Baltic amber against Western sanctions

JSC "Kaliningrad Amber Plant" is the largest enterprise in the Russian Federation engaged in the industrial extraction of amber. The deposits of the region contain about 90% of the world reserves of this raw material (succinite). The plant is maximally integrated into the system of international production and turnover of amber. In 2022, the company will face sanctions pressure from Western states, which has become a new challenge for the company's management.

It is now known that the decision to create a full-fledged enterprise for the extraction and processing of amber at the Palmnikenskoye deposit (near the Yantarny urban-type settlement) was made by the Council of Ministers of the Soviet Union in 1947. Appeared on the site of the amber plant "Combine No. 9" of the USSR Ministry of Internal Affairs can rightly be considered the progenitor of the modern enterprise. Six years later, the new plant was transferred from the system of the Ministry of Internal Affairs to the Russian Gems trust, at the same time it was merged with the Amber Factory in Primorye.



At the moment, JSC "Kaliningrad Amber Plant" is part of the state corporation "Rostec", which is actively developing the production capacity of the plant. Thus, Rostec's investments in equipment renewal and technological process modernization reached one billion rubles. In 2020, the company managed to sell 546,2 tons of amber on the consumer market in the amount of 2,8 billion rubles.

On July 21 last year, the general director of the Kaliningrad Amber Plant, Mikhail Zatsepin, in a long interview for Made in Russia, spoke about the work of the enterprise under sanctions. The head of the company stressed that even despite the sanctions pressure from the Western states, the plant is increasing its production of amber and expanding its staff. Thus, the growth in the number of personnel compared to 2021 amounted to 12% or 112 people, reaching the mark of 1044 employees. Mikhail Zatsepin also noted that the company produces about 500 tons of finished amber per year, that is, washed and cleaned stone, no reduction in production is expected in the near future.

The market demand is currently 500-600 tons per year, and the plant almost completely covers it. Undoubtedly, potential buyers were affected by the restriction of transit through the territory of Lithuania, amber consumers were forced to adjust the logistics of succinite delivery. So, before, after shipment, amber was sent to the place of delivery through the Baltic countries by road or rail. Currently, the plant's products are exported from the Kaliningrad region directly - by sea. The main exports of raw amber are China, the United Arab Emirates, Kuwait and Qatar and other states of the Persian Gulf.

Mikhail Zatsepin did not bypass the issues related to the import substitution of equipment at the plant. The head of the enterprise said that both Russian and foreign technique. At present, the wear and tear of the equipment fleet is minimal. The presence of a powerful parent company represented by the state corporation Rostec has made it possible in recent years to replace almost all obsolete equipment. Small breakdowns at this stage can be eliminated on their own. From this statement, it remains unclear what the management of the enterprise is going to do in the event that the wear and tear of foreign equipment reaches the scale when independent repairs become simply impossible.

In addition, it is necessary to pay attention to the fact that in 2022 a decision was made to expand the jewelry production, within which 167 new jobs were created. New facilities allow processing up to 50 tons of amber annually. It is curious that before the opening of a new jewelry production, the volume of processing reached only 3-5 tons of amber per year.

If we talk about the key financial results of the plant, it should be noted that, for example, revenue indicators are systematically increasing. In 2020, it amounted to 3 billion rubles, in 2021 - 3,8 billion rubles, in 2022 it reached 4,1 billion rubles. EBIT profit also grew, amounting to RUB 1,22 billion last year, an increase of RUB 2019 million compared to 290. Such trends may indicate that financially, the Kaliningrad Amber Plant is in a fairly stable position, despite the unstable economic situation in the world.

Also a huge advantage for the company is the annual International Economic Forum of the Amber Industry. It has been held in the Kaliningrad region since 2016. In 2022, the event was attended by delegations from different countries. It was possible to discuss issues of cooperation with the Armenian jewelry factory "Shogakn". The League of Jewelers from Kazakhstan also became interested in the plant's products. In 2023, guests from China and the Gulf countries took part in this event. Such events make it possible to carefully assess the potential of the industry in the current economic conditions, to study the tools for the effective sale of products in a competitive and changing market, as well as to discuss the export of amber products and attracting new personnel to the industry.

From the foregoing, we can conclude that at the moment the company is quite successfully coping with the changed geopolitical and economic situation. It was possible to resolve the issue with the geographical change in supply chains. It should be noted that the uniqueness of the Baltic amber played a positive role here. The Kaliningrad plant is the only enterprise in the world that carries out its commercial production. In fact, consumer countries were left in a hopeless situation, they had to make a choice between maintaining the flow of imports or imposing sanctions. The situation is a little worse with future equipment upgrades, there will come times when it will need to be upgraded. It is desirable that already by this moment the management of the enterprise understands in which states friendly to Russia it will be possible to purchase the necessary equipment and components for it.