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Russian Technologies to cash in on garbage

Russian Technologies to cash in on garbage
State corporation, Russian Technologies, is creating a new national garbage recycling company.

­The National Garbage recycling company is expected to be registered in 4 weeks due the end of July with 25% controlled by Russian Technologies and the rest will be controlled by domestic private investors.

It's still unclear how the company will be financed. But Russian Technologies say they're relying on cash from state budget with the major political party, Edinaya Rossia,  supporting the project. The garbage operator is expected to dominate the Russian recycling market estimated at 1.3 billion Euros in 2-3 years.

Russian Technologies subsidiaries will provide the entire cycle of recycling – from container and modern garbage transporters manufacturing to sorting and kitting equipment supply, allowing usage of the latest technologies for thermal utilization and landfill. A trial project is about to be launched in Kostroma region this autumn with the next stage –construction of the recycling unit based on the former Khimprom factory in Volgograd .

Acting Chairman of the Federation Council Alexander Torshin has proposed a new taxation on recycling of imported goods.
General Director of Russian Technologies, Sergei Chemezov said that the industry will need support from the state only in terms of legal amendments

"We expect that Edinaya Rossia will support and promote necessary law corrections to underpin industry development because it is more reasonable than to finance this project from the state budget. Everyone should bear in mind that around the world the price of the product includes the cost of its later disposal.”

Dmitry Adamidov, Deputy head of analytical department, InvestCafe says a government organization is the only powerful regulator can rejuvenate and legalize the industry

“The project is rather profitable with approximately 8-9% of internal rate of return. This industry is well managed and organized around the world with the nearest example of established industry infrastructure in Baltic countries: Belarus, Latvia and Lithuania. The collaboration of the state controlled company and major political party will bring positive results given that new laws can provide industry with tax benefits and subsidies which will result in higher business profitability. Assuming that the main downsides of this business are its criminal control and weak infrastructure, Russian Technologies is eventually the only organization able to clear all the mess. Certainly, the industry will need creation of sorting unit and a lot of promotion among the population to bring up more concerns and awareness among the population. Nonetheless, this business is more about solid management and logistics. The business may fall down quickly if went off the road with corruption and unreasonable terms. Russian Technologies will need at least 15 years to bring the industry on the desired quality and profitability level.”

Adamidov added that the business model and Russian Technologies approach to profit generation should be revised.

“I think it’s ridiculous and even impossible to force retailers to add the cost of recycling to the product price. Moreover, the government will not promote and support this in any case because the population will protest on this as well. The most efficient way to monetize the business is to use the energy from the recycled products and learn how to utilize it. Above all, it is important to establish a distribution chain and promote usage of recycled materials in production where it is possible. That is the way to highly industrial and socially responsible society where people opt for safe ecology.”

Chemezov added that Russian Technologies is planning to create a chain of recycling factories in Russian regions managed from Moscow Management Company headquarters.

Head of the committee in Edinaya Rossia Boris Gryzlov hailed the project and cooperation saying that innovative development of the country is party’s major focus

“Edinaya Rossia pay a lot of attention to country’s ecology promoting one of the main projects of the party- “Ecologically friendly Russian Technologies. We believe it is very important to establish cooperation and understanding with Russian Technologies and their meaningful project.”