************Forwarded by:*************
Joan Morgan, Intl. Trade Specialist onSiberia, BISNIS
U.S. Department of Commerce
E-mail: [email protected]
Direct Tel:202-482-2709; Fax: 202-482-2293 1) IRKUTSK OBLAST REGIONAL OVERVIEW
 2)  UPCOMING TRADE SHOWS - SIBERIA
 ********************************** ** IRKUTSK OBLAST REGIONAL OVERVIEW
 Prepared byAzim Mamanov, BISNIS Representative in Novosibirsk
  
 January 2000
  
 This reportgives a brief overview of the Irkutsk Oblast, and covers variousindustries developed in the region. In addition, it includescontact information that can be useful for American businessesconsidering business opportunities in the region.
  
 Of particularinterest to U.S. companies are non-ferrous metallurgy, forestry,and electrical engineering. The food-processing industry isanother sector of the local economy that can be beneficial forAmerican investors.
  
**Geographical Location and Population of the Irkutsk Oblast**
  
 The Irkutsk Oblast is located insouth-eastern Siberia in the basins of Angara, Lena and NizhnayaTunguska rivers, and occupies an area of 774,000square kilometers(4.6 percent of Russia’s territory). The Irkutsk Oblastborders with the Buryat and Tuva Republics in the south andsouth-west, the Krasnoyarsk Krai in the west, the Sakha (Yakut)Republic in the northeast, and the Chita Oblast in the east. Aunique and world-famous lake, Lake Baikal, is located in thesoutheast of the region.
  
 The climate is continental. Almost halfthe year the temperature is below 0C. Winter is frosty, and thetemperature is generally from -17C to -33C. Summer is hot, short,and dry in the first half, and humid in the second. Thetemperature is generally between +17C and +33C.
  
 The populationof the region is 2.77 million, from which 79.6 percent are urban,and 20.4 percent are rural. The density of the population is 3.5people per square kilometer, whereas the average density forRussia is 8.7. Irkutsk is the administrative center, with apopulation of 594,500. Other large cities are Angarsk (267,000people), Bratsk (253,600 people), Usolie-Sibirskoe(104,300people), and Ust-Ilimsk (107,200people). The average wagein the Irkutsk Oblast is about 1,800 rubles (US$72).
  
**Transportation**
  
 Two majorairports in the Irkutsk Oblast with international status arelocated in the cities of Irkutsk and Bratsk. There are directairline links with China, Japan, Uzbekistan, and Mongolia. Inaddition, charter flights to South Korea, Greece, Turkey, Spain,Italy, Bulgaria, UAE, and Egypt are available. Westernerstravelling to the region usually take a direct flight from Moscowto Irkutsk. About 36,000 people take international flights to andfrom the region. In 1998, 7,200 tons of cargo were transported,which is half that in 1997.
  
 Irkutsk is onthe Trans-Siberian Railroad, and has a railway connection withMoscow. The total length of railway track, the maintransportation “artery” of the region, amounts to2,481 kilometers. In 1998, 39 million tons of freight wastransported from the region by railroad, which is 6.4 percentless than in 1997. The main products delivered by railroad areoil, ores, timber, and coal. Since 1986, the Baikalo-AmurskayaMagistral (BAM) railroad has been working to facilitateexploration and mining of the natural resources in the region. Awell-developed network of automobile highways allows makingshipments to any destination in Russia, NIS countries, China andMongolia. In 1998, 4.8 million tons of freight was transported bytrucks, which is 17 percent less than in 1997.
  
 Rivertransportation also takes place in the region. In 1998, 2.2million tons of freight was transported by water, which is 25percent less than 1997.
  
 Imported goodsfrom Western countries are usually transported to the regionthrough Moscow by railroad.
  **Banking**
  
 Banking in theregion consists of a dozen local banks, and affiliates of morethan fifteen banks headquartered in Moscow (Alfa-Bank, Sberbank,Promstroibank, VneshTorgBank etc.), St. Petersburg (Menatep), andNovosibirsk (SibAcademBank).
  
**NaturalResources**
  
 The region isrich with natural resources. Approximately 86 percent of theregion’s territory (66.8 million hectares) is covered byforests mainly consisting of pine and larch trees. Wood reservestotal 8.3 billion cubic meters (which is 11 percent of all thewood reserves in Russia). The forests are inhabited by a largenumber of fur bearing animals, such as minks, muskrats, andermines.
  
 Agricultural land totals 5.1 millionhectares (6.6 percent of the region’s territory), and theshare of land occupied by industrial and other companies is 2.2percent.
  
 Lake Baikal, by its majorcharacteristics (23,000 cubic kilometers of fresh water, or 20percent of the world reserves of fresh water; 31,500 squarekilometers of surface area; maximum depth of 1,637 meters) is oneof the greatest lakes in the world. The overall water resourcesof the region total 120 cubic kilometers annually. 
  
 The region is rich with mineralresources as well. The most significant deposits in Russia, canbe found, particularly in the Lenskaya (gold), Mamsko-Shuiskaya(mica), Angarskaya (ferrous ores), and Vostochno-Sayanskaya (raremetals) provinces. Also the Irkutsk coal basin, and theworld’s largest East-Siberian salt basin are found there.
  
 Major mineral resources thatdetermine the industrial potential of the region are rawmaterials based on hydrocarbon, gold, mica, common salt, iron,brown and bituminous coal. Diamond is found in the region aswell. One of the most promising diamond deposits isChuno-Biryusinskaya. Reserves of natural resources found in theregion are as follows:
  
 NaturalResource                              Reserves
  
Oil                                                    260 million tons
Gas                                                   900 billion cubic meters
 IronOres                                          2 billion tons
Coal                                                 15 billion tons
 PotassiumSalt                                  627 million tons
 RockSalt                                          20 billion tons
Mica                                                 80% of Russia’s total
Magnesite                                         75% of Russia’s total
 Rare Metals:
           Niobium                                          65% of Russia’s total
           Tantalum                                          45% of Russia’s total
           Lithium                                             50% of Russia’s total
  
 Eleven tons of gold is being minedannually in the region. In the first 10 months of 1999, theamount of gold mined in the region exceeded 12 tons for the firsttime in a long time. Over 94 percent of gold was mined in theBodaibinsky district. The reserves of gold are substantial enoughto continue mining for another 15 years.
** **
 The list of the most significantdeposits in all of Russia includes these locations in the Irkutskregion: Verkhnechonskoe (oil), Kovyktinskoe (gas), Sukholozhskoe(gold), Nepskoe (potassium chloride), Beloziminskoe (niobium,tantalum), Savinskoe (magnesite), and Mugunskoe (coal).
  
**MajorIndustry Sectors**
  
 In terms ofgross domestic production volume, the region is ranked third,after the Tyumen Oblast and Krasnoyarsk Krai. The leadingindustries are: non-ferrous metallurgy, electric engineering,fuel, mechanical engineering and metal working, and the forestryand wood working industries. The following table demonstrates thecontribution of different industries to the local economy in 1997and 1998:
  
Industry:                                            Share in 1997(%)           Share in 1998 (%)
  
 ElectricEngineering                                 19.7                                 21.6
Fuel                                                14.3                                 10.3
 MechanicalEngineering and
 MetalWorking                                 11.9                                 7.0
Food-Processing                                 7.7                                 7.9
 Chemical andPetrochemical                      5.7                                 5.1
 FerrousMetallurgy                                 2.5                                 2.0
 Non-FerrousMetarllurgy                      21.3                                 25.6
 Flour, Groatsand FeedMaking           0.4                                 0.3
 ConstructionMaterials                      2.1                                 1.5
 Forestry andWoodWorking                      11.7                                 16.7
Light                                               0.4                                 0.3
Microbiological                            1.8                                 1.3
Other                                              0.5                                 0.4           
  
 Compared to1997, the share of the electric engineering industry increased by1.9 percent, non-ferrous metallurgy – by 4.3 percent,forestry and wood working – by 5 percent, and thefood-processing industry - by 0.2 percent. In all theseindustries production increase was noticed. The share of themechanical engineering and metal working industry decreased by4.9 percent, fuel industry – by 4 percent, ferrousmetallurgy – by 0.5 percent, and the chemical andpetrochemical industry - by 0.6 percent. In terms of productionvolume, significant production decrease was noticed in lightindustry (by 40 percent), ferrous metallurgy (by 31 percent),construction materials industry (by 28 percent), and fuelindustry (by 16 percent).
  **Financial Situation**
  
 The financialsituation for local industry remains difficult. A shortage of rawmaterials for manufacturing goods, and a lack of investmentcapital and funds for existing and potential clients, aggravatedby the financial crisis in August 1998, and has made it extremelydifficult for local companies to survive. In 1998, the majorityof large- and medium- size companies (823 enterprises) wereworking at a loss totalling US$300 million, and other companies(463 enterprises) gained in  profits totalling US$200million. Thus, the overall financial result for local businessesin 1998 was negative.
  
**MechanicalEngineering and Metal Working Industry**
  
 Mechanical engineering and metal workingoccupies 7 percent of all industrial manufacture in the region.In 1998, the production volume decreased by 9.8 percent, andtotalled US$112.6 million. The largest enterprises for mechanicalengineering and metal working are: Irkutsk Aircraft ProductionPlant JSC (produces aircrafts and consumer goods); IrkutskCableJSC (produces cables and wires); UsolMash JSC (produces cranes);VostSibElement JSC (produces batteries, galvanic elements); andIrkutskTyazhMash JSC (produces metallurgical and miningequipment).
  
**Chemical andPetrochemical Industry**
  
 The share of the chemical andpetrochemical industry in the local economy is 5.1 percent.Intensive development of the industry in the region has beendetermined by the existence of the resource base (salt,bituminous coal, wood etc.), and the construction of the WestSiberian – Angarsk oil pipeline. More than 2000 productshave been produced in the region.
  
 The chemical and petrochemical industryis located in the cities of Angarsk, Usolie-Sibirskoe, Zima,Sayansk, and Bratsk. The largest chemical production complex inEast Siberia and the Russian Far East is the Angarsky IndustrialHub combining a number of plants. The Angarskaya PetrochemicalCompany is the core of the Hub. The company is involved in oilprocessing with a production capacity of 24 million tons of oilannually. Other companies combined in the hub are UsolieChimPromJSC specializing in the production of caustic soda (244,000 tonsannually) and calcium carbide (100,000 tons); the UsolskyPharmaceutical Plant, and SayanChimProm JSC.
  
**Agricultural Industry**
  
 Theagricultural industry’s share in overall domesticproduction is 7.9 percent. A severe climate does not facilitatedevelopment of the industry in the region. Only 2.6 millionhectares of the vast territory is used for agricultural purposes.Among sub-sectors of the industry, raising cattle is the mostdeveloped: about 46 percent of the agricultural land is used forraising cattle. In 1998, the overall production volume in theagricultural industry totalled 7.1 billion rubles (US$355million), which is the 2.5 percent less than in 1997. Compared to1997, the production volume in plant cultivation sector decreasedby 7.1 percent, whereas the production volume in cattle raisingincreased by 1.8 percent. The region does not produce enough foodproducts to satisfy its own needs. About 42 percent of meat, 101percent of dairy products, and 55 percent of grain is exportedfrom outside.
  
 The mainagricultural products are grain, vegetables, and potatoes. Grainproduction amounted to 742,000 tons, and increased by 0.2 percentmore in 1997. Production of potatoes totalled 903,000 tons, anddecreased by 9 percent. Vegetable production amounted to 119,000tons, and decreased by 16 percent as well.
  
 Agriculturalproducers in the region can be divided into three categories:agricultural enterprises, farmers, and the local population. Asof January 1, 1999, over 3,000 farms were registered in theregion. Many farms were challenged by hardships in the economy ofRussia, and the number of farms decreased by 6 percent comparedto 1997, and 1,385 farms have gone bankrupt since 1992. In otherregions of Russia, the majority of the local populationcultivates vegetables itself. Thus, most of the potatoes (96percent) and vegetables (81 percent) in the region were producedlocally.
  
 Raising cattleplays an important role in the region’s agriculture.Livestock consists mainly of cattle, swine, sheep and goats. Themain products in the cattle sector are meat, milk, wool, andeggs. The major meat producers (59 percent) and milk producers(67 percent) are from the local population, whereas the major eggproducers are agricultural enterprises. The share of agriculturalenterprises in meat and milk production is significant as well(38 and 31 percent, respectively). Main type of meat produced byagricultural enterprises is beef which is 84 percent of all themeat produced. Among the thirteen regions, located in Siberia,the Irkutsk Oblast is ranked seventh in the volume of meat andmilk production, and third in the volume of egg production.
  **Ferrous and Non-Ferrous Metallurgy**
  
** **
The ferrous and non-ferrous metallurgyindustry contributes 27.6 percent of the gross domestic product.Thirty-five percent of the Russian aluminium production capacityand 6 percent of iron ores mining capacity is located in theregion. Over one million tons of aluminium, and 3.5 million tonsof iron ore is produced in the region annually.
  
 The low cost of electrical energy producedin the region has facilitated the development of aluminiumproduction. Unlike in other regions, the second stage ofaluminium production, electrolysis of alumina is carried (thefirst stage is alumina production). Raw materials for aluminiumare imported from the Urals, NIS countries (Kazakhstan andUkraine), and Australia, India, Italy, Jamaica, the UnitedStates, and Venezuela.
  
 The industry is represented by suchcompanies as the Bratsky and Irkutsky Aluminium Plants. Theannual production capacity of the Bratsky Aluminium Plant is850,000 tons of aluminium. The plant mainly exports its productto Japan, Great Britain, Italy, Hungary, Poland, Turkey, and theUnited States. The annual production capacity of the IrkutskyAluminium Plant is 252,000 tons of aluminium. The plant is themajor supplier of aluminium to the IrkutskCable plant which inturn produces wires and cables.
  
**Forestry and Wood-Working Industry**
** **
 Forestry contributes 16.7 percent to thelocal economy. Approximately 86 percent of the region’sterritory (66.8 million hectares) is covered by forests. Reservesof wood are the second largest, after the Krasnoyarsk Krai, andtotal 8.3 billion cubic meters (11 percent of reserves inRussia), which is more than the reserves of Sweden, Norway,Finland, Yugoslavia and France  put together. Reserves ofconiferous trees total 4.7 billion cubic meters. The share oflarch in the reserves of coniferous trees is 30 percent, pine– 26 percent, cedar – 12 percent, fir – 3percent, and other – 17 percent.
  
 The major sub-sectors of the industry arecellulose and paper production (contributes 63.5 percent in theindustry production), wood-processing (22.6 percent), and logging(13.9 percent). Since 1990, the share of the region in theforestry industry of Russia has been increasing. Today, theregion contributes to Russia 10.9 percent of the timber, 8.8percent of the saw-timber, 33.7 percent of the sleepers forrailways, 48.2 percent of the cellulose, and 10 percent of thecardboard. The largest enterprises involved in the industry areBratskComplexHolding JSC, Ust-Ilim Timber Industrial Concern JSC,and the Baikal Integrated Pulp-and-Paper Mill.  
**Foreign Economic Activity and ForeignInvestments**
 
 According tothe West-Siberian Customs Committee, in 1998, the volume offoreign trade turnover for January – November of 1998totalled US$2,497.2 million (including US$152.4 million forexports, and US$127.7 million for imports), which is 1.1 percentless than in 1997. Export volume totalled US$1,891.7 million (by3.6 percent less than in 1997), and import volume totalledUS$605.5 percent (by 7.6 percent more than in 1997). The tradebalance in 1998 was positive, and amounted to US$1,286.2 million.
  
 The followingproducts are mainly exported from the region:
  
Product                      Amount, $USmillion           Share, %
  
 Aluminium                  1,200.1                          63
Cellulose                      197.8                                       10
 Forestryproducts           156.9                                       8
Aircrafts                      53.7                                          3
Oil                            31.3                                          2
  
 The productsare mainly exported to non-NIS countries, particularly to Japan(aluminium, forestry products, coal), Singapore (oil products),India (aircrafts), China, and the United States (aluminium,silicon).
  
 The mainproducts which are imported are raw materials for the aluminiumindustry, equipment and machinery, food products, andpharmaceuticals.
  
 Products areimported from 68 countries, particularly from countries locatedin Asia (20 percent), Europe (21 percent), the United States(14-15 percent), Australia (4-6 percent), and the NIS (30-40percent). The main exporters are Kazakhstan, China, the UnitedStates, India, Ukraine, and Australia. The region imports fromKazakhstan, aluminium ore, beef, grain, flour; from India -aluminium ore, electric equipment, sugar, food products,tram-cars, and wagons; from China - fruits, paper and cardboard,consumer goods, and food products.
  
 For January-September of 1998, investmentvolume totalled US$106.8 million, and 90.1 million rubles.Compared to 1997, the dollar investments increased by 11.4 times,whereas the ruble investments decreased by 54 percent.Investments were mainly made in the following industries:electric engineering (US$69.2 million), fuel (US$15.4 million,and 16.2 million rubles), forestry and cellulose (US$9.6 million,and 71.1 million rubles). Dollar investments were made bycompanies from Germany (65 percent), Great Britain (14 percent),and ruble investments were from Cyprus companies (79 percent).
  
 Representative offices of Pepsi, Coke, Mars, LucentTechnologies, and British Petroleum Amoco are located in theregion.
  
Industries that can beattractive for American investors are non-ferrous metallurgy,forestry, and electrical engineering. The food-processingindustry is another sector of the local economy that can bebeneficial for American investors. Due to the ruble’sdepreciation, and low average wages in the region, domesticproducers have gained a considerable part of market share. Despite this temporary windfall, domestic producers needinvestment to continue their growth.  Since many of themhave obsolete equipment and lack resources, yet have facilitiesequipped with the necessary infrastructure, investment in thelocal consumer-oriented industry could be a good opportunity forU.S. companies interested in the Russian market.
 
**USEFULCONTACTS:**
 
1. Mr. Boris A.Govorin, Governor
1a LeninSt.,
Irkutsk, Russia664027
 Phone: 7-3952-276760
 Fax: 7-3952-276760
  
 2. Mr. Pavel V. Davydenkov, Head of ForeignEconomic Relations Department
 Irkutsk Regional Administration
 1a Lenin St.,
 Irkutsk,Russia 664027
 Phone: 7-3952-241631
 Fax: 7-3952-243340
 Email: 
 
 3. Ms. Tatyana U. Galyga, Consultant
 Entrepreneurial Department for Medium and Small Business
 IrkutskRegional Administration
 1a LeninStreet, Office 154
 Irkutsk664027, Russia
 Phone:7-3952-241265
 Fax:7-3952-241580

4. Mr. Vladimir I. Snegirev, Director
Regional Small Business SupportCenter
 7bProletarskaya St.,
 Irkutsk,Russia 664011
 Phone: 7-3952-343037
 Fax: 7-3952-340599
 Email: [email protected]
  
 5. Mr. Alexander Vasilenko, Vice President
 The Leader fo the Council of NoncommercialPartnerships for Small Enterprises in the Irkutsk Region
 Noncommercial Partnerships for CommodityProducers and Employers
 4 Marata Street
 Irkutsk, 664000, Russia
 Phone: 7-3952-294354
 Fax: 7-3952-348891
 Email: [email protected]
  
 6. Nikolai K. Ivanov, General Director
 Marina V. Igoumnova, Assistant Manager,Travel and Convention Bureau
 Baikal Business Center
 279 Baikalskaya Street
 Irkutsk 664050, Russia
 Phone: 7-3952-259-113, 358-000
 Fax: 7-3952-259-110, 259-103
 Email: [email protected],[email protected]
 Website: www.bbc.ru
  
 7. Mr. Sergei Loskutnikov, Eat RussiaBranch Director
 Lucent Technologies, Bell Labs Innovations
 (Located in the Baikal Business Center)
 279 Baikalskaya Street
 Irkutsk, 664050 Russia
 Phone; 7-3952-259350
 Fax: 7-3952-259351
 Email: [email protected]
 Website: www.lucent.com
  
 Large Enterprises:
  
 1. BratskComplexHolding JSC
 Bratsk, Irkutsk Region, Russia 665718
 Phone: 7-39534-448687
 Fax: 7-39534-441048
 Wood-processing, cellulose production
  
 2. Irkutsk Aluminium Plant (affiliate ofthe Siberian-Ural Aluminium Company (SUAL))
 Shelekhov, Irkutsk Region, Russia 666020
 Phone: 7-39510-94012
 Fax: 7-39510-22224
 Aluminium production
                             
 3. Bratsk Aluminium Plant
 Bratsk, Irkutsk Region, Russia 665716
 Phone: 7-39534-411751
 Fax: 7-39534-437522
 Aluminium production
  
 4. Angarsk Petrochemical Company
 Angarsk, Irkutsk Region, Russia 665830
 Phone: 7-39518-75200
 Fax: 7-39518-66488
 Production of petroleum, aircraft fuel,kerosene, etc.
  
 5. IrkutskCable JSC
 Shelekhov, Irkutsk Region, Russia 666020
 Phone: 7-39510-22242
 Fax: 7-39510-23862
 Cable and wire production
  
******************************************************************
  
 UPCOMING TRADE SHOWS - SIBERIA. Thefollowing  trade  shows  are  being
 organized by the Siberian firm VostochnyeVorota Agency located in Chelyabinsk, in 2000.  They provide  an
 opportunity for firms to present their goodsand services to Siberian markets.
1) "Education and Careers Move to the Future"- Feb. 17-19;
2) "Medicine  in  Our Lives"  -  March  1-4; 
3) "Advertising Media - Still Photography,  Film,  Video  -  2000" March 21-24;
4) "Spring Construction  Market" -  April  4-7; 
 5)  "Vacation, Sports, Tourism" - April20-22;
6) "Light Industry in the Urals - 21st Century" - May 17-19;
7) "Auto 2000"  -  May 25-28; 
 8)  "Construction Industry - 2000" -Sept. 5-8;
9) "Information and Communications" Oct. 10-13;
10) "Home and Office - the Modern Woman" -Nov. 15-18;
11) "Wood Processing and Ecology - 2000"  -  Nov.  22-24; 
 12)  "Southern  Urals UniversalFair" - Dec. 6-9.
All firms are cordially invited to  attend and/or exhibit at any of the fairs. The agencyoffers its assistance.  Full  details  uponinquiry.
 Contact  Ms.  Lyudmila Parnevova
 Firm:  "Vostochnye Vorota"Agency
 Address: 454080 Russia, Chelyabinsk
 ul.  Entuziastov, 2, of. 223, a/ya9563.
Tel. (7-3512) 66-67-83
Fax: (7-3512)  33-75-12,33-75-18.
 E-mail:  [email protected]