12.6 mln. tons of blast furnace slag, against 20.5 mln. tons in 1990, a
7.9 mln.-ton reduction;

5.2 mln. tons of steel smelting slag, against 7.4 mln. tons in 1990, a
2.2 mln.-ton reduction.

That gives a sum total of 17.8 mln. tons compared to 27.8
mln. tons in 1990. Meanwhile, recycling of those wastes amounted to:

5.7 mln. tons of blast furnace slag, i.e. 45.2% of the total emerged,
against 115.2% back in 1990;

1.6m tons of steel smelting slag, i.e. 30.6% of the total, against 107%
in 1990.

The remaining slag, i.e. around 10.5 mln. tons, was dumped.

So, the compulsory executive approach yields poor results,
and alternative ways should be found, e.g. incentives. This gives primary importance to
granting of legal, technological and investment incentives to those who recycle waste and
consume the recycled goods. The authorities frequently impose unreasoned compulsory
requirements in this area. Pursuant to the Order for Pollution and Waste Charge (refer to
Regulation No.303 of the Cabinet of Ministers of Ukraine of March 1, 1999), waste should
be placed on special grounds that protect the air and water from pollution and
contamination. Should this condition be met, no charge is applied to placement of wastes,
but the land tax that is paid separately. If storage of waste and recycled materials
leaves an opportunity for such pollution, tripled charges are levied, with extra air and
water pollution charges being applied. This is a key paradox that shows that the approach
to such charges should be altered fundamentally. It appears expedient to use a
differentiated approach, e.g. levy a charge on deposition of waste and exempt recycled
resources and products. Without doubt that storage, ageing or transportation of the latter
shall not pollute the environment.

Here is another example to the issue. In its attempt to
integrate into the global community, Ukraine acceded to the Basel Convention for Control
over Cross-border Transportation of Dangerous Waste. By mistake or else, metallurgical
slag and granulated slug were been listed as dangerous waste. Therefore, in order to
export those wastes, one had to perform 15 registration procedures provided for in
Regulation No.1016 of the Cabinet of Ministers, dated September 12, 1997. In addition,
ecological charge was levied on export of those waste at checkpoints (in compliance with
Cabinet’s Regulation No.1034, 16/06/1999). As a consequence, Ukraine had been losing its
traditional markets for those products, especially in Russia, while the State had been
losing revenues. The Ukrainian Association of Ferrous Metallurgical Enterprises (UAFME)
took decisive measures and persuaded the Cabinet to issue another Regulation (No.1120,
July 13, 2000) that moved granulated slag and iron and steel smelting slag into the green,
i.e. non-dangerous, list. Upon similar address of UAFME, the Ministry of Transport lowered
railway freightage fare as regards conveyance of slag and products, reducing the effective
rates by 0.614.

Apparently, the State has realized that the unilateral
compulsory approach has no future and attempted alternative ways. For instance, the
Cabinet’s Regulation No.1197, dated August 8, 2000, defined a list of recycled materials
that are exempt from income tax and VAT. Unfortunately, this list includes none of
metallurgical waste, despite a petition submitted by UAFME and its Secondary Resources
Department. The head of the Environmental Department of executive authorities has clearly
stated his attitude toward this issue as regards Mariupol-based integrated mills. Notably,
he ruled that Ilyich Iron and Steel Works and Azovstal should suspend their recycling
efforts, pay redundancies and plant firs on the huge waste dumps. So, if metalmakers can
make no use of incentives and benefits provided for in the Law “On waste”, it is
highly doubtful that the Law should apply to metallurgical mills as it brings nothing but
fines and penalties. Meanwhile, tax incentives granted for other waste shall bring
excellent results, e.g. recycling of paper shall rise to 100 ths. tons per annum, while
VAT revenues may bring extra UAH 0.5 mln. and income tax some additional UAH 1.55 mln.

Thus, the executive directors of UAFME give a priority to
introduction of incentives in the metallurgical waste recycling business, especially in
the view of exceptional results of the economic experiment under way in the iron and steel
industry. To achieve this objective, UAFME holds consultations with relevant Standing
Committee of the Parliament, making proposals as regards introduction of and amendments to
the following laws:

to define the term of “waste” in article 1 of the Law “On waste”
as “any materials or items produced by human activity and rejected as useless”;

to make amendments to article 4 of the Law, thus exempting the process of
recycling and transactions with recycled metallurgical waste from provisions of this Law;

to give tax and financial incentives to waste recycling companies (per
provisions of article 40), should such companies spend the resulting revenues to acquire
waste. This shall revive the activities in this direction under condition of low consumer
demand for waste.

However, no demand may lead to overstocking with goods made
of recycled waste. That means that wages should be increased to raise the share of wages
and salaries in the GDP and make the population spend more. Meanwhile, the non-payment
crisis in Ukraine shows that the country desperately lacks cash.

If there is no market for recycled materials and products,
there would be hardly any effect in capital investment in, say, construction of recycling
facilities. For examples, the crushing and sorting machinery acquired by certain Ukrainian
companies has failed to settle the issue of complex recycling of slag waste. Therefore,
sales of mineral components of slag waste are the burning issue of the day, and UAFME
proposes certain steps that consider all the current market conditions.

So, the Ministry of Economy should make greater efforts to
co-ordinate business activity on this market segment, along with making consolidated
efforts to balance up production and realization of recycled waste. As long as recycling
is an important element of the national executive policy, the Cabinet of Ministers or the
Ministry of Economy should contribute their efforts to waste recycling. Only the
co-ordinated and effective steps of all participants will bring success and prevent
environmental disasters.

OPINION

Industrial waste and protection of land

released by information & analytical center of
Zaporozhstal

At the moment, Zaporozhstal fully recycles the following
waste:

hearth cinder, 73.7 ths. tons;

blast-furnace dust, 125 ths. tons;

rolling scale, 58.9 ths. tons;

iron-bearing sludge coming from blast furnaces, open hearths and
sintering machinery, 142.2 ths. tons.

A significant portion of waste, e.g. casting sludge, burnt
land, neutralized sludge, is not made use of due to absence of active market and high cost
of transportation.

To settle the issue, Zaporozhstal takes the following
steps:

searches for markets for blast furnace and steel smelting slag;

boosts slag recycling capacities;

applies neutralized sludge in blast furnace and open hearth shops;

makes greater use of waste clay, sand and burnt land to make construction
materials;

applies waste wood to make parquet and fiberboard.

The integrated mill owns several waste grounds. The largest
waste ground of Srednyaya received 607,684.5 tons of waste in 2000. A recycling technology
with respect to waste metal scrap is applied at the waste ground. Old blast furnace slag
is made use of; namely large chunks of metal scrap are extracted and recycled, while
metal-bearing materials are fractionated by magnetic separation in the crushing unit.
Currently, Zaporozhstal seeks statutory permission to make wider use of Srednyaya waste
ground.

From Mariupol to Vladivostok

released by press service of Azovstal

Azovstal’s Perspectiva plant can use its bricks to pave
an 8.5-meter wide road stretching from Mariupol to Vladivostok.

The management of Azovstal made first use of metallurgical
waste as materials for building bricks back in 1991, during expansion of the integrated
mill’s lines of business. On February 28, 1991, the mill registered Perspectiva
enterprise, co-owned with Donetsk’s Progress co-operative.

Since the very first years of its existence, Perspectiva
Brickyard has been making pattern paving elements, concrete and reinforced concrete goods,
packaging finished goods. In 1996, the brickyard commenced manufacturing commercial mortar
and concrete-forming goods making use of German machinery.

Since 1998, Perspectiva has been making ornamental paving
elements that meet high demand on the market. Khreschatik – the main street of
Ukraine’s capital Kiev – and some other streets and squares of the nation’s capital
are lined with elements produced by the brickyard. Overall, the company has made 34 mln.
pieces of pressed items over the nine years of its existence, which is enough to pave a
wide road stretching from Mariupol to Vladivostok.