on a mission to accompany the freights of chlorine and even empty tare going by rail.

It is worth noticing in this connection that in addition to its lobbying efforts, Association “RusChlor” is also taking part in the research and development work under project “Multi-level system for monitoring and managing the transport of dangerous goods by rail using the GLONASS/ GPS/ GALLILEO systems”.

In so doing RusChlor has already managed to suggest solutions for consideration on both the construction and the exact installation place for the corresponding set of the onboard equipment to be presumably mounted onto the railway tank-cars operated in transportation of chlorine and other hazmat substances.

In keeping with the work programme there have been also prepared by RusChlor suggestions already about introduction into the relevant normative documents of the changes involving abolishing the most notorious practice of sending the sorties manned by the consignor’s personnel on the missions to accompany the freights of chlorine.

Association «RusChlor” also continued last year with its long-standing work aimed at optimizing the liquid chlorine transportation processes for a variety of the transportation packing types.

Pursuant to the chlor-alkali production facilities’ request, Association “RusChlor” has looked into the possibilities of transporting chlorine as packaged in tank-containers.

In so doing RusChlor scrutinized the mechanical features of the tank-containers offered for the liquid chlorine duty by a few manufacturers from Europe, China, Byelorussia, and even South Africa. In a followup to that work, there was sequentially manufactured and certified under the supposition of their functioning in the territory of the Russian federation a trial batch of the tank-containers of series TK-50 there. There has been even performed a trial transportation of the first freight from a chlor-alkali production facility to the site of a consumer of the liquid chlorine packed into those very tank-containers in the Russian Federation.

The scientific-and-technological conferences that RusChlor organized and held in the reporting period has also made up an important line of the RusChlor’s activity. In so doing there was held in Moscow conferences “Chlorine and its Derivatives 2018” and “Chlorine and its Derivatives 2019” on correspondingly April 17 through 18, 2018 and April 09 through 10, 2019. Association “RusChlor” also participated in the last year’s annual WCC meeting held in Argentina on October 02 through 05, 2018.

You can find a somewhat more  detailed account of those events below in this report.

Sincerely yours,

Executive Director, Association "RusChlor"

Boris Yagud

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