THE IRON AND STEEL INDUSTRY OF THE USSR IN 1960

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• Collection: General CIA Records
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• Document Page Count: 28
• Document Creation Date: December 23, 2016
• Document Release Date: June 4, 2013
• Sequence Number: 1
• Publication Date: July 1, 1961
• Content Type: REPORT

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CON
N? 84
Economic Intelligence Report
THE IRON AND STEEL INDUSTRY OF THE USSR
IN 1960
CIA/RR ER 61-30
July 1961
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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CONFIDENTIAL
Economic Intelligence Report
THE IRON AND STEEL INDUSTRY OF THE USSR
IN 1960
CIA/RR ER 61-30
WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and '794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
CONFIDENTIAL
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FOREWORD
This report is intended to provide an appraisal of the current
status of the iron and steel industry of the USSR and of trends
significant to its future development. It is an analysis of the
achievements of the industry in 1960 and an assessment of plans for
1961 in relation to the goals of the Seven Year Plan (1959-65).
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Summary and Conclusions
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Page
1
I. Significant Trends 5
A. Current Production 5
B. Growth of Capacity 7
II. Raw Materials Base 15
III. Investment 18
IV. Foreign Trade 21
Tables
1. Production of Iron Ore, Iron, and Steel in the USSR,
1958-60 and. Planned for 1961 and 1965 6
2. Estimated Annual Additions to Capacity in the Iron and
Steel Industry of the USSR, 1951-60 and Planned for
1951-65 8
3. New Facilities Constructed for Iron and Steel Plants in
the USSR, 1960 and Planned for 1961 9
4. Coefficients of Utilization of Blast Furnaces and Open-
Hearth Furnaces in the USSR, Selected Years, 1940-60, and
Planned for 1961 and 1965 13
5. Estimated Investment in Ferrous Metallurgy in the USSR,
1956-65 19
Chart
USSR and US Production of Crude Steel and US Steelmaking
Capacity following page 6
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THE IRON AND STEEL INDUSTRY OF THE USSR*
IN 1960
Summary and Conclusions
The iron** and steel industry of the USSR continued to make im-
pressive gains in 1960. Production, with the exception of pig iron,
was somewhat in excess of the annual plan goals. As shown in the
tabulation, production of pig iron was about 0.3 million tons*** less
than the plan, but production of crude steel exceeded the plan by
about 0.4 million tons and that of rolled steel by 0.6 million tons.
Million Tons
1960
Commodity
Plan
Actual
1961 Plan
1965 Plan
Usable iron ore
105.5
106.5
116.5
150 to 160
Pig iron
47.1
46.8
51.2
65 to 70
Crude steel
64.9
65.3
71.3
86 to 91
Rolled steel
50.3
50.9
55.3
65 to 70
Neither crude nor rolled steel, however, attained the respective
levels of 68.3 million tons and 52.7 million tons that were antici-
pated in the abandoned Sixth Five Year Plan (1956-60). In general,
the expansion of capacity in the industry was less than that planned
for 1960. Only 4 of the 5 blast furnaces and 8 of the 10 open-hearth
furnaces scheduled for completion were in operation by the end of the
year.t
* The estimates and conclusions in this report represent the best
judgment of this Office as of 1 June 1961.
** Unless specifically designated as crude ore, all references in
this report are to usable iron ore.
*** Unless otherwise indicated, tonnages are given in metric tons
throughout this report.
t Totals given here are taken from official announcements concerning
plan fulfillment and do not necessarily agree with the totals shown in
Table 3, p. 9, below. Table 3, which is more detailed, includes some
reconstruction, some carryover from 1959, and some relatively minor
construction.
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Soviet production of crude steel in 1960 is estimated to have been
about 20 percent of world production, almost 62 percent of Bloc* pro-
Zu.ction, and 72.5 percent of US production. Steelmaking capacity in
the USSR, however, probably was only about 50 percent of the capacity
in the US, which was almost 135 million tons. According to some
Soviet forecasts, production of crude steel in 1962-63 is to reach the
level of more than 77 million tons that was attained by the US in
1958.** By 1965 the USSR may be producing at an annual rate of as
much as 93 million to 95 million tons of crude steel, althouel goals
of only 86 million to 91 million tons are planned for that year.
According to preliminary Soviet data, capital investment*** in the
iron and steel industry in 1960 (estimated at 12.5 billion rublest)
increased 17 percent above that of 1959 but was about 700 million
rubles less than the planned investment for the year. Investment in
1961 is planned at 16.4 billion rubles, or about 31 percent more than
the estimated investment in 1960. There are indications that capital
expenditures at some projects are to-Wing more than was anticipated,
but these expenditures are being offset by savings that result from
extending modern technology to broader segments of the industry and
from modernizing existing facilities. Such developments have provided
sizable increments in capacity and output at lower capital costs per
ton than would be required for constructing new facilities. These
savings may explain, at least in part, why Soviet leaders apparently
believe that some future investment funds can be diverted to agricul-
ture without jeopardizing the goals for 1965 for production of steel.
Preliminary data indicate that Soviet foreign trade in iron and
steel and in the steel industry's raw materials increased in 1960.
Exports of iron ore, almost all of which went to the European Satel-
lites, are estimated at more than 16 million tons compared with 13.4
million tons in 1959. Imports of nickel, estimated at 10,000 tons,
increased significantly above the level in 1959 of 4,600 tons and
these imports, obtained mainly from Canada and France, more than offset
* Unless otherwise indicated, the term Bloc as used in this report
refers to the Sino-Soviet Bloc.
** A year in which production of steel in the US was below average.
*** Unless otherwise indicated, data on investment refer to productive
investment, which excludes capital expended for housing, social welfare,
and similar facilities but includes investment in iron ore and manga-
nese mining.
t All ruble values throughout this report are given in old pre-1961
rubles, expressed in constant 1955 prices, and may be converted to US
dollars at a rate of exchange of 4 rubles to US $1, although this rate
does not necessarily reflect the actual value of the ruble in terms of
dollars.
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exports to other countries of the Bloc and Finland, which are esti-
mated at 7,000 tons. The USSR remained a net importer of steel from
the Free World and a net exporter of steel to other countries of the
Bloc.
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I. Significant Trends
A. Current Production
Impressive increases in production of iron and steel were
achieved by the USSR in 1960, reflecting not only new capacity put
into operation in 1959-60 but also higher production rates obtained
from many existing facilities. Production for the year amounted to
46.8 million tons of pig iron, 65.3 million tons of crude steel, and
50.9 million tons of rolled steel, as shown in Table 1.* Soviet out-
put of crude steel represented about 20 percent of world production,
62 percent of that in the Bloc, and 72.5 percent of that in the US.
Steelmaking capacity in the USSR, however, probably was no more than
50 percent of the capacity of 135 million tons in US industry.**
In 1960, as in the previous year, the over-all production of
iron and steel in the USSR substantially exceeded the goal set by the
Seven Year Plan (1959-65). Soviet authorities have stated that produc-
tion amounted to about 1 million tons of pig iron, 5 million tons of
crude steel, and 4 million tons of rolled steel in excess of the origi-
nal plans for 1959-60. 1/*** By achieving the levels of production
planned for 1961 -- 71.3 million tons of crude steel and 55.3 million
tons of rolled steel -- which the industry probably will attain, the
aggregate output during 1959-61 will amount to about 9.7 million tons
of crude steel and 7.7 million tons of rolled steel in excess of the
control figures of the Seven Year Plan for this period. 2/
Soviet production of crude steel increased more than 5.3 million
tons in 1960 above the level in 1959. This advance was the largest yet
obtained in a single year and one that followed an increase in 1959 of
5 million tons above the level in 1958. Thus the growth in production
of steel has averaged 5.2 million tons, or 9 percent a year, during
the first 2 years of the Seven Year Plan period. An increase of 6 mil-
lion tons is scheduled for 1961. From the level of output planned for
1961, annual increases averaging only 4.9 million tons, or 6.4 percent
a year, will be sufficient to enable the industry to attain production
of 91 million tons -- the upper limit of the range in production goals
-- in 1965. Continued expansion at the current (1959-61) average rate
of 5.5 million tons per year would appear to be within the capabilities
of the industry and to represent the minimum rate of increase that may
be expected during 1962-65. This rate would mean that production in
1965 may amount to between 93 million and 95 million tons of crude
steel.
* Table 1 follows on p. 6.
** For a comparison of Soviet and US steel production, see the chart,
following p. 6.
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Table 1
Production of Iron Ore, Iron, and Steel in the USSR
1958-60 and Planned for 1961 and 1965
Million Metric Tons
Commodity
1958
1959
1960
1961
1965
Actual 2/
Plan 12/
Actual Si
Plan 2/
Actual 2/
Plan 1/
Plan 5/
Crude iron ore
114.2
120.6
123.0
N.A.
N.A.
N.A.
230 to 245
Usable iron ore
88.8
92.7
94.4
105.5
106.5
116.5
150 to 160
Pig iron
39.6
42.6
43.0
47.1
46.8
51.2
65 to 70
Crude steel
54.9
58.9
60.0
64.9
65.3
71.3
86 to 91
Rolled steel
43.1
45.9
47.0
50.3
50.9
55.3
65 to 70
a. y. The figure for crude iron ore is estimated.
. The figure for crude iron ore is estimated
c. J. The figure for crude iron -ore is estimated.
d. 7
e.
f. 2/. The figure for usable iron ore is estimated.
g.
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USSR and US Production of Crude Steel and US Steelmaking Capacity
Thousands of
metric tons
140
120
100
80 ?
60 ?
40 ?
20 ?
US capacity
?US production
? USSR production
Plan
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1965*
35083 6-61
*Seven year plan goal is 86-91 million tons;
current expectation is about 93-95 million tons
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B. Growth of Capacity
Although the amount of new capacity commissioned in 1960
equaled or exceeded that in 1959, as shown in Table 21* there were
shortfalls in construction of new blast furnaces and open-hearth fur-
naces compared with the plan for 1960. This plan included construction
of 5 blast furnaces with an estimated total capacity of 4.5 million
tons and of 10 open-hearth furnaces and 3 electric furnaces with an
estimated total capacity of 4.3 million tons. The three electric fur-
naces** were completed, but only four of the blast furnaces and eight
of the open-hearth furnaces were completed by the end of the year,
resulting in shortfalls estimated at 900,000 tons in each category.
In 1961 the USSR plans to build four new blast furnaces with a
total capacity of 4.4 million tons of pig iron -- approximately the
same as the plan for 1960 but an increase of 0.8 million tons above
the amount actually built in 1960. New steelmaking capacity is planned
at 7.2 million tons, the largest on record and larger, by 0.3 million
tons, than the amount commissioned during 1959 and 1960. Seventeen new
open-hearth furnaces and three electric furnaces are to be built during
1961. New rolling mill capacity planned for 1961 includes seven mills
with a total capacity of 4.4 million tons, which also is a new high for
the industry. The installation of five tube mills, with a total capac-
ity of 1 million tons a year, also is planned for 1961. New facilities
constructed for the iron and steel industry in 1960 and those planned
for 1961 are listed in Table 3***.
Among the new facilities brought into production in 1960 was a
2,000-cubic-meter (cu m) blast furnace with a designed capacity esti-
mated at 1.1 million tons of pig iron per year -- the largest in the
world -- which was built at the Krivoy Rog Metallurgical Plant. Three
more furnaces of this size are to be built in 1961, one each at the
Cherepovets, Novo-Lipetsk, and Novo-Tula plants. An even larger unit,
possibly 2,286 cu m with an annual capacity of about 1.8 million tons,
is to be erected at Krivoy Rog.
The capacity of many existing Soviet blast furnaces was in-
creased significantly by the application of Improved technology. A
major development in this field was the conversion of additional fur-
naces to the use of natural gas. At least 13 blast furnaces -- 11 in
the Ukraine and 2 in the Transcaucasus at Rustavi -- were adapted tot
* Table 2 follows on p. 8.
** At least two additional electric furnaces and more than the six
rolling mills identified in the 1960 plan were commissioned, but these
facilities either were carried over from the previous year or were not
included in the official plan for new construction in 1960.
*** Table 3 follows on p. 9.
Text continued on p. 12.
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Table 2
Estimated Annual Additions to Capacity in the Iron and Steel Industry of the USSR E/
1951-60 and Planned for 1951-65
Million Metric Tons
Annual
Average
Crude Iron Ore
Pig Iron
Crude Steel
Rolled Steel
Plan
Actual
Plan
Actual
Plan
Actual
Plan
Actual
1951-55
13.4 to 13.6
12/
8.2
2.4 12/
2.1 1/
2.512/
2.0 1/
2.3 12/
1.3 1/
1956
14.0 2/
7.0 2/
3.2 1/
1.8 1/
2.8/
1.4 51
2.8 121
1.7W
1957
20.0 1/
9.0 1/
2.1 1/
2.1 1/
3.0 1/
2.1 1/
1.9
1.5 1/
1958
16.1 IV
14.5 1/
4.7 1/
4.9 1/
2.5 1/
2.1 1/
1.4 1/
0.8 1/
1959
26.3 II/
23.0 LI/
4.4 2/
2.7 sy
3.6 f/
3.51/
2.9 1/
2.9 1/
1960
31.0 2/
30.0 s/
4.5 1/
3.6 1/
4.3 f/
3.4 1/
4.1 1/
4.1 1/
1961
40.0 s/
N.A.
4.4 a/
N.A.
7.2 s/
N.A.
4.4 s/
N.A.
1952-58
N.A.
9.6 I/
N.A.
2.3
N.A.
1.8 E/
N.A.
1.0
1959-65
28.9 I/
3.4 to 4.3 E/
4.0 to 5.1 E/
3.3 to 4.1 f./
a. Excluding additions to capacity resulting from rebuilding existing facilities and from technological and other
sources of increased production from existing facilities.
b. 11/
c. 12/
d. 1V
e. The total planned for 1956-58 was 50 million metric tons. The amount commissioned was slightly less than the
31 million metric tons planned for 1960.111/
f. Estimated.
g. if
h. 11
K
j. Li
1.
22/
ci?
2.
m.
21/
r.
g.Y
0.
22/
s.
t.
2;(
13.
-2Y
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Table 3
New Facilities Constructed for Iron and Steel Plants in the USSR
1960 and Planned for 1961
Economic Region 2/
Ta (Northwest)
Ib (North)
ha (Baltic)
III (South)
Plant
Leningrad Rolling Mill
Cherepovets
Liyepaya-Sarkanas
Avdeyevka
Dneprospetstal
Il'ich (Zhdanov)
Krivoy Rog
Karl Liebknecht
(Dnepropetrovsk)
Novomoskovsk
Stalino
Voroshilovsk
(Alchevsk)
Yenakiyevo
Zaporozh'ye
Coke
Batteries
Blast
Furnaces
1960 1961 1960 1961
2
2
1
Steelmaking Facilities
1960
Steel-Shaping Facilities
1961 1960 1961
1 12/ 2 open-hearths 2/ 3 open-hearths
4 electric furnaces 1 electric furnace
3 open-hearths
1 d/ 1 2/ 2 open-hearths 2/ 3 open-hearths
1
12/
2 electric furnaces
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1,700-mm continuous
hot thin sheet mill
700-mm continuous
billet mill
350-mm bar mill
1,700-mm continuous
hot thin sheet mill
250-mm wire rod mill
Four-strand continu-
ous casting line
1,700-mm cold strip
mill
Cold bar mill
Cold-rolling shop
250-mm small bar mill
1,150-mm slabbing mill
Cold sheet mill (2d
section of the
1,700-mm mill)
4 fine wire mills
Small bar mill
Thermal tube process-
ing shop
Electroweld tube mill 1/
1,100-mm blooming mill
1st section of cold-
rolling shop
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Table 3
New Facilities Constructed for Iron and Steel Plants in the USSR
1960 and Planned for 1961
(Continued)
Economic Region 2/
(Transcaucasus)
VII (Central)
VIII (Urals)
Plant
Transcaucasus
(Rustavi)
Sumgait
Lt. Schmidt (Baku)
Sardarov
Elektrostal
Krasnoye Sormovo
Novo -Lipetsk
Novo-Tula
Chelyabinsk-Bakal
Chelyabinsk Tube
Chusovoy
Magnitogorsk
Novo-Tagil
Novo-Troitsk
Pervoural'sk - Novo-
Trubnyy
Seversk-POlevskoy
Coke
Batteries
Blast
Furnaces
1960 1961 1960 1961
1
2
2
e
Steelmaking Facilities
Steel-Shaping Facilities
1960 1961 1960 1961
1 open-hearth
1 electric furnace
1 electric furnace
2 open-hearths
1 open-hearth
1 open-hearth
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Electric furnaces
1 open-hearth
1 open-hearth
1 open-hearth
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2d continuous
casting line
2d continuous
casting line
1,200-mm five-stand
continuous cold
sheet mill
2d continuous pipe-
welding shop
2,500-mm continous
hot sheet mill
2,800-mm plate mill
2 tube-drawing mills
600-mm rolling mill
2d section of cold-
rolling shop
2,300-mm sheet mill
1,700-mm sheet mill
1,150-mm blooming mill
Continuous seamless
tube shop
Tube shop
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Table 3
New Facilities Constructed for Iron and Steel Plants in the USSR
1960 and Planned for 1961
(Continued)
Coke
Batteries
Blast
Furnaces
Steelmaking Facilities
Steel-Shaping Facilities
Economic Region a/
Plant
1960
1961
1960
1961
1960
1961
1960
1961
IX (West Siberia)
Kuznetsk Metallurgical
2
1,150-mm blooming mill
Combine
Novosibirsk imeni
Kuzmin
Electroweld tube
mill 1/
West Siberian
1
Xa (Kazakhstan)
Karaganda Metallur-
g ical Combine (Temir
2
1
1
1 b/
1 open-hearth .91
Tau)
Xb (Central Asia)
Chardzhou Repair and
1 electric furnace
Excavator
Begovat
Bar mill
Bar mill
XII (Far East)
South Sakhalin Mining
Equipment Repair
1 electric arc
furnace
Amurstal'
450-mm bar mill
a. Economic regions are those defined and numbered on map 27052 (7-58), USSR: Political-Administrative Divisions and Economic Regions, March 1958.
b. Probably a 2,000-cubic-meter furnace.
c. Probably units with a capacity of 600 metric tons.
d. Reported to be the largest in the world, probably a 2,000-cubic-meter furnace.
e. Reported to be the largest in Europe, probably units with a capacity of 600 metric tons.
f. For 1,020-mm pipe.
g. Reconstructed and greatly enlarged.
h. The Chelyabinsk-Bakal plant will acquire some steelmaking facilities in 1961, possibly another furnace for the electric furnace shop commissioned in 1960.
i. Probably the 102-mm electroweld tube mill previously believed to have been in operation in 1959.
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natural gas during 1960, bringing the total to a minimum of 45 furnaces,
or about 35 percent of all blast furnaces in the USSR. The use of natu-
ral gas has resulted not only in increases in production from blast fur-
naces but has contributed to a reduction in consumption of coke per ton
of pig iron from 771 kilograms (kg) in 1959 to 718 kg in the first half
of 1960.* 12/ By the end of 1961, all blast furnaces in the Ukraine,
representing more than one-half of the present capacity in the USSR,
are to be operating on natural gas, and, in the USSR as a whole, 60 per-
cent (about 30 million tons) of the pig iron is to be produced in fur-
naces in which natural gas is used.
Improved blast furnace productivity also has been obtained from
the increased use of fluxed sinter, high top-pressure, and humidity
control. Production of sinter increased from 56.8 million tons in 1959
to approximately 65 million tons in 1960, thereby permitting an increase
in the proportion of sinter in the total ore charge from 70.3 to 79 per-
cent. The application of high top-pressure and humidity control was ex-
tended in 1960 to include 75 percent of all Soviet blast furnaces, rep-
resenting 85 percent of total blast furnace volume compared with 81.8
percent in 1959.** The effect of these and other developments was re-
flected in continued improvement in the blast furnace coefficient in
1960, as shown in Table 4.***
As in the case of new blast furnaces, the new open-hearth fur-
naces being built by the USSR average larger in size than those con-
structed in earlier years. The aggregate capacity of the 8 open-hearths
built in 1960 was about equal to that of the 10 furnaces built in 1959.
Three of the units constructed in 1960 -- two at Cherepovets and one at
Krivoy Rog -- are believed to be 600-ton furnaces, each with an annual
capacity estimated at 500,000 tons. Even larger units are being de-
signed, current reports indicating that 850-ton to 950-ton open-hearth
furnaces with a designed capacity of 650,000 to 750,000 tons of steel
annually are now contemplated. 11/
In the USSR, as in the leadin countries of the
siderable attention is being given to the use of oxygen
making process. In the Soviet steel industry, about 25
open-hearth steel produced in 1959 came from oxygen-fed
by 1965 the proportion is expected to reach 70 percent.
Free World, con-
in the steel-
percent of the
furnaces, and
A substantial
* As a direct result of these decreased requirements for coke, mainly
at the Rustavi plant, planned production of coking coal and of coke in
the Georgian SSR in 1961 is less than the actual output in 1960 in spite
of a planned increase of 3.3 percent in production of pig iron. 22/
** In 1960, only 16 US furnaces had been adapted to this usage.
*** Table 4 follows on p. 13.
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Table 4
Coefficients of Utilization of Blast Furnaces
and Open-Hearth Furnaces in the USSR 2/
Selected Years, 1940-60, and Planned for 1961 and 1965
Year
Blast
Furnaces 12/
Open-Heart4
Furnaces 2/
1940
1.19
4.24
1950
0.98
5.36
1955
0.803
6.55
1956
0.785
6.80
1957
0.791
6.98
1958
0.775
7.21
1959
0.771
7.48
1960
0.75
7.69
1961
0.737
7.82
1965
0.70
8.7
a. 12/
b. Cubic meters of usable volume per ton of basic pig iron
produced in 24 hours.
c. Tons of crude steel per square meter of hearth area per
24 hours.
increase in production of steel in oxygen converters also is planned --
from about 6 percent of the total at the present time to 20 percent of
the steel to be produced in 1965. The plan for 1961 includes construc-
tion of an unknown number of 100-ton oxygen converters, which would be
the largest yet constructed in the USSR, although 200-ton to 250-ton
units are in the design stage. The largest unit in the US, which is
expected to be in production in 1961, has a rated capacity of about
180 tons.
The converter program in the USSR was launched with considerable
fanfare, but it has not proceeded on schedule. One reason for the delay
is that Soviet industry has not yet fully mastered the technology of
building and operating top-blown oxygen converters. As a consequence,
efforts were continued during 1960 to purchase equipment and complete
technical data from Austria for making steel by the L-D (Linz-Donawitz)
process. "Agreement in principle" reportedly was reached, and the deal
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may be concluded in 1961. The USSR also is experiencing some difficulty
in providing sufficient oxygen-generating capacity to meet the increas-
ing demands of the steel industry.
The USSR in 1960 continued the development of semicontinuous
teeming techniques. A new four-strand casting unit (allegedly the
largest in the world, with a reported capacity of 600,000 tons per year)
was installed at Stalino, and a central laboratory was established there
to continue the work of the research institutes in developing continuous
casting technology. 131 Five other semicontinuous steel-casting instal-
lations are known to be operating in the USSR, and five more are reported
to be under construction.
Soviet additions to rolling mill capacity in 1960, an impressive
4.1 million tons, are substantially greater than those of any earlier
year and represent a significant increase above the previous record of
2.9 million tons added in 1959. Six rolling mills were commissioned:
a 2,800-millimeter (mm) plate mill at the Orsk-Khalilovo Metallurgical
Combine at Novo-Troitsk, the first section of a 2,500-mm continuous
sheet mill at Magnitogorsk, 1,700-mm continuous sheet mills at both the
Cherepovets and the Il'ich (Zhdanov) plants, a 1,200-mm continuous cold
sheet mill at Novo-Lipetsk, and a 700-mm continuous billet mill at
Cherepovets.
The seven rolling mills planned to be completed in 1961 include
three blooming mills -- the 1,100-mm mill at Yenakiyevo and 1,150-mm
mills at both Novo-Troitsk and Kuznetsk -- a slabbing mill and the sec-
ond section of the 1,700-mm sheet mill at the Illich plant in Zhdanov,
and 2,300-mm and 1,700-mm sheet mills at Chelyabinsk. In addition,
several bar mills will be put into operation.
Although in the past 2 years the USSR apparently has succeeded
in commissioning the rolling mills provided for by the plans for those
years, there is considerable evidence that delays in designing, con-
structing, and installing such equipment continue to harass the indus-
try. Timelags of 5 to 10 years between the beginning of designing and
the completion of installations are not unusual. In addition to delay-
ing the buildup of capacity, such long lead times often result in the
installation of rolling mills that, by Western standards, are obsolete
when installed. Moreover, the amount of new rolling mill capacity in-
stalled in the past 2 years, although impressive in relation to that
put into operation in previous years, is far less than is required to
replace the obsolete facilities that now represent a large proportion
of the total capacity. Nor has the industry made any significant prog-
ress toward installing the amount of cold-rolling and finishing capac-
ity that will be required to achieve the rolled steel product mix
planned for 1965. Most of the capacity installed during 1959-60 is for
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production of hot flat-rolled products and represents some progress to-
ward the goal for 1965 of doubling production of sheet, which in 1958
amounted to about 11.3 million tons. The amount of cold-rolling ca-
pacity installed in 1959 and 1960 is negligible in relation to the plan
to increase production of cold-rolled sheet during 1959-65 by 5 million
to 6 million tons.
The USSR has made some progress in expanding the capacity of
pipe and tube mills but continued, during 1960, to be deficient in ca-
pacity for production of large-diameter pipe -- particularly 1,020-mm
(40-inch diameter) pipe required for the oil and gas pipeline programs.
A site at Novomoskovsk was cleared late in 1960 for the first such
shop, but the reported target date for production, the second quarter
of 1961, is unlikely to be met. The only other 1,020-mm mill known to
be planned for 1959-65 is one which, according to a report in 1960, is
to be put into operation at Novo-Lipetsk "during the next few years."
An electroweld pipe mill, possibly '820-mm, is being installed at
Taganrog and is planned to be in operation in the third quarter of 1961.
Two other 820-mm electroweld pipe mills have been installed in the USSR,
both at the Chelyabinsk Tube Mill.
The USSR is deficient not only in mill capacity for large-
diameter pipe but also in mill capacity for making the wide plate that
is required for production of large-diameter pipe. Plate of the dimen-
sions (3,300-mm wide by 12 to 13-mm thick) required to produce 1,020-mm
pipe on a single-weld, straight-seam basis is not yet produced in the
USSR, and as late as October 1960 plate mills capable of producing such
plate reportedly were only in the planning stage. ly A 4,500-mm*
plate mill is to be installed at Novo-Lipetsk but is not to be in pro-
duction until 1964. A 4,200-mm plate mill and an electroweld pipe
mill are planned for the projected plant that is to be built at Tayshet
in West Siberia, but this capacity will not become available during the
Seven Year Plan. The Chelyabinsk Tube Mill apparently is undertaking
to produce 1,020-mm pipe by welding two preformed halves, a method that
would permit production of large-diameter pipe from plate of dimensions
that are now produced in the USSR.
II. Raw Materials Base
Production of raw materials for the iron and steel industry of the
USSR in 1960 was, in general, equal to or greater than the amounts
planned for that year. Production of iron ore increased 12.1 million
tons Ei above the level in 1959 to 106.5 million tons 2',./ -- the
largest increase yet achieved in a single year and about 1 million
tons more than the plan. Production of coke was scheduled to increase
* Also reported as a 4,200-mm plate mill. 12/
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6.6 percent to 57 million tons, but it actually amounted to only 56.2
million tons. About 6 million tons of manganese ore were produced,
almost 3 percent more than the announced goal. Soviet production of
chromite, nickel, cobalt, and molybdenum also reportedly exceeded the
plan in 1960, although neither the plan nor the actual output of these
metals was announced.
Unlike similar reports issued in recent years, Soviet statements
concerning the plan for 1961 have not given the exact production goal
for iron ore. Production, however, reportedly is to be at least 10
million tons greater than in 1960, or more than 116.5 million tons. .q2/
An increase of about 5 percent that is planned for production of coke
would put the goal at about 60 million tons. Except for a planned in-
crease of 14 percent in production of nickel, Lg.] the goals for produc-
ing other raw and alloying materials in 1961 are unknown.
According to preliminary reports, an unprecedented amount of new
capacity -- about 30 million tons -- was constructed for the Soviet
iron ore mining industry in 1960. )12/ This amount, which was a sub-
stantial increase of 7 million tons above that constructed in 1959 and
was within 1 million tons of the planned goal for 1960, also was the
best performance achieved by the industry in recent years relative to
construction plans. In 1961, 40 million tons of new iron ore mining
capacity are to be built. If this goal is achieved, about 93 million
tons of capacity will have been built in the first 3 years of the plan
period -- approximately the amount required (an average of about 30 mil-
lion tons a year) to meet the over-all goal of 206 million tons planned
for construction during 1959-65.
In addition to constructing new iron ore mining capacity, the USSR
also must develop more concentrating and sintering capacity in order to
supply the increasing quantities of upgraded iron ore that are required
both for domestic consumption and for export to the European Satellites.
The USSR concentrated about 58 percent 1.:1.3./ of its crude ore in 1960
compared with a little more than 50 percent in 1959.1.4.0j The proportion
is expected to increase to 72 to 73 percent in 1965. _5/ Production of
sinter, which amounted to 56.8 million tons in 1959, is estimated at
65 million tons in 1960. Installation of 19 new sinter lines, with an
aggregate capacity of more than 15 million tons, is planned for 1961.
The design for what the USSR claims to be the world's largest sinter
line has been completed, and its construction is to begin in 1961. The
size of this equipment is unknown, but previously the USSR claimed to
be designing a sinter line with a hearth area of 2,150 square feet. At
present the largest such facility in the world, located at the Jones
and Laughlin plant in Aliquippa, Pennsylvania, has a hearth area of
2,419 square feet and is capable of producing more than 225,000 net
tons of sinter per month.
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The principal developments in the iron ore industry of the USSR in
1960 occurred in the Ukrainian SSR, which was the source of 55 percent
of the total production of usable iron ore in the USSR in 1960; at the
Kursk Magnetic Anomaly (111AA) in the RSFSR; and at Kustanay in Kazakh
SSR. More than the 18.5 million tons of ore mining capacity planned
for construction in the Ukrainian SSR was commissioned in 1960, 46
and the actual production of 59.1 million tons of usable ore 47 was
about 1.1 million tons above the plan. In 1961, 20.7 million tons of
mining capacity are to be commissioned in the Ukrainian SSR, j/* and
production of usable ore is planned at 61.5 million tons. 49 The
major development in the Ukraine is in the Krivoy Rog Basin, which
supplies more than 50 percent of Soviet iron ore. In this area,
71 million tons of iron ore mining capacity and five concentrating
plants, with an aggregate capacity of 25.3 million tons of concentrates,
are to be constructed during 1959-65. In 1959 the first section of the
Novo Krivoy Rog Ore Concentrating Combine began production, and the
Southern Ore Concentrating Combine No. 2, which is capable of producing
4.5 million tons of concentrates annually, began production according
to plan in the last few days of 1960. The first section of the Central
Ore Concentrating Combine, which was to be in production in 1960, began
operating in March 1961, and another larger section is scheduled to be
in production in 1961. Work on the Northern and the Ingulets Ore Con-
centrating Combines is to begin in 1961, the former scheduled to begin
producing in 1962-63 and the latter in 1965.
Elsewhere in the Ukrainian SSR the construction of two other large
combines was underway by the end of 1960. The Dneprovsk Ore Concen-
trating Combine, working the Kremenchug iron ore deposit, is to have
its first section with an annual capacity of 4.9 million tons of con-
centrates, in operation in 1963. Construction of the Zaporozh'ye Iron
Ore Combine, based on the Belozerka deposit, also was begun late in
1960. The first mine of this combine is to be in operation in 1964
with an annual capacity of 1 million tons of high-grade ore.
In the RSFSR, although development of the iron ore deposits at the
KMA (Which are said to contain 5.6 billion tons of rich ore requiring
little or no concentration) continued during 1960, progress was far
from satisfactory. The first section of the Mikhailovsk Mine and its
crushing plant, with an annual capdcity of 2.5 million tons of ore,
were commissioned, but only one-half of the overburden planned for
removal in 1960 was stripped, and the actual production of ore amounted
to less than one-third of the 700,000 tons planned for the year. 22/
These shortfalls were caused by the failure to deal adequately with
* Officials of the Ukrainian SSR claim that the investment funds allo-
cated for this purpose are insufficient to assure the achievement of
these objectives. See III, p. 18, below.
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water seepage (a major problem at the KMA) as well as by the inadequacy
of facilities and equipment for extracting and removing the ore from
the pit. The continued existence of these deficiencies in the first
quarter of 1961 casts doubt on the feasibility of the plan to increase
the extraction of ore at the Mikhailovsk Mine to 1.65 million tons in
1961.
The second section of the Lebedinsk pit, which was opened during
1960, increased the capacity of the mine to 3 million tons a year, and
by 1964 the mine is expected to be producing at an annual rate of 6 mil-
lion tons of crude ore. Preparation of the construction site has begun
at the Stoylensk pit, which is scheduled to be in production by the end
of 1962, and at the Yakovlevsk mine, where production is not expected
until 1965.
In Kazakh SSR, top priority is being given to the expansion of op-
erations at the Sokolov-Sarbay Concentrating Combine in the Kustanay
Basin. Production of usable ore at the combine in 1960 was 4.3 million
tons, almost twice that in 1959. Development of the deposit of limo-
nite ore at Lisakovsk in the Kustanay Basin is to begin in 1961.
Elsewhere in the USSR, construction of new iron ore mining capacity
is behind schedule. Construction of the Kachkanar Ore Concentrating
Combine, which will supply ore for the iron and steel plants of the
northern and central Urals, lagged throughout 1960, and efforts to com-
plete the first section of the combine by the end of 1961 are being
intensified. When completed, this section will have an annual capacity
of 7.5 million tons of crude iron ore yielding 1.6 million tons of con-
centrates. Also well behind schedule is the development of the Altay-
Sayan region in West Siberia and the mine and concentrating plant at
Korshunovsk in the Angara-Ilimsk Basin in East Siberia that is sched-
uled to be in operation in 1961. The latter will be the initial source
of ore for the West Siberian Metallurgical Plant being built near
Stalinsk.*
III. Investment
According to preliminary Soviet data, the annual investment in
productive facilities for ferrous metallurgy in the USSR amounted to
12.5 billion rubles in 1960, but, as in 1959, this investment was less
than the plan (see Table 5**). As a result of these two shortfalls
* The first blast furnace at this plant was put under construction
early in 1961 and is to be in production in 1962. As ore deposits lo-
cated nearer the West Siberian Metallurgical Plant are developed, those
at Korshunovsk will be used to supply the steel plant to be built at
Tayshet in East Siberia.
** Table 5 follows on p. 19.
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Table 5
Estimated Investment in Ferrous Metallurgy in the USSR
1956-65
Billion Rubles 2/
Year
Total 12/
Productive E/
Iron Ore 1/
Plan
Actual
Plan
Actual
Plan
Actual
1956
N.A.
8.7 2/
N.A.
5.618 1/
N.A.
1.546 E/
1957
10.8 Ly
8.8 1/
N.A.
5.967 f
N.A.
1.768E/
1958
12.1 1/
11.3 ,,/
N.A.
8.2 k
N.A.
2.711/
1959
15.0 1/
N.A.
10.983/
10.7 EL/
4.0 l/
N.A.
1960
N.A.
N.A.
13.2 n
12.5 2/
4.22 E/
N.A.
1961
N.A.
N.A.
16.4 a/
N.A.
N.A.
N.A.
1952-58
N.A.
N.A.
N.A.
40.8 E/
11.5 2/
N.A.
1959-65
130 I/
N.A.
100
N.A.
31.6 2/
N.A.
a. Adjusted to 1 July 1955 prices. Amended by the new uniform evaluations of 1956.
b. Centralized capital investment in ferrous metallurgy.
c. Excluding such capital investments as those for housing and social welfare fa-
cilities.
d. Productive investment, probably including investment in the mining of manganese
and chrome ore.
e. Planned investment (in uncorrected 1955
was 1.7 billion more than actual investment
rubles, when adjusted by a factor of 1.045,
f. 22/. Investment in 1957 also was given
crease of 0.35 billion rubles above that in
g. 211/
h. 22/. Revised plan.
i. Investment in 1958 was 12.1 billion rubles, or 3.3 billion rubles larger than
actual investment in 1957. 26/
? yk.
1. Estimated.
m. Revised figure, based on a statement that investment in 1960 (preliminary data)
was 17 percent larger than in 1959. 22/ However, the planned investment for 1961
(see footnote q, below) reportedly is 1.5 times actual investment in 1959, indicat-
ing that actual investment in 1959 may have approached 10.9 billion rubles.
n. Reported as 26 percent larger than the preliminary estimate of investment of
about 10.5 billion rubles in 1959. 6.y
o. Probably a preliminary estimate of investment expected in 1960. 61/
p. Thirty-two percent of the total investment planned for 1960 was allocated for
construction of mining enterprises. _.21
q. Plan as reported.
r. 64
s.
65/
t.
rubles) of 10.0 billion rubles in 1957
in 1956. _51/ Investment of 8.3 billion
gives 8.7 billion rubles for 1956.
elsewhere as 6 billion rubles, an in-
1956. _U/
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(that of 1960 apparently approximated 700 million rubles), investment
in the industry during the first 2 years of the Seven Year Plan was
roughly 1 billion rubles less than was planned.
The USSR has allocated 16.4 billion rubles for investment in fer-
rous metallurgy in 1961. The value of construction-installation work,
excluding the cost of equipment, is planned at 10.37 billion rubles,
50 percent of which will be spent at plants and mines in the RSFSR and
one-third in the Ukrainian SSR. The remainder is for projects in
Kazakh SSR, the Georgian SSR, and Azerbaydzhan SSR. .?.1/ Additional
funds may be made available to enterprises in the Ukrainian SSR in
1961. During discussions of the plan the argument was that investment
funds allocated to ferrous metallurgy in the Ukrainian SSR for 1961
"would not ensure completion of certain major projects essential for
putting into operation capacity called for in the 1961 plan or for
creation of a reserve for construction projects in the iron ore indus-
try." Z./ The request for 210 million more rubles for iron ore mining
was turned down, but agreement was reached to consider it again during
the course of the year. L51/
In a few specific instances, delays in construction of new capacity
can be attributed to inadequate allocations of investment, but in
1959-60 these delays more often reflected inefficiencies in and poor
organization and coordination of construction work, all the way from
the central planning level to the construction site. Such deficiencies
in construction also have pushed construction costs of certain projects
well above the planned levels. One example is the new Karaganda Metal-
lurgical Combine being constructed at Temir Tau in Kazakh SSR. Although
construction was behind schedule both in 1959 and in 1960, expenditures
reportedly are some 70 million rubles larger than planned for the 2-1/2
years during which the plant has been under construction. El/
At some major projects, total investment during 1959-65 will be
larger than originally planned because of revisions in plans for the
projects. Capital expenditures at the Sokolov-Sarbay Concentrating
Combine, for example, reportedly will be considerably larger because
of the increase in its planned capacity from 19 million tons to 26.5
million tons.
In spite of the failure to complete all the new capacity planned for
Soviet ferrous metallurgy in 1959-60, production has increased more rap-
idly than planned. That output of steel has exceeded the expectations
of Soviet planners no doubt reflects, in part, the conservative charac-
ter of the original production plan. However, it is also possible that
improved technology (for example, the use of natural gas as a fuel in
blast furnaces, the use of oxygen in open-hearth furnaces, improved
operating practices, and the like), not only is resulting in increases
in production larger than expected from existing facilities but also is
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being applied at a somewhat faster pace than was anticipated. Increases
in capacity and output resulting from the modernization and reconstruc-
tion of existing facilities also may be larger than were expected.
During the next few years the Soviet steel industry should continue
to obtain significant increases in capacity and production by extending
the use of modern technology and by modernizing existing facilities,
many of which currently are producing at rates that are relatively low
compared with those at the best Soviet plants. Moreover, such increases
can be obtained for less investment, per ton of capacity or production,
than is required to construct new capacity in new plants. The possi-
bility that technology and plant modernization have returned larger
benefits than anticipated, and perhaps the prospect that they will
continue to do so during the next few years, may explain in part
Khrushchev's indication that investment funds may be diverted from fer-
rous metallurgy to agriculture without jeopardizing the production
goals of the steel industry for 1965.
In general, it appears that the sum of 100 billion rubles allocated
to ferrous metallurgy during 1959-65 will be more than sufficient to
provide for the increases in production of crude steel set forth in the
Seven Year Plan. The extent to which production may exceed the goals
for 1965 is likely to be determined mainly by whether the Soviet leaders
do in fact divert investment funds from ferrous metallurgy to agricul-
ture and by the amounts so diverted. There is little reason to believe
that funds would be diverted in amounts jeopardizing the attainment of
the planned production goals.
IV. Foreign Trade
Increases in exports of iron ore, coke, manganese ore, and chrome
ore, none of which the USSR imports, and increases in both imports and
exports of nickel, iron, and steel in 1960 are indicated by preliminary
data*. Exports of iron ore -- almost all of which went to the European
Satellites -- are estimated at 16 million to 17 million tons for the
full year compared with 13.4 million tons in 1959. Exports of manga-
nese probably were slightly larger than the quantity of 979,000 tons
exported in 1959, and shipments of chrome ore may have amounted to
about 300,000 tons compared with 272,000 tons in 1959.
Imports of nickel in 1960 are estimated to have been 10,000 tons,
a sizable increase above the level of 4,600 tons imported in 1959.
* The most complete data now available on trade between the USSR and
certain countries of the Free World cover only the first half of 1960,
and data on intra-Bloc trade are even less complete.
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These imports, which originated principally in Canada and in France,
more than offset the estimated quantity of 7,000 tons exported to
other countries of the Bloc and to Finland. Exports of nickel in 1959
amounted to 6,100 tons.
Soviet exports of semifinished and finished steel probably exceeded
the quantity of 2.7 million tons exported in 1959, and some increase is
indicated for imports that, in 1959, amounted to 1.2 million tons. As
in recent years, the USSR continued to be a net importer of steel from
the Free World -- mainly Western Europe -- and a net exporter to other
countries in the Bloc, principally the European Satellites. On a ton-
nage basis, Soviet imports of steel from the Free World more than off-
set exports to underdeveloped countries outside the Bloc.
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