IronMagazine №3 (17) 2017 12 Money makes money What is driving the interest in digital financial instruments? goes online 20 The technology driving change www.metalloinvest.com How innovation impacts the demand for traditional industry materials

26 Giants in metal armour Can skyscraper construction survive without metal?

THE DIGITAL IM SPEAKS AND MOVES ON 2 You can comment on Great Iron Magazine articles online at re-migration

How digital innovation and the efforts of developed governments are helping the process of ‘reshoring’ www.metalloinvest.com IRON MAGAZINE №3 (17) 2017 1

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Founder: Management Company METALLOINVEST LLC Cover story View into the future Editorial office: 02 | Great re-migration 20 | The technology driving change 28, Rublevskoye Shosse, Moscow, 121609, Russia How digital innovation and the efforts of How innovation impacts the demand for Tel.: + 7 (495) 981-5555, ext. 7574 developed governments are helping the traditional industry materials Fax: + 7 (495) 981-9992 process of ‘reshoring’ [email protected] Industry International experience 26 | Giants in metal armour Project Manager 10 | Eternal values Can skyscraper construction survive without Dmitry Kravchenko The complete history of protectionism from metal? [email protected] English Kings Editor-in-Chief Management Anton Troshin Business plan 30 | Risky business [email protected] 12 | Money makes money What drives innovation – technology or What is driving the interest in digital humans? The issue was approved for printing financial instruments? on December 20, 2017 Employees Circulation: 999 copies Focus group 32 | Success: the right place, the Printed by Union Print LLC, 2, ul. Okskiy Syezd, 16 | To find and neutralise right time Nizhny Novgorod, 603022 Iron Magazine asks the experts – how What skills will you need in the digital future? The content of the issue may strictly must cryptocurrencies be not be used without the consent regulated? Summary of the Editorial office. 34 | Theatre. Version 20.17 Audience: 16+ Directors are increasingly using technology in their productions. Does the audience really benefit?

36 | The new old Publisher: LyudiPeople, Group of Companies Why people in the 19th century were scared of Office 18, Stroenie 1, 21, Zvyozdny Bulvar, ‘steam’ innovations, and what came out of it Moscow, 129085 Tel.: +7 (495) 988-18-06 Photo gallery vashagazeta.com 38 | Above the clouds E-mail: [email protected] The world’s best skyscrapers, all in IM’s gallery Director General: Vladimir Zmeyushchenko Chief Editor: Evgeniy Peresipkin Executive Editor: Vilorika Ivanova Designer: Natalia Tikhonkova Photo Editor: Evgeniy Krasnov Available Colour Corrector: Aleksandr Kiselev Production Director: Oleg Merochkin on the Photo: AFP, AKG, East news, Getty, App Store Shutterstock, ТАSS, Russia today 2 Cover story IRON MAGAZINE №3 (17) 2017 3

Great re-migration ot so long ago, the main trend in The new term ‘reshoring’ has become one of the most common buzzwords in recent the manufacturing years. It refers to Western corporations with offshore production facilities – mainly industries of Julia in Asia – relocating back home. Among the main reasons for this re-migration are developed countries Gromadskaya changes to production costs abroad and the protectionist domestic policies. New was offshoring, opportunities brought about by the development of digital technology also have their or outsourcing, role to play in this process. Nproduction. While the brains of the companies remained in their homeland, business owners sourced labouring hands in more affordable countries. As is well known, Asia, and China in particular, benefited from this trend. Since the 1960s, in places like the USA and Western Europe the percentage of GDP accounted for by manufacturing has declined significantly – in some cases, it halved or more. However, after the 2008 crash, which only highlighted the imbalance of power in the leading world economies, Western governments began to look for new recipes for their economic wellbeing.

Time To Move Nobody believed that the process of reindustrialisation would be easy, but it already seems to be on a steady course. “Interest is fuelled by the complex growing role of global value chains, and higher competition amongst developing countries in those industries and subsectors of the global market, which, until recently, were dominated by developed countries,” writes Vladimir Kondratiev, Head of the Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO) in his article for World Economy and International Relations. In these conditions, governments play a key role in relation to domestic business with production facilities abroad. The administration of the current US President, Donald Trump, who rose to power with the simple slogan ‘Make America Great Again’, is often used as an example. However, his predecessor, Barack Obama, also commented that it was necessary “to stop encouraging entrepreneurs who move jobs abroad.” During the Obama 4 Cover story IRON MAGAZINE №3 (17) 2017 5

according to the government, relates American Free Trade Agreement intertwined. What is protectionism? to the product itself, rather than the (NAFTA) negotiations, the US Protectionist trade policies are a set place in which it is finally assembled. administration called for a change in of governmental actions that protect In 2009, Congress enacted the the terms, demanding that American domestic producers from international American Recovery and Reinvestment products should be used more widely competition. In the narrow sense, it Act (known as the Recovery Act), in vehicle manufacturing in the is an issue related to customs policy, allocating substantial funds as a United States of America, Canada and and in a broader sense, it is a set of stimulus package (about $787 billion) Mexico. This included various types of measures protecting the interests of and outlining specific requirements metal (like steel). The US Secretary of domestic companies to encourage for localisation. Its provision imposed Commerce, Wilbur Ross, defended the and stimulate production in a specific a general requirement that any public demands by stating that the measure country. building or public works project would promote production of vehicles Protectionism is not a new idea. funded by the new stimulus package using parts produced by NAFTA Leading European states have relied must use only iron, steel and other members, rather than in Asia. on it since the 18th century, while manufactured goods ‘made in the As this case suggests imposing America has used protectionist USA’; and that the funds will always be defined barriers, this approach looks policies since the end of the Civil sufficient, if construction projects are almost like protectionism. Along War (i.e. the second half of the 19th in compliance with these criteria. with reshoring, this is one of the century). In modern history, the US Walmart has promised to purchase American products for an additional $250 billion These kinds of initiatives are main issues currently being tackled Smoot-Hawley Tariff Act of 1930, commonplace today. Recently, media by the most prominent economists, increasing tariffs on over 20,000 reported that during the North especially since the issues are so imported goods, marked a turning administration, tax rebates were has also made some noise. This policies’ do not always mean returning introduced for businesses investing was a major development, because home. Quite often it is a matter of in domestic industry. Trump is previously Silicon Valley giants lived by moving production closer to the end continuing this theme, but he also the formula of ‘Designed in California. customer. This is especially true introduced a tax on companies that Assembled in Asia’. for companies producing everyday keep their manufacturing abroad, but In Europe, reshoring is not goods, like the Spanish Inditex, a sell their products domestically. yet high on the agenda, since it is large fashion chain with stores like In 2013, Boston Consulting Group not necessary relevant for all EU Zara, Massimo Dutti, Pull and Bear, (BCG) found that the executives of every countries. But governments are known Oysho, Uterque, Stradivarius, and second American corporation with a to be looking into it. “In the United Bershka. Inditex first announced that turnover of $1 billion were planning to Kingdom, reshoring is considered its products would be produced in both relocate their production facilities from a tool for balancing the structure of Asia and Spain. Then it added Portugal China or were looking into doing so. the economy. In Germany, it is being and Morocco to the list. Now, the According to the Reshoring Initiative, factored into the future development range of locations of the company’s since 2010, America has brought more of the country’s manufacturing sector. production facilities has become even than 300,000 jobs ‘back home’; and In Italy, it is the main idea behind the wider, including Russia as well. already 940,000 new industrial jobs state certification programme ‘100% have been created. Made in Italy’, helping companies False Mirror To paraphrase a famous saying return production ‘back home’. In When it comes to the remigration of by Lenin, in the business of reshoring, addition, the Ministry of Industrial industrial facilities, localisation has the upper classes want, and the Renewal in France recently adopted a big part to play. In this respect, the working classes can. Walmart has measures for limiting outsourcing and USA leads the way, using a state already promised to purchase offshoring and accelerating reshoring,” procurement strategy as a mechanism American products for an additional notes Vladimir Kondratiev. However, in for stimulating localisation. Most $250 billion. “So far, this promise is business terms, these ‘immigration importantly, the slogan ‘Buy American’, the largest driver in the trend to move production back home”, said Harry Mozer, the Head of the Reshoring The interest in reshoring Initiative. Thanks to this trend, some industries are now enjoying a is driven by increased renaissance. For instance, reshoring has revitalised the automobile industry. competition from developing Apple’s 2013 opening of production The American IT industry has long lived under the slogan: ‘Designed in California. Assembled in Asia.’ – now its representatives can facilities in Mesa, near Phoenix, USA, countries return production to their homeland 6 Cover story IRON MAGAZINE №3 (17) 2017 7

Countries using industrial robots may cut production point for protectionist policies. It On the other hand, the rapid As a result, the economy reaches of excellent solutions for returning triggered a wave of similar tariff costs by a third economic development of Asia (for the Lewis Turning Point, when high production ‘back home’ or bringing restrictions that rippled around the reasons including Western offshoring), profits become distant memories. it closer to the consumer. Boeing world. Only after the Second World is leading to an increase in labour IMF experts Mitali Das and Papa is a pioneer in this area. At first, War did the picture begin to change. reinstating their protectionist policies. mention the importance of developing costs. As early as the 1950s, the N’Diaye believe that this will ‘almost the company used 3D printing The results of any protectionist At every economic forum, we hear free trade, while in fact they have Nobel laureate in economics Arthur undoubtedly’ happen in China by 2025. for prototyping, and then it began policy are often ambiguous. On the about the importance of free trade, been continuously dismantling it. Lewis conducted a study on how This situation is aggravated by the to produce aircraft components one hand, these measures stimulate but in fact the impact of protectionist And if in 1985-2007, the growth rate the situation could develop further. demographic problem: a decreasing using this technology. Boeing uses the growth of national industries and measures implemented after the of international trade significantly He used the idea that developing working-age population. 3D printing not only for plastic help create employment opportunities. financial crisis if the late 2000s is outstripped the dynamics of global countries are formed of two main The digital revolution can help components, but also for metal parts, Supporters of protectionism argue growing. And, if earlier protectionism GDP, then last year its figures became sectors: 1) low productivity and with this issue. At the end of last year, having signed a contract with Norsk that it enabled the industrialisation of mainly tightened customs policies, now much more modest for the first time. surplus labour (subsistence economy); the United Nations Conference on Titanium for the production of parts for Europe and North America. But on the the emphasis has shifted to non-tariff 2) high productivity (industry). By Trade and Development (UNCTAD) its Dreamliner. other hand, protectionism infringes restrictions – i.e. towards a more Robots Are Coming using the excess labour of the former, presented a report on the role of Today’s clients prefer custom- the freedom of entrepreneurship and elegant, yet effective strategy. However, One of the conditions for the large- the latter increases profitability. The automation in the modern world, made products to mass-produced consumer rights. And we should not the time-tested practice of trade scale industrial remigration of growth in labour productivity outstrips according to which robots will take items. This goes not only for the forget that any severe restriction of barriers is alive and well: according to industry was the shale revolution, wages, so it is possible to get more 2/3 of the jobs in developing countries. design of the goods, which usually is external competition could lead to the WTO, since 2008, over 2,000 trade which reduced energy costs and profit than in economies without This again brought the focus to China, not that difficult to amend, but their monopolisation. barriers have been introduced. lowered the cost price. In the case such distortions between sectors. which since 2013 has purchased functional elements, which often But despite these disadvantages, And here is the paradox. At every of America, the weakened dollar also However, as the number of surplus more industrial robots than any other come with a heftier price tag due to more and more countries are summit, the G20 member states needs to be considered. workers decreases, salaries increase. country in the world. So, for its long- the need to reconfigure equipment. term economic development strategy, Producing customised goods in Beijing is betting on strengthening close proximity to the shipment domestic demand. But this is hardly destination eases this process, as it possible without increasing the allows some room for implementing incomes of the population through the necessary amendments. In such higher wages. The outcome for China cases, digital technology, including remains unclear. 3D printing, provides a significant But digital technologies are degree of flexibility. It is much easier becoming commonplace not only in to readjust its production lines for any the East, but also in the West. This customisation required, as well as area also is being led by pioneers. produce smaller batches. According to BCG, in countries that Digital technology has recently are introducing industrial robots on a been high on the agenda of many greater scale, production costs could governments around the world. be reduced by 18-33% by 2025. This Germany launched its High-Tech explains, for instance, why Adidas Strategy before the financial crisis. opened manufacturing facilities in In 2012, the country adopted the the Bavarian city of Ansbach in 2016, Industrie 4.0 initiative, an economic staffed mainly with robots. Humans development plan with a focus on new are only required to oversee the work technologies. One of the key objectives of the machines, demonstrating that of this plan is to encourage’ smart’ new technologies are benefitting the services, which the government reshoring trend. supports, both directly and indirectly. Alongside robotics, additive This includes such measures as manufacturing also offers a number establishing innovation clusters. Additive technologies are among the solutions that help to “bring” production 3D-printing from titanium can save Boeing up to $3 million on the production of each Dreamliner, according to Norsk Titanium to the consumer 8 Cover story IRON MAGAZINE №3 (17) 2017 9

Results can be seen in industries that have managed not only to preserve, but also Acting Minister of Industry and Trade and lower interest rates on loans for Denis Manturov, the policy is set to new integrated investment projects. to develop competences create “conditions for a new round In accordance with the new Industrial of industrial development in the Policy, the government established its country”. Industrial Development Fund, which Most importantly, the document since 2016 has sponsored about 130 Mind the Gap reshoring, although its content outlines new special investment ventures, worth over 34 billion roubles For Russia, offshoring has never is completely different. 2014 saw contracts that guarantee long-term (approximately $578 million), which been a big issue. But it would be the approval of the revised version stable business conditions, as well will help to create about 12,500 jobs. problematic to overlook the new of the Development of Industry as tax rebates for new integrated Businesses are hopeful that global trend towards reshoring, as and Enhancing Competitiveness investment initiatives. At the First such measures will prove effective. consequences may be challenging. initiative. Its main new objective National Import Substitution Forum According to the Head of the ‘Import substitution’ has was to reduce the quantity of goods in September 2017, the Deputy Head Russian Union of Industrialists recently become a major imported into Russia. The same of the Ministry of Industry and Trade, and Entrepreneurs, Alexander economic trend in Russia. In its year, the government adopted a new Georgy Kalamanov, also mentioned Shokhin, special interest ventures objectives, this concept resembles Industrial Policy. According to the subsidies for industrial R&D needs have already become one of the most effective tools for supporting domestic industry. However, the To confirm the absurdity of accusations of espionage, Kaspersky Lab decided to take process is not straightforward, a painful step – disclose the code of its software products and it will, most likely, take some industries a while before they can reap the fruits of these initiatives. However, ‘import substitution’ in the United States of America, This goes for the most R&D-driven cannot be a means to an end. has almost brought suspicions in sectors, like the chemical industry Instead, it is one of many incentives espionage against the company. To and pharmaceuticals, where import for industrial development. Global prove its innocence, the company is substitution is taking a long time to product demand is another driving now going to open its software code have an effect. force behind the process. According to investigative experts. However, there are some to Petr Fradkov, Head of the Russian In conclusion, since the industries that managed to preserve Export Center, in January-June this 2008 financial crisis, which resulted their existing skills, while also year, Russia’s non-primary exports in reshoring and re-industrialisation, developing new knowledge. Take grew by almost 19%, while exports of global economies have undergone the heavy goods vehicle industry, for engineering products are powering major restructuring. Consequently, in instance. The leading Russian player through at the same speed as today’s world, there is hardly a country is KAMAZ. In 2016, its sales rose exports of agricultural products. that does not rely on protectionist by 15%, increasing the company’s One of the main stumbling policies to a certain degree. The domestic market share to 56%. In blocks is the development and particular shape or form this type comparison, in 2012-13 its share international sales of domestic digital of policy will take depends on each was 30-35%, which was the highest productions solutions. In terms of individual government. However, the it had ever been at that point. This its importance, Vladimir Putin once key is to not to cross the line as doing year, the market share is still likened Russia’s current need for so could destroy the existing system trending upwards: in January-October digitalisation to the electrification of of international relations. “While KAMAZ’s sales in Russia grew by 22%. the country in the past. In October, protectionist policies are becoming The vehicle manufacturing giant’s speaking at a meeting of the Security the norm, one-sided, politically growth has had a positive knock-on Council, the president said that it is motivated sanctions on trade and effect for its partners. KAMAZ is one important to develop the production investment are becoming a hidden of the key clients of OEMK (part of of not only hardware, but also weapon,” wrote Vladimir Putin in an Metalloinvest). Since 2009, KAMAZ software in Russia. He stressed the article for the German newspaper has purchased over 400,000 tonnes importance of “minimising the risks Handelsblatt, in July, ahead of the of high-quality rolled steel products of depending on foreign software and 2017 G20 Summit in Hamburg. In his from the enterprise. In November, telecommunications”. opinion, “only open trade relations KAMAZ and Metalloinvest signed a This will not be easy to implement, based on uniform norms and new three-year contract, according as Russian companies are up against standards stimulate the growth of to which, KAMAZ intends to cover up very powerful global competitors. the global economy and contribute KAMAZ was able to increase its share of sales in the Russian market to 56%. As suppliers, the company also often chooses domestic to 80% of its bar requirements with For example, a massive campaign to the progressive development of enterprises. One of them is the Oskol Electrometallurgical Plant, part of Metalloinvest purchases from OEMK. against Kaspersky Lab, launched international relations.” 10 INTERNATIONAL IRON MAGAZINE №3 (17) 2017 11 EXPERIENCE Eternal values

In these times of global economic upheaval, governments of various compa- nies are becoming more tempted to resort to protectionism. As Jim Yong Kim, Olga President of the World Bank, notes, this is one of the fundamental risks for Mikhailova the fragile economic recovery. The effectiveness of protectionist policies is not always evident. However, as a rule, no one rushes to reject them, either.

t is genuinely unknown who A Reformer with a Crown of wool and preventing imports of was the first protectionist. During the time of Henry VII, fabric was ready-made fabric products. English However, the English king a vital commodity. England exported producers, on the other hand, Henry VII of the Tudor dynasty wool and imported finished fabric benefited from tax breaks and a policy Boeing accused Bombardier of dumping when it sold Delta Air Lines CS100. As a result, the Canadian company faced the threat is often described as the products. Henry ended this dependency of trade preferences. As a result, the of defensive duties, which could enter into force in the US in February 2018 pioneer of this economic policy. by incentivising technical production, country’s fabric production led to Henry ascended to the throne and increasing the domestic economic prosperity. Henry VII’s heirs Iin 1485 after the bloody Wars of the processing level of raw materials. continued his policy. Roses and made his name with his To achieve this, he introduced The author of Robinson Crusoe, goods transported by water between lack of competition. So far, no US By saying this, he acknowledged economic policy. tariff barriers, decreasing exports Daniel Defoe, who also wrote American ports be carried on ships president has launched a full-blown the defeat of the opponents of political tracts, called the strategy A bearing the US flag, constructed campaign to abolish the Act. And free trade, including himself. That Plan of the English Commerce or the in America, owned by American this can hardly be expected from Disraeli was mistaken is evident Tudor Plan. By and large, the policy citizens, and even crewed only by Donald Trump, who has always even today. is still in existence today in the form American citizens or American spoken of supporting American A recent joint study drawing of support for industries with a high permanent residents. These business. on figures from the World Bank, degree of processing. In modern requirements still apply even when the Yet, as history shows, the Heritage index and Global Trade history, Japan and South Korea have ships stop in foreign ports on the way. development of domestic industry Alert concluded that the world’s undergone similar reforms. The Act has been repeatedly needs more than just protectionist leading powers have often relied on “Not all countries have succeeded criticised. Senator John McCain, policies. Following World War II, protectionist laws and protective through protection and subsidies, unleashed the latest attack, calling it the Japanese government adopted measures to defend domestic but few have done so without them”, ‘an archaic law’. It is often reported a policy of active support for the industry. No fewer than 7,000 writes the South Korean economist that, as a result of this protectionist country’s steelmaking companies. such policies were uncovered in Ha-Joon Chang in his book Bad policy, building a ship in America However, because of these excessive the legislations of the 60 largest Samaritans. costs four times more than in Asia, protectionist measures, the industry global economies. Experts while running a ship is at least twice ended up with excess high-cost estimate the monetary value of Dear Sailors... as expensive. Critics even blame the steel production capacity. In the end, these policies at $400 billion per year. However, not all protectionist Jones Act for traffic jams. In Europe, Japan adjusted its strategy, putting According to the study, of the policies have been successful. A 40% of domestic cargo is transported more emphasis on the technical relatively large economies, only good example would be the Jones by sea, but in America the figure is modernisation of the steelmaking Brazil, Saudi Arabia and Tunisia Act (The Merchant Marine Act) in not more than 2%. industry and on increasing efficiency. have liberalised their economic America. Since 1920, this legislation And yet the Jones Act still legislation in recent years. “Donald has been eliminating foreign stands today, to the profit American Everyone Does It Trump is getting all the headlines at competitors from maritime trade ship owners and shipbuilders, as “Protectionism is no longer just dead, the moment but everybody’s doing routes linking the different regions of well as rail and road logistical it’s cursed,” British Prime Minister it,” David Lowe, one of the authors the United States of America. companies, who benefit from the Benjamin Disraeli said in 1850. of the study said to Reuters. The In the time following World question is: who is suffering the War I, the Jones Act was designed most from these policies? The expert to support domestic ship owners Leading world powers answer is unambiguous: countries and shipbuilders, as well as to that, in the time of non-free trade, solve American employment issues. are increasingly using depend exclusively on certain Railway companies lobbied for the markets. “You can see why Trump law, fearing that European merchant protectionist measures to is talking so tough about deals like fleets would use American routes. NAFTA. Because he can,” says The Act continues to require that any protect their producers David Lowe. 12 BUSINESS PLAN IRON MAGAZINE №3 (17) 2017 13

Money makes money

The role and importance of the financial sector for the global economy is ever- growing. If the world’s leading countries officially recognise innovations such Yakov as cryptocurrencies, blockchain and smart contracts, it could indicate the Utin beginning of a new era.

n the beginning, financing funds, which promised more income. foreign units up for sale. The Fourth became possible due to the The stock market attracted more Industrial Revolution also played deregulation of financial activities. attention because of pension reforms, an important role in transforming At the end of World War II, the resulting in pension savings also international production chains. Due Marshall Plan helped accumulate being placed in securities. to high automation levels, production a significant amount of dollars In the struggle for customers, costs in developed countries have outside the USA. This led to banks lobbied for a revision of the reduced. Icompetition for foreign currency Glass-Steagall Act, which prohibited deposits, with borrowed funds mixing credit and deposit operations Removing Payment lent to companies that exported with investment banking. Moreover, the Barriers goods to America. In the late 1970s, deregulation did not stop there. Banks, whose innovations ultimately the amount of offshore dollars in The strengthening of the led to a significant economic downturn, circulation rose to $385 billion; by the role of banks and other financial faced a sharp increase in regulatory mid-1980s, it exceeded $1.6 trillion. intermediaries has led to significant pressure. The need for additional changes in the structure of the capital, the cost of improving risk Returning Home largest corporations, according management processes, and the In Britain, it was Margaret Thatcher’s to Susan Bergen, Professor at complexity of reporting formats has government that significantly the Massachusetts University of led to a substantial increase in costs. influenced the internationalisation Technology. The pressure on a This has led to the emergence of a of financial services. Following a company’s management to show new class of technology companies large-scale antitrust investigation in short-term profits has forced that, without relying on credit, interest 1986, the UK abolished fixed interest businesses to rely more heavily and market risks, can make payments, rates on securities, and lifted the ban on outsourcing their industrial advise investors, buy and sell securities, on merging the roles of brokers and production. However, after the global and connect potential borrowers and financial advisers. Finally, foreign financial crisis in 2008, the pace of creditors. banks were given the green light to globalisation has slowed significantly The changes penetrated the own firms that traded on the London and many companies have put their economy even further. In October 2008, Stock Exchange. Around the same time, the USA went through similarly notorious reforms. In 1971, President Nixon Traditional institutions, whose refused to peg the dollar to gold, which resulted in a recession, innovations ultimately led accompanied by increased inflation. In these conditions, bank depositors to a crisis, faced increasing began to transfer their funds to mutual, venture capital and hedge regulatory pressure 14 BUSINESS PLAN IRON MAGAZINE №3 (17) 2017 15

In order to legalise Russia’s First cryptocurrencies, the key is In September, Raiffeisen Bank, MegaFon and the National Settlement Depository implemented recently, a special standard has been to “not build up unnecessary the country’s first deal to place bonds using introduced for ICO tokens, compliance blockchain. They issued 500 million roubles with which automatically guarantees barriers” with a circulation period of approximately three the listing on a variety of virtual months. exchanges. This new way of raising are working on agreeing their position ‘distributed database’, ‘digital L/C’ The structure of the issue is made up funds is rapidly gaining popularity. and it is likely that the norms protecting (digital letter of credit), ‘digital bill of of discounted commercial bonds, which are This year, blockchain start-ups placed investors’ rights will soon be introduced. sale’, ‘cryptocurrency’, ‘token’, and registered by the National Settlement Depository tokens for a larger amount than they ‘smart contract’. These are the issues and are placed by private subscription without received from traditional venture Weighing Up the Risks that the Russian FinTech Association collateral or an issue prospectus, and with easy investors. In Russia, blockchain is also getting has worked on since 2016. This disclosure. Circulation on the secondary market At first, a whitepaper with a a lot of attention: during the St. legalisation will allow the Association’s does not provide for exchange trades. Such description of an idea was enough for Petersburg International Economic creation – MasterChain – to become a securities allow companies to quickly attract the ICO. Today, it requires a competent Forum 2017, Vladimir Putin met with fully-functioning and legally-certified short-term liquidity from qualified investors. independent reviewer to certify that Vitalik Buterin, the founder of the platform for any cryptocurrency The issue used a fully decentralised the smart contract is programmed Ethereum. applications. platform, with the issuer, the central depository, appropriately. In addition, nowadays any In October, following the It is likely that Bitcoin was and the investor having direct access to it. The use of funds from the electronic wallet meeting, the President instructed the conceptualised as a response to the solution provides the necessary confidentiality, is often carried out under the watchful government and the Central Bank global financial crisis, whose tenth but at the same time makes the process of Cryptocurrencies have a chance to become one of the cornerstones of the eye of an authoritative person. All of to work out the issues of regulating anniversary the world will mark next placement, circulation and accounting of bonds new global financial system this is increasing trust in technology. these new financial technologies. year. It is symbolic that it is now, at a as transparent and simple as possible. Using The U.S. Securities and Exchange According to the documents published time when business and consumers cryptographic protection and verification allows Commission (SEC) decided that, in on the Kremlin website, this refers have become more optimistic again, users to conduct all transactions electronically. the American scientist Nick Szabo, accessible only by authorised users. some cases, tokens can be classified to the regulatory framework for ICOs, that governments and central banks was finally realised. Unlike Bitcoin, It is possible that in the coming years as securities, and the U.S. Commodity using a similar approach to IPOs. are trying to legalise cryptocurrencies, which allows users to initiate direct the International Organization for Futures Trading is inclined to classify In addition, the Russian legislation thus opening up new horizons for a then-unknown man named Satoshi and unconditional transactions, smart Standardization will include a standard tokens as commodities. Both bodies is legalising terminology such as financial innovation. Nakamoto published a research contracts perform transactions, for blockchain technologies and its paper entitled Bitcoin: A Peer-to-Peer automatically monitoring compliance distributed legers. Thus, Satoshi Electronic Cash System. It described with certain conditions. Nakamoto’s invention has the chance a secure electronic payment system The innovative systems do not to become one of the cornerstones of with its own currency. The authors end there. A few years ago in the the new global financial system. managed to solve the problem of trust USA, a global consortium called R3 in an environment where participants was created, within which the Corda Finding Investors do not know if they can trust each platform was developed, facilitating Blockchain also makes the full other. At the same time, in a so-called the storage, management and automation and transparency of blockchain – a distributed database synchronisation of responsibilities crowdfunding possible. Smart contracts with information about all transactions – between financial organisations. have become an ideal means for users do not need any identification Corda’s smart contracts use legitimate attracting financing in cryptocurrencies: except their digital signature. The owner legal language. The Digital Asset the computer protocol can accept user of a specific signature is unknown, Platform is yet another interesting applications to purchase a certain but the operations in all wallets are development – it is an environment number of tokens into its wallet. transparent. designed for creating financial The process of crowdfunding The anonymity, or rather, the applications with its own programming on the Ethereum is called Initial lack of a direct connection between language. In it, the philosophy of Coin Offering (ICO, similar to IPO). a particular person and one or more blockchain and its smart contracts Purchased tokens can then be resold Bitcoin wallets, prompted abuse of the is linked to a secure database, on electronic platforms, and, more system. However, existing businesses saw blockchain as an opportunity to reduce costs by saving on the services Blockchain has provided of an intermediary, whose role had suddenly become redundant. businesses with the opportunity Blockchain spawned yet another phenomenon – the Ethereum to reduce costs – you can save on platform, where the idea of smart Anyone can participate in the mining of cryptocurrencies. This involves participating in the maintenance of a distributed platform by contracts, proposed in the 1990s by intermediary services downloading your own equipment 16 Focus group IRON MAGAZINE №3 (17) 2017 17

To find

Nikita Maslennikov, Alexander Abramov, and neutralise Head of the Finance and Economics Professor of the Department of Department at the Institute of Finance, Higher School of Economics: Recently cryptocurrencies have become not only a means of payment, but also Contemporary Development: attractive investment assets. However, they carry risks associated with money I am a supporter of the laundering, tax evasion and spread of fraudulent schemes. Iron Magazine asked Due to its high volatility, the cryptocurrency market regulation. Alexander some experts about how tough governmental regulation should be in the virtual cryptocurrency market resembles a If at first this phenomenon was Bulanov environment. dotcom bubble that is about to burst. more like an initiative for a narrow However, I believe that in this case, circle of specialists, now it is the crypto-market would not collapse becoming truly global. Ultimately, but clear itself from non-viable this leads to some users unable players. to comprehend all the risks of Nevertheless, the market cryptocurrency usage, and who regulation is needed anyway. need protection. But on the other Various countries have taken hand, excessive governmental different approaches. In the USA intervention could damage cryptocurrencies are treated as goods, cryptocurrency’s appeal. and the transactions with them are The emergence of taxed accordingly. Japan recognises cryptocurrencies had many bitcoins as a means of payment, prerequisites. But despite their while Switzerland treats them as a relevance, they have not yet found foreign currency, and China prohibits wide application in the financial any crypto-operations. In general, sector and their positioning as cryptocurrencies are considered an alternative to real money mainly as a new type of financial is premature, in my view. This instrument. This interpretation seems is mainly because blockchain to be the most promising, in my view, currencies have not yet been built as the existing regulatory measures into the taxation system and are can be applied. characterised by high volatility. The process of crypto-market I believe it would be better formation is likely to be accompanied to use cryptocurrency as a by the development of digital national financial asset that has its own currencies as equivalents to fiat money regulated market. Furthermore, (that is, legal means of payment, the cryptocurrencies could be used nominal value of which is determined to develop commodity markets, and guaranteed by the government), for example, within the Eurasian necessary for accounting purposes. Economic Union (EEA) countries. Thus, crypto-rouble as a digital This could achieve liberalisation of version of the national currency will trade in the EEA that would benefit be fully controlled by the Central the economies of the member Bank. In this case, the Central Bank will have to provide liquidity not only to credit institutions, but to all active Excessive participants in the financial system as the current use of cryptocurrencies interference excludes any mediators and allows operations to be conducted directly. should be feared 18 Focus group IRON MAGAZINE №3 (17) 2017 19

Elina financial power. It is at this point to fraudulent schemes, prompting the Konstantin before the abolition of the gold need to solve the problem of collecting Sidorenko, that we can expect the formation of country’s leadership to subsequently Korishchenko, standard. This is because the issuance minimum required information about Head of the a fully-fledged cryptoeconomy with introduce restraining measures. Head of the of a cryptocurrency could only occur bitcoin account holders. Interdepart­mental sufficient capitalisation. However, this Recently the Minister of Department of upon completion of an actual process – The cryptocurrencies regulation Working Group of will only become a reality if there is a Communications Nikolai Nikiforov Stock Markets «mining». As the current monetary should be treated very carefully and in a the Russian State regulatory framework that guarantees announced that Russia plans to develop its and Financial system has been in crisis since 2008, balanced way. Looking at the example of Duma on risk protection against unwanted risks. own national cryptocurrency. I think this Engineering, the use of cryptocurrency could be China, users may simply move on using assessment of When developing the framework, would make sense, only if the crypto-rouble Faculty of one of the most effective measures to the same services but in a different cryptocur­rencies, we must rely on our own capacity. Not is viewed as some sort of transaction- Finance and improve the situation. country. It is probably worth taking into and a Professor at a single country in the world has yet facilitating service, a link between the real Banking, Russian As for the risks associated with account the Japanese experience, where MGIMO: built a significant legislative regulation money and cryptocurrency that cannot be Presidential Academy of National the use of cryptocurrencies (money cryptocurrencies have been recognised as in this area. The exception is Japan, speculated. Economy and Public Administration: laundering, tax evasion, etc.), the same an electronic means of payment, all private According to the Centre for Digital which used cryptocurrency to weaken its concerns may apply to cash, precious individuals and organisations that carry Economics of Financial Innovation excessively strong yen, but this example The main advantage of any metals and other commodities. To out crypto-transactions must register and at MGIMO, the greatest turbulence is of a different matter. To develop the cryptocurrency is that it can be used reduce the risks of illegal use of meet certain requirements (in particular, in the ICO market is expected in necessary legislation and a legal status of The greatest to implement a fundamentally new cryptocurrencies, first of all, we would related to capital). early 2018 followed by stabilisation cryptocurrencies should be governments’ approach to monetary circulation. of the situation. Then, during core priority in this area. China has turbulence Today’s market operates mainly market stagnation, new players become an example when the lack of a in the ICO market on debt. But after switching to The situation will come close to what was are expected to enter, among them regulatory framework, multiplied by the cryptocurrency, the economic model large corporations with significant rapid growth of bitcoin’s popularity led will be in early 2018 could become similar to that used before the abolition of the gold standard

Denis Smirnov, Pavel Novikov, Blockchain Consultant, Director of the FinTech & Lisk Project (Russia): Blockchain Development Centre of the Skolkovo I think in the future, Foundation: cryptocurrencies in Russia will gain status of With over $250 billion financial assets, which in capitalisation, we could be traded on are seeing a galloping specialised exchanges. At capitalisation growth the same time, they would either be affiliated with the of cryptocurrencies. But if we compare this government, or have licences that allow to monitor market to any other major global economic transactions (at least when they are cashed). For phenomenon, it turns out that its scale is not yet this purpose, in the nearest future, a crypto-rouble as big as it seems. There is still some time to should be developed in Russia, the rate of which prepare for changes. would be tied to the value of the national currency. Of course, any technology can be used for both In terms of the forecasts, in the worst case good and evil. In this respect, cryptocurrencies scenario, we can expect either a complete ban on are no different from ordinary money, and as cryptocurrencies or a lack of regulation in this area such they require regulation. In bitcoin’s case, with the possibility of trading cryptocurrencies only on regulations can be easily implemented, since any affiliated sites with mandatory registration. corresponding controlling authority can easily In the best case scenario, we can consider track the streams of tokens, marking them at their the wide use of cryptocurrencies as a financial discretion. In a way, it could work as an X-ray of instrument, in which governments would assume cashflow, scanning all financial transactions and not only the role of regulators, but also the duties hence reducing corruption. of arbitrators in operations which would involve It is likely that in Russia, bitcoin and other cryptocurrencies (for example, providing legal cryptocurrencies will not be used as a means of protection for organisations dealing with ICOs). payment. Instead they could become a means of exchange, savings and investments. In 2018, Russia is planning to develop new taxation The state can not only be regulation and new terminology for the crypto- economy, including ‘cryptocurrency’, ‘tokens’, a regulator, but also an arbiter ‘smart contracts’, ‘ICO’ and ‘mining’. 20 VIEW INTO IRON MAGAZINE №3 (17) 2017 21 THE FUTURE

Significant Contribution

According to the Digital McKinsey The technology n the modern world, the law of countries for their entire subsequent Digital Russia: New Reality report the developmental acceleration history, emphasises McKinsey. published in July 2017, digital of history, which states that the Today, digitalisation is shaping the transformation is one of the main speed of human development appearance and structure of the factors driving global economic increases at each period of economies of countries and even growth. According to the report, in the driving change history, can be observed with entire regions. At the same time, USA, the expected increase in value the naked eye. Smartphones, technology is fundamentally affecting as a result of digital technology could Innovation requires more than just creative thinking. It also needs materials which not long ago seemed futuristic, demand in traditional industries. reach $2.2 trillion by 2025. In Russia, I digitalisation may increase the to help ideas become a reality. Experts warn that technological advances may in a few years have become everyday Some of these trends are still not Julia have a significant effect on the demand for raw materials. In particular, inno- objects. New technology and ideas immediately clear, while others can country’s GDP by 8.9 trillion roubles Gromadskaya, Alexander vative development could lead to demand for an increase in new high-quality are constantly introduced around be predicted with a high level of over the same period. Bulanov steel grades. the world, affecting all aspects of certainty. human life. According to McKinsey, this The Decline of The Oil ‘black gold’ is reached, after which year humanity has passed the point and Gas Era the industry is expected to enter into of no return, with every second The most pressing issue for Russia, gradual decline. Alexander Novak, person on the planet now connected one of the world’s largest oil and gas Minister of Energy of the Russian to the internet. In terms of scale, exporters, is how long the era of oil Federation, commented at the today’s progress is comparable and gas will last. A few years ago, Russian Energy Week in October: only to the industrial revolution of its decline was associated with the “New technologies are making it the 18th and 19th centuries, which Peak oil theory, the point at which possible to extract value practically determined the leadership of some the maximum rate of extraction of even from a stone”. Sources of GDP growth as a result of digitalisation

Optimising production and logistical operations • Real-time monitoring of production lines in real time 2,1–2,9 • Optimisation of logistical routes and identification of priority orders of shipments

Increasing the efficiency of labour market • Efficient and fast search for work and filling of vacancies • Opportunities for remote work 1,4–4,0 • New professions and jibs Impact of digitalisation The potential effect on GDP from the digitalisation of the economy Boosting productivity of equipment by 2025 is valued at: • Reducing idle time of equipment and expenditures on 0,4–1,4 repairs 4,1–8,9 • Increasing workload of equipment trillion roubles

which represents Increasing efficiency of R&D and product development 19-34% • Fast prototyping and quality control 0,2–0,5 of total GDP growth • Analysis of large quantities of data in development and finalisation stages of production

Reducing usage of resources and production wastage • Reducing use of electricity and fuel <0.1 • Decreasing wastage of raw materials during production 22 VIEW INTO IRON MAGAZINE №3 (17) 2017 23 THE FUTURE

In the digital age there is a Gennady growing demand for many Podgorodetsky, Director of Today, the theory of peak oil metals and alloys with unique A reversal of this trend can be The demand for copper could the Innovative demand is widespread. There is no expected only with a technological grow not only from electric cars, but Metallurgical general agreement as to when the properties leap within the energy sector. also because of developments in Technology Scientific peak will be reached. Researchers at According to Alexander Novak, the energy sector. Take the growth and Educational The Grantham Research Institute on only with the invention of easily in the use of solar panels. Also, Centre at the National Climate Change and the Environment The most commonly discussed of Royal Dutch Shell, noted during accessible high-volume and very without copper, the production of University of Science believe that it will take place happen reasons for the change in demand the last St. Petersburg International fast batteries could we possibly modern smartphones, computers and Technology MISIS: in 2020. The World Economic Council include the increase in energy Economic Forum, this picture discuss a peak in demand and other electronic devices would has provided an estimated date efficiency, the transition to alternative seems slightly over-simplified, for hydrocarbons. So far, this be impossible. In total, according The most metal-intensive branches of modern of 2030; the International Energy (greener) energy sources, and the noting, “Even if 50% of electricity technology is not available. to Wood Mackenzie, while in 2016 industry are construction, engineering, and Agency and OPEC claim 2040 to be demand for which has been steadily demand is supplied by renewable copper consumption was estimated automobile manufacturing. Metal is a vital core a good bet. And one of the main growing in recent years. Examples energy, then, in spite of everything, Copper Mountain at 22.3 million tonnes, then material in these industries, because progress producers of petroleum, Saudi include: solar batteries, tidal energy, aviation, shipping, petrochemicals, all At the same time, advanced in 2020 it could grow to 24 million is largely dependent on the development of the Arabia, presumes a peak to be not wind power, as well as alternative production processes that require technology is driving interest in tonnes. steel industry. Various attempts to replace ferrous earlier than in the middle of the types of stack effect equipment. high temperatures, will still require metals. The most striking example is However, copper is not the metals in these industries with other materials century. However, as Ben van Beurden, CEO hydrocarbons”. copper, a vital material for a whole only metal required for modern have proved unsuccessful yet. This is because range of industries from mechanical innovation. In the long run, experts ferrous metals offer the best value for money. engineering to electronics. In the expect to see continued high demand In addition, as the necessary infrastructure last 20 years alone, global copper for steel (a change in the structure of for collecting recyclable materials, is already consumption has doubled. In the sales is also expected, with emphasis established, these metals can be reused future, we can expect an even faster on high-quality brands). For repeatedly. growth rate. example, this will be promoted by In all traditional industries, progress means The automobile industry, and the development of non-traditional reducing the consumption of raw materials and electric vehicle production in energy, as mentioned above. After energy costs for the manufacture of products. particular, may prove to be one of the all, a wide application of steel makes This leads to an increase in the proportion of main drivers spurring demand. Each it possible. One industrial wind high-quality steel grades and alloys with unique electric car requires up to four times generator requires about 140 tonnes properties. According to Worldsteel, in the next more copper than its traditional of steel. Increasingly, steel is being 15 to 20 years, the production of ferrous metals counterpart, which is used for used in fundamentally new fields. is expected to grow at a rate of 1-3% per year. electrical wiring: 80kg compared to According to Scott Chubbs, Director At the same time, new technological innovation 20kg of copper. For larger vehicles of Steeluniversity at the World will require an increase in the share of new with bigger battery sizes, the Steel Association, a real milestone high-quality steel grades and other ferrous requirements are even higher. For occurred this year: the ‘living steel’ metals. Requirements for metal products will example, an electric bus needs about Restello building was completed in be toughened, which could result in some 370kg of copper. Kolkata; in this building, steel has adjustments to manufacturing technology. Despite flaws of existing electric been used in not only the structural vehicles (in particular, their long construction and ventilation system, recharging time), experts predict but also in the exterior finishing. that they will gain widespread In addition, there is growing One of the main competitive popularity (according to Goldman interest in lithium, cobalt, nickel, advantages of composites is that they Sachs, sales could increase to 8% aluminium and manganese. are relatively light, which is important by 2030 and 32% by 2040). This is According to CRU, in 2016 around for industries such as the aerospace largely due to green policies across 220,000 tonnes of lithium were sector. Lighter weight materials the globe – cars with zero emissions used in the world, but by 2025 help to reduce fuel consumption, as are the world’s bet on future. Sales this figure could increase to well as to improve various technical have grown in Asia especially. 450,000 tonnes. characteristics. In particular, the According to China Daily, in 2016, At the same time, the demand strength and resistance of composite China purchased 58% of all electric for new materials called composites materials are already greater than cars sold in the world. As a result, will grow. Their range of uses is those of aluminium. For example, according to the International Copper expanding every year. As a result, in Boeing’s Dreamliner aircraft consists Association (ICA), demand for copper monetary terms, Markets & Markets of 80% composite material, in terms will increase from its current level of estimates the world market of of volume, but only 50%, in terms of 185,000 tonnes to 1.74 million tonnes composites in 2016 at $69.5 billion, weight. By comparison, in the early in 2027 in the automobile industry and in five years it is expected to 2000s, these figures were a quarter For the construction of one industrial wind generator, 140 tonnes of metal are required alone. increase to $105 billion. lower. 24 VIEW INTO IRON MAGAZINE №3 (17) 2017 25 THE FUTURE

Innovative methods of metal processing allow not only to create new designs, but also to The use of polymers and composites in medicine is another increase profitability good example. Comparatively recently, reusable glass syringes were used everywhere, and now quality metal grades, as well as These high-quality steel products, they are only a memory. According innovative processing systems, such which outperform all composites to Markets & Markets, in five years, as hot forming, enable vehicles in terms of a number of important the market share of medical plastics to be produced to new designs, characteristics, are used to build increased from $13.9 billion to $21.1 with better safety and lower fuel transmissions, engines, suspensions, billion. In the future, the production consumption. steering systems, high-strength of disposable products, as well as Thus, Special Bar Quality (SBQ) fixing bolts and other components. high-tech items, will develop more products, manufactured by OEMK significantly (prostheses made from (part of Metalloinvest), are used in Paper Will Survive polymers can already be developed the production of vital parts for the However, the most notable example on 3D printers). automobile industry, mechanical of new technological applications However, to proclaim the engineering, shipbuilding and is in portable electronics. If from triumph of composites over aircraft industries, among others. the 1980-1990s, commuters used to traditional materials would still be The main SBQ customers are car read books, now they are all staring premature. In car manufacturing, manufacturers, including both into their smartphones and tablets. cheaper steel is used more and Russian KAMAZ and AvtoVAZ, as Surely, this transition to digital more frequently when compared to well as Volkswagen, Peugeot- technology must mean the inevitable more expensive composites. High- Citroen, Skoda, Daimler and others. death of traditional paper? Especially

The most notable example of new technological applications is in portable electronics

since, apart from various gadgets, The most serious changes are people might prefer to read printed paper has to compete with its direct expected in the printing industry, documents; others might be sending electronic analogues (used, for where the demand for paper is documents to printers by habit or by example, in price tags). However, the expected to go down. This situation mistake. reality is not so simple. According is reversed within business The trend in packaging is not yet to Pöyry Management Consulting, communications. It would seem that clear. A survey by Printfuture and world consumption of paper and electronic document management, Wissler & Partner concluded that paperboard could reach 482 million email, and other digital solutions there is also a noticeable decrease in tonnes per year by 2030. That is, should lead to a decrease in paper demand. Nevertheless, according to demand for these products could consumption. But the fact of the Pöyry Management Consulting, the increase by 1.1% annually. matter is that volume of business volume of consumption of packaging Paper consumption varies in printing is growing. Why? There and container cardboard, as well as the main sectors driving demand. could be many explanations: some sanitary paper, is expected to grow until 2030. This is due to marketing needs, booming e-commerce, and growing consumption of ready- meals and branded consumer goods. Electronic gadgets should However, in this regard, plastic is often the main competitor to logically mean the death cardboard and paper. We will have to It is premature to speak about the victory of composites over traditional materials. However, in some sectors, such wait and see which material will win as medicine, their use creates new opportunities of paper – yet this is not the case this race to the top. 26 Industry IRON MAGAZINE №3 (17) 2017 27

Giants Skyscraper Fashion followed by the Moscow International For a long time, Russia’s tallest Business Centre, known as the buildings were Saints Peter and Paul Moscow City. At 374m high (97 Cathedral and Saint Isaac’s Cathedral floors), one of its skyscrapers – the in Saint Petersburg (122.5m and eastern tower called the Federation in metal armour 101.5m respectively). Skyscrapers Tower – remains the tallest building in The construction of high-rise buildings is often viewed as a symbol of ambition. Yet, came into fashion only in the 20th Europe. However, it is expected that within an ever-expanding urban landscape, such buildings offer a practical solution century under the name ‘tucheresy’, the St. Petersburg Lakhta Centre will Olga for saving space. It was for this purpose that the very first skyscrapers were built in meaning ‘cloud cutters’. Moscow led overtake this record in 2018. Mikhailova, America a century ago, and today we are following the same trend. Although tech- the trend. One by one, the city began Alexander nological progress has sped up substantially in this area, one main characteristic to build multi-storey buildings, the The Importance Bulanov remains the same – building skyscrapers requires a lot of metal. most famous of which was the Nirnsee of the Filling House. With its 11 floors (40m), it When it comes to building skyscrapers, was similar to the Chicago Home there is no such thing as one size Insurance Building. fits all – each project is unique in its he construction of high-rise During the Soviet regime, in own right. The world’s tallest twisted buildings is often viewed as the 1930s, two important Moscow high-rise building, with a twist of a symbol of ambition. Yet, buildings – the Cathedral of Christ 90 degrees, is the Infinity Tower in within an ever-expanding the Saviour and the Sukharev Tower – Dubai (307m, 73 floors). Although at a urban landscape, such were demolished. “Soviet people will lesser height – 246m, 55 floors – The buildings offer a practical create more majestic and memorable Evolution Tower in Moscow has an solution for saving space. It examples of architectural creativity,” even greater twist of 156 degrees. It Twas for this purpose that the very first said Stalin, adding the USSR to is designed with a vertical structural skyscrapers were built in America a the race for the tallest building in RC frame supported by a central century ago, and today we are following the world. However, World War II, monolithic reinforced core. It also the same trend. Although technological which reached the country in 1941, has one of the most innovative cold- progress has sped up substantially interrupted architectural plans, and bent glazings in the world, says Petr in this area, one main characteristic the construction of the Palace of Zhuk, Professor of the Department of remains the same – building skyscrapers Soviets was stopped. Later, the Seven Architectural Materials at the Moscow requires a lot of metal. Sisters, a group of seven skyscrapers Architectural Institute. By today’s standards, the first in Moscow designed in the Stalinist However, while the structural skyscraper was only modestly style, joined the competition. One of elements of the Evolution Tower high – with just 10 floors, the Home them, the main building of the Moscow are made of a concrete-containing Insurance Building in Chicago reached State University (239m, 34 floors), mixture, its neighbour – the Eurasia only 42m. However, in 1885 it was a held the title of the tallest building in Tower (309 m, 71 floors) – uses sensation. Its architect, William Jenny, Europe for 37 years; but this is only a frame made entirely of steel. This is installed a bearing steel frame, which if one excludes the Television Tower a very common solution. In the United reduced the load on the walls. (Ostankino Tower), which from 1967 States of America, for example, 65% In 1913, the Woolworth Building holds the record in Europe at 540.1m of high-rise buildings are built with (241m, 57 floors) was erected in New high (compare to Berlin Television steel-only frames. In Russia, however, York. It was built to steal the title Tower – 368m). the monolithic concrete core is more of the tallest building in the world In the 21st century, Moscow popular. In this respect, the Eurasia from another one of New York’s skyscrapers once again began to Tower is a pioneer of new ideas, skyscrapers, called the MetLife Tower compete with each other for the although its predecessors, like the (213m, 50 floors). Thus, the race to title of the main skyscraper in Seven Sisters, used the same formula. build ever-taller buildings began. “In Europe. The first was the Triumph But whatever the design, there is their symbolism, skyscrapers could Palace (264.5m, 57 floors) in 2005, always one major prerequisite – every be compared to palaces and churches around the world. They share a common objective – to highlight the importance of the customer and to Metalloinvest’s plant is the supplier for the push the scientific, technological and even cultural development of society Dubai Creek Tower project, which will be forward,” believes Vladimir Neustruev, a building structures consultant. 100m higher than the Burj Khalifa 28 Industry IRON MAGAZINE №3 (17) 2017 29

skyscraper needs to be built from used in the construction of Moscow Not a Revolution, of construction work and further has a special degree of fire safety. systems, which increased the rigidity materials capable of withstanding City, have a high resistance to cold But an Evolution costs of operation are an absolute It depends not only on the fire of the spatial framework. Yet, for enormous loads. In this respect, temperatures, which facilitates the The tallest building in the world today necessity, says Vladimir Neustruev. protection system itself, but also on several decades, we have utilised we are yet to find a replacement to trouble-free upkeep of buildings and is the 163-floor Burj Khalifa (828 m) in Moreover, skyscrapers have individual many other factors. adaptive systems that adjust to the metal. According to Petr Zhuk: “Many structures even at temperatures as Dubai, built in 2010. However, a more characteristics. “If one were to replace “One of the important factors is direction and strength of the seismic have tried to find a replacement, low as –70°С. Products made from ambitious project is already under way – high-strength steels with conventional the fire resistance of the skyscraper or wind impact. “This could be pre- for instance, using composites high-strength metal brands undergo there are grand plans to complete the brands, the weight of the structures frame, which is achieved by stressed concrete or cables controlled based on Kevlar fibres. But, so far, a cycle of thermo-mechanical Dubai Creek Tower for the World Expo- will increase significantly, which would processing metal with specialised by a computer,” says Vladimir no one has managed to complete tests and have a stable chemical 2020 exhibition in the UAE. The height require more complex and expensive materials. The World Trade Towers Neustruev. a project without using metal composition. of the main tower should rise 100m foundations. This would result in demonstrated the need for high- However, he adds, in all aspects structures.” The building of a skyscraper above the Burj Khalifa. either big overheads or less floors,” quality insulation. When building of high-rise construction, there The modern use of high-strength means a high level of responsibility For stability, the Dubai Creek highlights Neustruev. the towers, constructors used is an evolutionary rather than a metals in high-rise buildings has not only for the designers and builders, Tower designers rely on steel cables, When calculating the supporting metal structures processed with revolutionary process. “We are yet partly been the result of their but also for the material suppliers. secured onto the reinforced concrete structures and foundations, suppliers synthetic thermal insulation materials to hear about fundamentally new popularity in the military industry, Alexander Tusnin, Professor of the core. One of the metal suppliers must work with higher values of instead of asbestos. The former’s solutions successfully implemented car manufacturing and shipbuilding. Department of Metal and Wood for the Tower is the Hamriyah Steel reliability factors. After 9/11, when fire resistance at extremely high in the construction of high-rises. The These metals have also withstood Structures at the Moscow State plant, which is part of Metalloinvest. the 400-metre sister towers of the temperatures, according to studies, most recent projects are carried the test of time in bridge building University of Civil Engineering, said: It is a new enterprise, commissioned World Trade Center collapsed in did not match design requirements. If out according to the standard and in the construction of large- “It all depends on the height. It in 2010 with a planned capacity of 1 New York, the issue of protection these requirements were met, many scheme, which includes a metal span farms, which led to the best is particularly important to avoid million tonnes of steel products per from progressive collapse in the victims could have survived as the frame, monolithic disks, and a practices applied in skyscraper frame displacements, the vibrations year. The tender was won because the case of local damage to load-bearing collapse would have been delayed by glazed facade.” construction today. of which can be noticeable and cause plant’s products met the technological structures is another factor that about four hours,” explains Petr Zhuk. Nevertheless, even without Such materials are ready for discomfort for people on the top floors. and cost requirements of the Dubai needs to be considered. Then there are the issues of wind revolutions in this area, architects and truly extreme tests. For instance, This is why skyscrapers progress only Creek Tower. For any project, the In addition, it is important not and seismic safety. The first high-rise builders thrive for new heights, and long steel products by Metalloinvest, as far as steel making progresses.” accurate calculation of the cost to forget that any high-rise building buildings used passive protection hence the skyscraper race continues. Tallest Buildings...... The World’s ...Europe’s The Most Ambitious Concepts

Burj Khalifa, Tokyo Sky Shanghai Ostankino Kiev Television Federation Sky Mile The Illinois, Burj Mubarak Al 2000 Tree, Tower, Television Tower, Tower (East), Tower, Kabir, Dubai (United Tower, Chicago (USA) Arab Emirates) Tokyo (Japan) Shanghai (China) Kyiv (Ukraine) Moscow (Russia) Tokyo (Japan) Madinat al-Harir ➤ The idea belongs 1750 Moscow (Russia) (Kuwait) ➤ The skyscraper ➤ The highest ➤ The highest ➤ Built in 1974, it is ➤ The complex ➤ The building will to Frank Lloyd was originally built to television tower structure in ➤ Built in 1967, the the highest all-metal consists of two use alternative Wright, famous ➤ The height is not be the tallest building in the world. It Shanghai, which construction in the towers - East Tower energy sources, architect of many 1500 tower is a veteran accidental; it is related in the world. Before is built, in part, is a significant record holder in the world today. Electro- and the West Tower solar and wind, iconic buildings in to the book of famous the completion of because many of achievement in itself world. The height of its welding was used to (height 242.5m). Their while its top America, including Arab and Persian the work, the media Tokyo’s skyscrapers as the city has 930 concrete part is 385m, secure all elements of foundation is based floors will get the Guggenheim. fairy tales called The 1250 was not informed interfered with its buildings with a which is higher than the tower, which was an on a massive concrete their water supply The project is in Thousand and One of the height of the signal transmission. height of more than the tallest skyscraper innovation at the time of slab of 14,000 m3 from a system discussion since Nights. The idea is building, so as not to 100m. in Europe. construction. of concrete, which for collecting and the 1950s, but to build the tallest give information to is recorded in the storing water the timing of its building as part of 1000 implementation is potential ompetitors. Guinness Book of right from its own Floors Kuwait’s bid to host the Records. m facade. still in the air. Olympics. 528 750 1700 m Floors Floors 500 1609,4 234 Floors 163 m m m m m 634 128 250 1001 828 m Floors 540,1 385 373,8 m 97 632 0

Source: skyscrapercenter.com 30 management IRON MAGAZINE №3 (17) 2017 31 Risky business

Modern society is a dynamic environment, with demand for new innovations constantly evolving. To meet demand, businesses Maria need to be able to adapt quickly. Yakovleva

conomist Joseph and the company itself became at Domino’s, but Doyle’s most important Schumpeter introduced the second largest network of pizzerias lessons are about the mindset required his theory of innovation in the world. How did this happen? It put for organisations to do big things in in the 1920s. He saw all its efforts into clever marketing and tough fields”, wrote William Taylor, the activities of pioneering innovation, just as Drucker prescribed. the co-founder of Fast Company in his entrepreneurs, who At first, Patrick Doyle, Domino’s article for the Harvard Business Review. In the late 1990s, Lebedinsky GOK took a risk and built an HBI production facility, the first in Russia searched for new business new CEO, improved product quality Esolutions and drove innovation, and invested heavily in advertising. Innovative Puzzle as playing the key role in economic Then, Domino’s introduced a number Fear of change and underestimating and the quality of our technology is The company’s bet on innovation made Conference and the Corporate Forum development. However, innovative ideas of innovations that improved customer the harm of inaction are the two growing,” comments Patrick Doyle on Metalloinvest the global leader in of Youth Initiatives. According to Ruslan are not enough on their own, as they service. After all, a pizza by itself is not biggest enemies of innovative Domino’s innovative strategy and its the market for value-added iron ore Ilyasov, Deputy CEO for Organisational need to be put into practice effectively. worth much if it is not delivered properly. management. Since innovation is successful application. If they do not act products. Development and Human Resources, Customers want their pizza quickly and always a risky business, it is treated as a solution to a problem, innovations Management Company Metalloinvest, Pizza as an Example hot, as if straight from the oven. So with caution. At the same time, people are simply irrelevant. Management Lean Innovation “This is a traditional and extremely useful Peter Drucker, one of the most the company optimised its orders using often forget that while some wait, consultancies always recommend What else encourages innovation? practice. Using these platforms, our influential management theoreticians a mobile application and introducing others act. integrating innovation into the long-term Building creative teams and stimulating specialists are able to share their ideas of the twentieth century, noted that delivery via a messaging service. Later, However, a desire to be ahead development strategy for any company. creative thinking in employees are also directly and secure managerial support, business has only two functions: it turned to improving its delivery fleet of the curve is not enough on its The idea needs to go beyond ‘what vital for management. There are many while the company receives first-hand marketing and innovation. “They create and equipping its delivery vehicles own. Innovation for its own sake does should we do?’ and into ‘what results do examples of successful innovative practical suggestions on improving results. Everything else is a cost,” he said. with portable ovens, which could keep not usually work. Instead, it has to we expect from implementing it?” projects conceived by staff members, production.” In 2010, Domino’s Pizza shares up to 80 pizzas warm. always solve someone’s business In the late 1990s, in Russia, which brought their companies to new In the 1990s, Steve Blank, were worth less than $9 apiece. Seven Change always begins in the mind. problem. “Our sales are growing, the the iron ore market stagnated: demand heights through advance products and the godfather of Silicon Valley, who has years later they went up almost 20 times, “I could go on about the innovations number of restaurants is growing, for products and prices stayed flat, technology. Google, for example, has launched eight successful start-ups, but Lebedinsky GOK (now part of a whole culture of start-ups built into recognised the importance of customer Metalloinvest) took a risk and built a its structure. It is thanks to this culture development. His methodology utilises new unit for hot briquetted iron (HBI), that customers around the world can a customer-oriented approach to the likes of which had never before been benefit from applications and services product creation. As Blank puts built in Russia. At that time there were such as Gmail, AdSense and Google it, market demand should drive all only a few such facilities in the world, Cardboard. innovative business activities. This in India, Mexico and Venezuela. This This is especially true when working approach is one of the component parts decision was bold and revolutionary, but with young ambitious employees. It is up of the Lean Start-up methodology. time proved that it was necessary. In to individual companies how they choose It could appear that customer 2007, Metalloinvest launched a second to stimulate creativity in their workforce. development is directed entirely HBI plant at Lebedinsky GOK with an Metalloinvest offers two platforms to its outwards, into the consumer even bigger production capacity, and young staff members who want to share market. But in case of innovation in 2012 it decided to build HBI-3 Plant, their ideas with senior management: the methodology can prove useful for which was launched in July 2017. the Scientific and Technology businesses internally. When it comes to heavy industry, innovation can manifest itself not only in the final product or Technology itself is not service, but also in the process of development and production. And it is as important as the people the company’s employees who are best placed to help identify what processes who implement it require innovative intervention. 32 Employees IRON MAGAZINE №3 (17) 2017 33

Success: the right place, the right time

Up to half of all of the work in the world will be automated within the next two decades. Industrial production will undergo a change in scale matched only by the industrial revolution of the 18th and 19th centuries. Tatyana Petrova

arisa Lapidus, Director of theatres of international universities In the modern world, the digital the Centre for Social and through online education, doctors workforce, referring to people who Economic Innovation at and patients through telemedicine, have adapted to new work conditions, the Faculty of Economics employers and employees through is a strategic asset. “A shortage in of Moscow State remote work, and producers the digital workforce inevitably leads University, notes that we and consumers through additive to a slow-down in the growth of both are already living in the manufacturing. The Internet of the digital economy and a country’s ???the specific criteria of companies in The results of using new An integrated financial and Lage of the digital economy. “Online Things has provided companies with economy as a whole,” observes many industries, from IT to heavy technologies at Metalloinvest economic management system for technologies have bridged many gaps: tools for instantaneous and reliable the Digital/McKinsey report Digital industry. enterprises are already noticeable. all enterprises, created using the between sellers and buyers through data gathering on the state of their Russia: A New Reality. However, the For example, Metalloinvest is According to Igor Gurkov, even the SAP Business Suite 4 SAP HANA (or e-commerce, students and lecture production processes”, she notes. innovation cycle is shrinking. In this expanding its partnerships with very appearance of industrial facilities SAP S/4HANA), will be the main tool reality, basic knowledge is no longer leading educational institutions and has changed. “Industrial facilities driving these changes. During the enough to build a successful career. experts. The Company has joined today look different: they are clean, past year, a team of over 700 people According to Ekaterina Morozova, up with the Stary Oskol branch of and people seem more collected and has been working on designing Director of the Open University of the the National University of Science friendly,” he explains. But he believes the system, drawing on global best Skolkovo Foundation, thanks to digital and Technology MISiS, which has that the best is yet to come. practice. The system is scheduled to innovation, education has become recently launched a new programme In 2016, Metalloinvest started be completed by 2019. This innovation more accessible. “Today you can for mining engineers. Commenting implementing a comprehensive will affect every employee of the acquire unique skills through online on the partnership, Oleg Mikhailov, business transformation programme Company. courses. You can learn a lot for free,” Managing Director of Lebedinsky GOK entitled Industry 4.0. Given the scale According to experts, new she comments. (part of Metalloinvest), said: “First of the initiative, CEO Andrey Varichev technologies are changing the very Job seekers literally have no of all, this will allow us to educate is overseeing proceedings. “These ideology of work. Grigory Finkelstein limitations: Grigory Finkelstein, a future mining engineers at our are complex measures aimed at says that if previously work was partner at ECOPSY Consulting, enterprise, and secondly, we will be transforming all business processes, driven by the idea of meeting specific believes that nowadays, employers are able to choose the best of the best and digitalising and automating goals at any cost, today, compliance not interested in the universities that specialists and, as a result, gain a production, as well as centralising with rules, discipline and occupational applicants attended. Instead, they look competitive advantage over other operations and reducing costs,” he health and safety, as well as for all the necessary competencies. mining companies.” explains. increasing efficiency and productivity, However, he adds, there is always an come first. At the same time, if exception: educational institutions with previously staff were expected to industry-driven departments or joint ‘Digital’ employees are perform a set of clearly defined tasks, programmes. today more and more employers want There are more and more of these a strategic asset. Their shortage to see innovative solutions. And this is programmes, because businesses not accidental. Essentially, machines are interested in employing these leads to a slowdown in relieve people of mundane work, new kinds of specialists. The giving us more time and energy for programmes are an efficient way of the growth rate of the economy creativity. The Amazon warehouse, where operations are fully robotic preparing graduates to be ready for 34 Summary IRON MAGAZINE №3 (17) 2017 35

a wider group of people. For Theatre instance, an initiative called the Special View by the Art, Science and Sport Foundation uses audio descriptive commentary as part of its programme for visually impaired Version 20.17 people. This technology helps blind and visually impaired spectators Digital technologies have firmly established themselves ‘see’ theatre performances as not only in our daily lives, but also in all kinds of art. sighted viewers would. Using tools How is digital technology influencing the development of for simultaneous interpretation, Olga Dmitrieva the theatre? specialists narrate everything happening on stage, such as scene changes, the activities of performers, and their facial expressions and gestures. This is similar to radio commentary on a sports match, heatre has always been continue to be discussed even a few decoration on stage. Rotating, it where listeners can visualise The only decoration used within the Hamlet/Collage performance – a specially- open to technological years after their premiere. transforms into various interiors everything that happens on the programmed cube-constructor innovation. The idea of In Russian theatre, one using multimedia effects. All of this field, thanks to the commentator’s digital representation truly innovative performance serves one purpose – to portray a narration. was born long before comes to mind: Hamlet /Collage, human being left alone with their According to Maria Melnichenko, the invention of the which premiered at Moscow’s own consciousness. director of the Special View initiative, Predicting the emergence of a first computer. In the Theatre of Nations in 2013. In Creators of the play Do through audio description in 2017, middle of the nineteenth century, the this Shakespearean tragedy, the Not Leave Your Planet also set eight performances were adapted for new theatre genre associated T first play by the iconic Canadian German composer Richard Wagner themselves a difficult challenge: people with visual impairments in the formulated this in his concept of the playwright and director Robert to tell the story of awaking Sovremennik Theatre, the Moscow with holography Gesamtkunstwerk (the ‘total work of Lepage staged in Moscow, the in a dream world. This 2016 art’). He proposed the harmonious artistic director, Yevgeny Mironov, interpretation of the Little Prince by coexistence of various forms of art plays all of the characters. All of Antoine de Saint-Exupe‘ry, starring Provincial Theatre, the Helikon (music, theatre, dance, poetry, light the play’s events take place in a Konstantin Khabensky, was staged at Opera and Stanislavski and in the and design) in a single artwork, to half-open cube and is the only the Sovremennik Theatre in Moscow, Nemirovich-Danchenko Moscow allow viewers to completely immerse with the support of the Art, Science Academic Music Theatre. Work is themselves in events onstage. and Sport Charity Foundation. underway to adapt the productions in Today, it is perhaps more In addition to classical music and other regions of Russia. difficult to surprise an audience unusual stage direction, director Experts have varying opinions on with interactive installations, audio- Victor Kramer made use of kinetic how modern technological progress visual special effects and other art and the latest developments in will be used in future in the theatre. pieces of theatrical wizardry. And video art. The result was a stunning Some of them are difficult to imagine. yet some performances still manage fantasy play, colourful, moving and Some, for example, predict a new to surprise their viewers, causing very beautiful. theatre genre associated based on genuine interest among both the Technical innovations help holograms. Given the experience general audience and critics, and to make theatre accessible to we already have, we can hope that in the future new technologies will be introduced only where they are needed, to help to communicate the playwright’s ideas more vividly and expressively. Hopefully, the theatre will maintain its unique and alive immediacy, retaining its original mission to evoke human emotions, discuss painful topics, promote independent thinking, The use of video art helped the Sovremennik theatre take a fresh look at the and save audiences from spiritual ??? story of ‘The Little Prince’ emptiness. 36 Summary IRON MAGAZINE №3 (17) 2017 37

Supporters of technical progress often became cartoon heroes

паровой двигатель metal production tripled. In 1858, the time. This format for presenting a transatlantic telegraph cable was scientific and technical advancements laid, and on August 16 of that year, proved successful for developing Queen Victoria and U.S. President networks between businesses and James Buchanan exchanged their inventors based in different countries. first telegrams. The forum was held regularly from Fears that social and economic then on. At one of these exhibitions in upheavals would impede scientific Paris, in 1878, visitors saw Yablochkov and technological progress have candles – a prototype of the modern rather than as something practical. also proved groundless. And in 1851, electric bulb – decorating the stand of For instance, in 1835, the French the World Exhibition was held in the Russian Empire. minister Adolf Thiers did not believe England on an unprecedented scale. Pope Leo XIII provided an unusual The new old that it would be possible to build In the Crystal Palace, an architectural conclusion to the whirlwind 19th The horrors of the digital future have been their own distinct subgenre five miles of railways per year in his masterpiece made of glass and iron century in his papal address entitled of science fiction for many years. From a robot uprising in the Terminator country. The intelligentsia of the time built specifically for this event in Rerum Novarum or Rights and Duties Anton to the rehousing of the human race in the Matrix, it represents a diverse agreed: the characters in Charles London’s Hyde Park, visitors saw of Capital and Labour on 15 May 1891, Sobchenko genre. It seems that human reality is now beginning to resemble these Dickens’ novel Dombey and Son were incredible innovations for the time: while instructing the congregation: stories for the first time. However, this view is mistaken. confident that they would “survive a fax prototype, an improved Jacquard “Everyone should put his hand to all these ridiculous inventions;” and loom, Colt pistols and many other the work which falls to his share, the chimney sweep from the London mechanical devices. and that at once and straightway.” suburbs publicly promised “on The exhibition was a huge However, mankind’s subsequent the opening day of the railway – success: in six months it was visited history has showed that people did not he appearance of the first As a result, the Luddite movement By the middle of the nineteenth if it ever opens – to order his two by six million people – a third of heed this call, and are still afraid of mechanical looms arose in England. Its members were century – the time of the second boys to welcome the failure by the population of Great Britain at everything new. and steam engines in workers outraged at the mechanisation industrial revolution – the rage shouting mockingly from their England in the second of production, who saw these machines of the Luddites had been chimneys”. half of the 18th century as the main reason for the deterioration replaced by scepticism. This was But, despite a lack of public The workers, initially seemed like a true of their living conditions. They destroyed especially noticeable in relation disbelief, transportation systems revolution: the human industrial machinery on such a scale to the development of routes continued to develop. Other outraged by mechanisation, Tmind appeared to have tamed that the British Parliament was forced of communication. Even after industries also grew, primarily nature. The world had changed both to pass a law in which causing damage the opening of the first railway metallurgy and communications. deliberately destroyed inexorably and irrevocably, causing to production equipment carried lines, the public often perceived new In the United Kingdom alone, over both rapture and resistance. the death penalty. technologies as an entertainment, the decade and a half from 1830, the machines