What is happening to BelAZ under the sanctions imposed

On June 21, the EU introduced sectoral sanctions against Belarus. BelAZ, the manufacturer of mining dump trucks, also was affected. Radio Svaboda analyzes what is happening to the plant.

Debt exceeding 1.2 billion rubles

In the first quarter of this year, BelAZ earned 36 million rubles, a year earlier there was a net loss of 60 million. Such data follows from the report on the Unified portal for the financial market.

The plant has a debt of 371.4 million BYN for long-term loans and 880.7 million BYN for short-term loans, a total of more than 1.2 billion BYN.

The net profit of BelAZ for the last year was 30 million BYN, a year earlier it was 265 million BYN. That is, the net profit decreased by 8 times over the year. The number of personnel decreased by 571 people for the year.

What about dump truck sales?

The National Statistics Committee of the Republic of Belarus (Belstat) deleted operational statistics on mining dump truck sales. Last year Belarus sold to the EU mining dump trucks worth of $ 3.3 million. This is only 10 units. In total, during the year Belarus sold 435 units of this equipment to different countries. From the EU countries, dump trucks were bought by Poland and Bulgaria.

Most of the dump trucks were bought by Russia (for $ 106 million), India (for $ 83 million), Uzbekistan (for $ 55 million).

Which companies have refused to cooperate with BelAZ?

The American company Cummins, one of the suppliers of engines to BelAZ, has stopped sending products to BelAZ and its dealers.

This summer Rolls-Royce announced the complete cessation of cooperation with BelAZ. Previously, supplies went through their German subsidiary MTU Friedrichshafen GmbH. These two companies are the main suppliers of engines and power units for the plant.

Earlier this year, global companies Becker Group, Liebherr and Danfoss refused to cooperate with BelAZ.

The German Becker Group, in particular, said that “after the EU sanctions imposed against BelAZ, it stopped all operations with BelAZ starting from July 9, 2021”. The company supplied paint for BelAZ through the Finnish distributor Geramatic OY.

Another German manufacturer, Liebherr, which previously supplied machines and other equipment to BelAZ, also confirmed that its “policy (is) to comply with the rules and regulations”.

In early July, the international mining and metallurgical group of companies Metinvest announced that it had sent a request to the European Commission asking for an explanation about the possibility of purchasing from BelAZ, which was subject to sanctions.

Later, the Kryvyi Rig mining and metallurgical plant ArcelorMittal announced that it was suspending purchases from BelAZ and was sending this issue for analysis to its legal department.

All cases of suspension of cooperation are related to sanctions or human rights violations in Belarus.

What is the impact of the refusal to supply parts?

There are not many suppliers of components for mining trucks. According to Vadim Iosub, financial analyst at Alpari Eurasia, Rolls-Royce was one of the main suppliers of engines.

– Such engines are manufactured in industrialized countries – the USA, Japan, Western Europe. In theory, being under sanctions it is possible to arrange supplies through a series of intermediaries, however, most likely that this will make the process more expensive and extend the delivery time. It is unlikely that it will be possible to hide the supply of engines for BelAZ, so production problems will be serious, – says Vadim Iosub.

According to Lev Lvovskiy, senior researcher at Beroc, problems may arise even with Chinese suppliers.

– Nobody wants to get involved with sanctions. It is clear that American companies have refused. The Chinese are in no hurry to supply their engines, because China, if you look at the economy, is one of the largest economies in the world, and the United States is an important partner for them. There is no point in waiting for Chinese motors either. Russia remains. Large companies also do not want to be associated with sanctions. The profitability of BelAZ was not at a high level, so, how they are going to survive now is a serious question. Most likely, the state will seek to finance them, says Lev Lvovsky.

Let’s see what engines BelAZ vehicles have, which the plant sells now through its website.

For example, the 45-ton 7545 is a Cummins engine. And the 75440 model with a carrying capacity of 32 tons, has a YaMZ engine – manufactured by the Yaroslavl Motor Plant.

The 75320 model with a lifting capacity of 290 tons has a Cummins engine, the model with a lifting capacity of 450 tons – an engine by the German manufacturer MTU (Rolls-Royce), which also stopped deliveries to BelAZ. The 360 ​​ton model also has an MTU engine. The 75310 model with a lifting capacity of 240 tons is powered by a Cummins engine.

As you can see, most of the models have engines manufactured by companies that have now refused to cooperate with BelAZ.