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Maksim Fyodorov, editor-in-chief of the Publishing House MediaYug  
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The Young and Daring Want to Win (1848)
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New-ploughed field2014 (1584)
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Gentle Misha and the rest. Olimpic symbols represent not only the Games, but the countries where they take place (2102)
Reloading. Political sport projects Moscow1980 and Sochi2014 have a lot in common (1782)
The Olympic necklace (1829)

Line up!

1 (2008)
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Market development is stimulated by upcoming Olympic Games in Sochi, and within the next five years the production of building supplies should be radically increased to meet the need of growing industry.

Cement Industry

The majority of cement plants located in the South, as well as in all other regions of Russia, is not up-to-date to handle the growing demands. Inadequate capital-output ratio, exhaustion of main funding, and extensively long time period for development of a new production lines (3–4 years) constitute the main holdingback point. Nevertheless the experts take notice of the increasing interest of major companies in investments into South Federal District The company «Inteco», after purchasing Verhnebakansk Cement Factory and «Actaicement» in the Krasnodar Region in 2006, is planning to create a one production group with the output up to 5 million tons per year. «BaselCement» is currently building Tuapse Cement Factory with estimated production output of 2 million tons per year. The Urals mining company began the construction of cement factory in Northern Osetia with estimated production output of 1.5 million tons per year. The French company Lafarge SA made more concrete the plans as well — it will build a concrete factory in the Rostov Region which will be producing 4 million tons of cement per year.

Market insiders hope that implementation of all those investments together with the modernization of already existing manufacturing in the South of the Russian Federation, will help to avoid the cement deficit during the active phase of a construction of Olympic facilities and supporting infrastructures. Besides, the lack of cement can be compensated by the supplies from Turkey, for example. Lomakin Ilya, the Chief Executive Officer of Dicovery Research Group, notes that the amount of imported cement constitutes only 2% of overall cement production in Russia (61 million tons in 2007), but this number is expected to increase in the South Federal Region.

Metal Manufacturing

«The demand for metal products should have been increased by 50–63%, or from 40 million tons per year to 60–65 million tons, by the year 2010-2011, according to the projected development of Russia. The significant share in this growth belongs to the South Federal Region development projects», noted President of «Estar TD» Kamyshev Nikolay. The demand for metal of a building dimensions will be satisfied, it includes the import from Ukraine and partially from Turkey. Right now, the share of imported metal products in the South Federal Region constitutes 40–45%.

But with the introduction of new manufacturing powers that number can go down. The investment activity of metal products producers and suppliers is quite obvious in the south of Russia. As it has been mentioned by «Ugmetalsnab»’s press-office director Salomatina Lyubov: «One metallurgic pipe company is installing its new equipment for pipe production in Tagmet, «Inprom», a new production line for process of supporting elements, «Alunext» launched the press with capacity of 1100 tons, «UMS-Factory» put into production 2 new moulding lines last year, «STAKS» is planning to increase its productive output up to 450.000 tons per year, and the production of its mill products up to 550.000 tons per year «Estar» is realizing large projects in the Rostov Region. After reaching its projected manufacturing capacity, Rostov Metallurgic Factory will supply up to 730.000 tons of metal products, foremost the reinforcing bars, for the needs of the Olympic building projects. Another company, «Estara», South Russian Metallurgic Factory, will be manufacturing approximately 900,000 tons per year of largegraded metal products, including main beams and channels.

Brining together Demand and Supply

 According to the Chairman of the Board of Directors of JSC «Glubokinsky Brick Factory» Lyashev Andrey, Russian producers of brick can meet the Sochi constructions demands. Glubokinsky Brick Factory is currently supplying lining bricks to Sochi and planning to participate in the Olympic constructions as well. This fall company is planning to introduce the production of multilayered wall application of reinforcement elements, which has been designed specifically for the regions with high seismic activity. «BaselCement», which has recently bought more then 50% of Alagirskiy minefield in Northern Osetia, is aiming to become the largest ballast stone supplier. «In 2008 the company plans to put into production not less then 3 ballast stone plants, and supply home market, as well as Sochi, with approximately 1 million tons of nonmetallic materials», said the president of the company Savenko Dimitry.

It is possible that some part of sand and ballast stone will be supplied to the Olympic locations by the neighboring countries.

The only question is how to agree on the price on all these building materials? Today, the price level has reached its historical maximum and is expected to keep growing. The demand from BRIC (Brazil, Russia, India and China) and the raw materials price growth will stimulate further price growth tern. Rising of brick cost is connected with the growing cost of energy: which is 20–30% per year.

Market insiders and experts agree on one point — it is possible to decrease the growing price rate on building materials by stabilizing the energy tariffs. Another way to put prices under control is to level the correlation of demand and supply. For instance, experts predict the prices stabilization in cement industry in 2011, after all planned upgrading being finished for the most factories, and new factories being opened.