The Asbestos Lobby in Ukraine1
The processing [and use of] asbestos in Ukraine is a primary hazard to the health of its citizens.
Without going into details, we note that the most common types of this mineral encountered – the amphiboles crocidolite and amosite, and chrysotile [an asbestiform serpentine] – are definitely carcinogenic. They are classed as carcinogens of the first degree – those most harmful to the human body. The first type of asbestos is generally forbidden for use in EU countries [banned in the late 1900s], but today [since 2000] the EU also rejects the second type [chrysotile], using environmentally-friendly asbestos substitutes in the automotive and paper industry, as well as in pipe manufacturing and construction.
In Ukraine, however, the overall picture is terrible, and not only because certain business circles are making us live with the consequences of yesterday’s technology. Just think about the number of decades that we have been using asbestos for roofing slates – you can only imagine the extent of industrial need for them and, accordingly, the volume of their production.
So there we have it, a super-profitable business with, as I will outline later, several components contributing to this super-profitability, the first of which is demand based on the use of outdated technological methods [and materials]. Who needs to invest in the latest, completely safe technologies, when there already exists a “ready-made” industry [to satisfy current needs]; one that in our country is supported by a [powerful] “lobby”.
Inevitably, [asbestos] businesses in Ukraine have very close links to our import trade, because we do not have our own asbestos deposits. This is the second component of super profitability. The third (but not well known) component is maximum avoidance of the tax burden, due to the fact that virtually all schemes under which international asbestos businesses operate, and the Ukrainian component, are offshore.
Until 2017, Kostanay minerals JSC (Kazakhstan) and Orenburgasbest JSC supplied asbestos to all Ukrainian companies through their offshore company “Gilson Universal LLP”; they did not pay any taxes towards the Ukrainian budget, despite the fact that the above suppliers sold the mineral [chrysotile asbestos] offshore at a price of 100 to 150 dollars per tonne, and Ukrainian companies then bought it for a completely different price – from 450 to 635 dollars per tonne.
Average prices for asbestos in the Russian Federation and Ukraine in US$ per tonne
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | |
| Russian Federation | 282 | 322 | 286 | 304 | 222 | 217 | 276 |
| Ukraine | 507 | 610 | 635 | 622 | 598 | 511 | 464 |
According to current data presented in the table below, the main suppliers of asbestos to Ukraine are Kazakhstan and Russia, because transporting the mineral from China or Brazil (which also have huge reserves) to Ukraine is economically inefficient.
Volume of supply of asbestos to Ukraine in 2014-2016 [values are in thousands of US$]
| Year | Russian Federation | Republic of Kazakhstan | Total | |||
| Amount tonnes | Value US$ (,000) | Amount tonnes | Value US$ (,000) | Amount tonnes | Value US$ (,000) | |
| 2014 | 13,396 | 7,743 | 11,348 | 7,064 | 24,743 | 14,807 |
| 2015 | 6,915 | 3,420 | 3,443 | 1,875 | 10,357 | 5,295 |
| 2016 | 7,637 | 3,376 | 7,903 | 3,839 | 15,540 | 7,215 |
Again, the old links and schemes, with which the war makes little interference, continue to operate. It is for this reason that in 2005, with the purpose of “protecting the use of asbestos in Ukraine”, the “Ukrainian Chrysotile Association” was established – controlled and funded by Russian and Kazakh asbestos mining enterprises.
Of course, since the beginning of hostilities, the amount of “Russian” imports has decreased (by 40 percent), but as we see, trade goes on. Since the profile of production is entirely dependent on imports, it is worth noting that its Kazakh component also passes through the Russian Federation. So what is the war for and for whom?
At present, the real [major] shareholder of four out of the seven asbestos-cement enterprises in Ukraine is the Kazakh company “Kusto”, which is directly related to “Orenburgasbest” (Russian Federation).
As for the war ... The head of the aforementioned organization the “Ukrainian Chrysotile Association” is a representative of the shareholders of LLC “Techprom”, which is located in the temporarily occupied territory of Ukraine, in the so-called DPR (Donetsk People’s Republic), where it pays local “taxes”, financing terrorists. Incidentally, it was there that during the last two years, Kazakh partners supplied asbestos through the Gukovo station – Chervona Mohyla – which is at this moment in time not under the control of the Ukrainian state.
In addition, since the end of the 90’s, there have been cases of the actual seizure of Ukrainian enterprises by the leaders of the Kazakh–Russian “Kusto Group”. Using their monopoly of the asbestos supply, these dealers caused a massive timed dumping on the basis of overestimated prices for asbestos for Ukraine, after which the Ukrainian part of the enterprises were forced to sell part of their shares.
Currently [the original Ukrainian text of this article was published in October 2018], the London Courts are hearing a case involving the Kazakh shareholders of the Kusto Group2, which owns the asbestos-producing enterprises Kostanay Minerals (Kazakhstan) and Orenburg Minerals OJSC (Russian Federation) and a number of asbestos-cement production enterprises in Ukraine, Kazakhstan and the Russian Federation. Do you know what they are accused of? All together being involved in hiring a professional organization to spy upon the activities of the World Health Organization [one of the objectives of the spying operation was to determine if ban asbestos campaigners were exerting undue influence on WHO policy, but the spy did have some face-to-face meetings with WHO personnel; the case was settled in November 2018].
We also have some charges outstanding against some members of the asbestos “mafia” in Ukraine, but that is another story.
P.S. It will be more than a year before the law prohibiting the use of asbestos in the manufacture of roof coverings comes into force in Ukraine. Meanwhile, the asbestos lobby has succeeded in enabling the asbestos industry to continue to operate unhindered, a situation which some believe could not exist without some participation of the First Vice Prime Minister – Minister of Economic Development and Trade.
Such an economy and such a policy of asbestos crime against Ukraine, the investigation is ongoing
Ukrainian article: October 12, 2018
English Translation: January 8, 2019
_______
1 This article by Ukrainian journalist Taras Volya, was first published on the Ecology page of the [Ukrainian] Journalists Against Corruption website (http://pero.org.ua/category/ekologija/) under the title “The Asbestos Lobby”. It was translated by Mick Antoniw and the English version edited by D. Allen (IBAS). Footnotes and textual clarifications were added by the editor.
While the facts in this article pertaining to asbestos industry operations in Ukraine have not been independently verified by IBAS, we are aware of the difficult progress toward the implementation of an effective asbestos ban in Ukraine and have researched and published a series of articles on the matter (for the latest of these see: http://ibasecretariat.org/lka-ukraine-s-fight%20to-ban-asbestos-update.php).
2 Two individuals and an offshore shell company – with connections to the Kazakh asbestos mining industry – instrumental in commissioning K2 to spy on asbestos campaigners were named publicly during the court case, but neither they nor K2’s “ultimate client” were parties to the legal proceedings.
