The world's asbestos behemoth

Vast amounts shipped overseas, used at home



MOSCOW — In the aptly named city of Asbest, in the Ural Mountains 900 miles (1500 km) northeast of Moscow, the dominance of Russia’s asbestos industry — the world’s largest — is on clear display. Just east of the city is the massive open-pit Uralasbest mine. At seven miles (11 km) long and 1-½ miles (2.5 km) wide, it is nearly half the size of Manhattan — and more than a thousand feet (300 meters) deep. Nearly half a million metric tons of asbestos are gouged from the mine each year.

Seventy thousand people live in Asbest, once known as “the dying city” for its extraordinary rates of lung cancer and other asbestos-related diseases. But Uralasbest does not appear to have suffered any loss of status. It and other Russian asbestos producers operate with the swagger that comes from unwavering government support. Controversy bypasses them, perhaps in no small measure because Prime Minister Vladimir Putin is their ally. Nothing, it seems, is allowed to interfere with an industry that employs 400,000 people and, along with its counterpart in neighboring Kazakhstan, generates at least $800 million a year.

“We feel the absolute support of the state,” Denis Nikitin, a spokesman for Russia’s asbestos lobby group, the Chrysotile Association, told the International Consortium of Investigative Journalists. “The only way to remove our cheap and available product from the market is to ban it.”

Ban or restrict asbestos is, in fact, what 52 countries have already done. Once widely valued for its heat and fire resistance, asbestos can no longer be sold in the European Union. In the United States — where the mineral already has taken an estimated 200,000 lives and the industry has paid out $70 billion in damages and litigation costs — asbestos use is limited to a handful of products, such as automobile brakes and gaskets. Fueled by an aggressive industry campaign, however, asbestos use has grown markedly elsewhere in the world, led by such countries as ChinaIndia, and Russia. With its new life in emerging markets, the cumulative death toll from asbestos may reach 10 million by 2030, according to Dr. James Leigh, director of the Centre for Occupational and Environmental Health at the Sydney School of Public Health in Australia.

In Russia alone, the annual death toll is estimated at 10,400, according to the Geneva-based International Labor Organization. But that hasn’t influenced production.

In 2008, Russian mines yielded more than 1 million tons of asbestos — nearly half the world supply and more than three times that of the next largest producer, China. Russia is also, by far, the world’s largest exporter of the toxic mineral, shipping two-thirds of its supply overseas — pouring into world markets more asbestos than the next four top exporting countries combined. Its leading customers:  Thailand, China, and India, followed by Indonesia, Vietnam, and Iran.

Unlike another major exporter, Canada, which uses relatively little asbestos at home but ships huge quantities abroad, the Russians remain heavy users. Indeed, Russia is the world’s third largest consumer, behind only China and India, using asbestos widely in roofing, automobile brakes, and insulation. Nearly 60,000 miles (95,000 km) of the country’s water pipes are lined with asbestos cement. All told, some 3,000 asbestos-containing products have been deemed safe by the Chief Sanitary Officer of Russia, Nikitin says.

In April 2009, Prime Minister Putin met with a group of labor leaders, including Andrei Kholzakov, chairman of the Uralasbest union and the International Trade Unions Alliance for Chrysotile (named after chrysotile, the form of asbestos widely used today). Kholzakov shared his growing concern about a growing global anti-asbestos movement and asked for Putin’s help. The prime minister was receptive. “He promised to support Russian producers of chrysotile, especially in situations where we find ourselves under political pressure at the international level,” Kholzakov said afterward in a press release. “If we behave irresponsibly our opponents will certainly use the situation,” Putin is quoted as saying. “It goes without saying.”

Little opposition

In Russia, anti-asbestos sentiment is muted at best. The few opposition groups are outmuscled by the Chrysotile Association, which boasts of backing from an alliance of workers — “For Chrysotile” — that claims 12 million members in more than a dozen countries, including Russia, China, India, Brazil, and Canada. The alliance, according to the Chrysotile Association’s website, “represents the interests of its members in government agencies at all levels and in international associations, and informs the public and mass-media about scientific research on chrysotile asbestos.”

The Chrysotile Association is part of an international network of industry groups that promotes the “controlled” use of asbestos despite strong evidence of the fibrous mineral’s toxicity. The network’s message, as voiced by Nikitin, is consistent: chrysotile, or white, asbestos, is less dangerous than other forms and may be even safer than some substitute materials.

Olga Speranskaya, a leader of the Russian environmental group Eco-Accord, believes that controlled use is “a myth.” Says Speranskaya: “If it is safe, why do you need to control it?” In 2008, Eco-Accord and other non-governmental organizations released a survey of the chrysotile industry in Russia, Ukraine, and Kazakhstan, concluding that all forms of asbestos are dangerous and condemning industry officials for keeping the compound from being listed under Annex III of the Rotterdam Convention, a treaty that requires exporters of hazardous substances to use clear labeling and warn importers of any restrictions or bans. The survey also decried the lack of research into asbestos-related diseases in Russia.

“I think it is useless to continue arguing,” Speranskaya wrote in an e-mail to ICIJ. “The important thing to do is to give people the opportunity to examine the situation themselves.”

A murky business

Ownership of the biggest asbestos producers in Russia — Orenburg Minerals — and in neighboring Kazakhstan — Kostanai Minerals — is difficult to determine. Orenburg Minerals is now Russia’s biggest producer (followed by Uralasbest), scraping more than a half-million tons of chrysotile a year from the Kiembaevskoe deposit, near the Kazakhstan border. Mined since 1979, the deposit holds about 25 million tons of asbestos, enough for at least 50 years of production.

Kostanai Minerals produced 230,000 tons of chrysotile in 2007. It has tapped the world’s fifth-largest asbestos deposit, Djetygarinskoe, since 1965. The deposit, in northern Kazakhstan, holds 37 million tons of chrysotile.

Both producers were managed by a British firm, United Minerals Group Limited, starting in 2003, according to a Kostanai Minerals investors report. The firm’s name changed to Eurasia FM Consulting Ltd. in 2005, but it is unclear whether Eurasia still manages the two operations. In 2004, United Minerals controlled 30 percent of the world chrysotile market.

A Cyprus-based company, UniCredit Securities International Ltd. — part ofUniCredit, one of the world’s largest banking groups, with 10,000 branches in 50 countries — holds stakes in both Orenburg Minerals and Kostanai Minerals “on behalf of undisclosed clients,” UniCredit spokesman Andrea Morawski told ICIJ in an e-mail. Morawski emphasized, however, “We don’t exert any control over [Orenburg Minerals or Kostanai Minerals] nor are we beneficiaries of the stakes held. As far as we are reasonably aware, we have not been beneficiaries of any fee/profit deriving from asbestos activities.”

Online profiles of one former and one active executive of Eurasia, available on LinkedIn, say the company is an “investment subsidiary” of Kazakhstan’s BTA Bank, which is at the center of a political scandal. The government of Kazakhstan took control of the bank in February 2009; the following month, a criminal investigation was opened against its former owner, Mukhtar Ablyazov, who was accused of embezzlement. Ablyazov, who had been an official in the Kazakhstan government, fled to London. He told Vedomosti, a Russian business newspaper, that the criminal case was politically motivated. Before the investigation began, he said, Kazakhstan President Nursultan Nazarbayev demanded that half the ownership in the bank be transferred to his trustee. Nazarbayev’s press secretary declined to comment on the situation.

Kostanai Minerals has received backing from state-controlled banks in both Russia and Kazakhstan. In March 2008, the Russian Sberbank gave the company a $3.6 million loan. In 2007, Kostanai Minerals received a $2.9 million loan from the Development Bank of Kazakhstan.

Officials with Orenburg Minerals and Kostanai Minerals did not respond to ICIJ interview requests. A spokesman for BTA Bank called Eurasia a “client” of the bank and declined further comment.

Registered in the English city of Leeds, Eurasia lists only one shareholder — PL Company Nominees Ltd. Eurasia and PL Company share the same address in Leeds. The founder of PL Company, British businessman Peter Michael Levine, also headed and founded Imperial Energy Corporation, an oil and natural gas exploration company with major interests in Siberia and Kostanai, Kazakhstan, which itself was sold for $2.1 billion in 2009.

Levine could not be reached for comment. A representative of PLLG Group, which includes PL Company, said in an e-mail to ICIJ that Levine has not been associated with the firm for a substantial period of time. PLLG Group, the representative wrote, is a “professional services organization [that] maintains an appropriate policy of confidentiality.”

Financial records of Kostanai Minerals show transactions with at least nine U.S.-based companies, registered in Delaware, Colorado, New York, and Oregon. At least three are listed as chrysotile dealers. The biggest was Asters Investments LLC, a now-defunct firm based in Eugene, Ore., which bought more than 48,000 tons of asbestos from Kostanai Minerals in 2004. In 2006, Asters did more than $1 million in business with a Ukrainian asbestos dealer that had partnerships with both Orenburg Minerals and Kostanai Minerals, according to an April 2006 investors report.

The biggest British dealer for Kostanai Minerals, United Minerals Global Trading, was registered in London in 2002; that year it bought 152,000 tons of chrysotile, according to the Kostanai investors report. The company’s name was changed to Minerals Global Trading in 2004, when it acquired more than five percent of the asbestos produced by Kostanai Minerals. The asbestos was sent to India, China, Iran, Turkey, and Vietnam.

Kostanai Minerals and Minerals Global Trading did millions of dollars in business in 2008 and 2009, according to Kostanai Minerals reports. ICIJ could not discern the owners, directors or shareholders of Minerals Global Trading. Dozens of firms are registered at the same address in London. A BBC reporter was told nobody at the address could help identify or forward a message to the company.

Compared to Orenburg Minerals and Kostanai Minerals, ownership of Uralasbest is quite transparent. Top managers control 38 percent of the company, according to a March 2010 company report. The board includes the owners of Uralasbest and representatives of two groups with offices in South Africa, which banned asbestos in 2008. The C. J. Petrow Group, headquartered in Johannesburg, owned about 14 percent of Uralasbest until 2003 and supplied chrysotile to developing countries. The Marvol Group — established in Germany, with offices in Cape Town, Amman, and Moscow — controlled about seven percent of Uralasbest until 2006. The company was founded by Mark Voloshin in the mid-1980s. Voloshin is a former dentist who reportedly was involved in sales of Russian military equipment to South Africa in the 1990s.

Representatives of Uralasbest and Voloshin did not respond to interview requests. In a 2004 report to investors, Kostanai Minerals said that United Minerals had a constructive relationship with Uralasbest, its main competitor. “The risks of competition are minimal,” the report said.

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