The Chemical Industry

Production of chemicals is critical for any economy. One of the earliest chemical industries to appear in Russia was the production of sulfuric and nitric acid, needed to make fertilizers and gunpowder. The production of potassium hydroxide for glass making was another early chemical industry. Some of Russia's earliest chemical factories were built in the early 1800s, mainly around Moscow, along the Volga, and in the Urals. During the Soviet period, much development occurred in the production of organic compounds from coal, petroleum, and natural gas, including plastics, fertilizer, paints, pesticides, detergents, and chemical weapons. Soviet chemists were at the forefront of research in many branches of modern chemistry.

The geographic distribution of the chemical industry depends on the availability of the necessary raw materials, access to water, and cheap energy. Moreover, the production of many kinds of chemicals is highly polluting and must be carefully located away from large settlements or fragile natural areas, but it also requires access to a highly skilled labor force, which is frequently problematic. There are five main types of chemical industries in Russia today: (1) mining and enrichment of raw materials (e.g., phosphates, potassium, and sulfur); (2) production of common acids, bases, and other feedstocks to be used in farther chemical processes; (3) basic organic synthesis (alcohols, ethers, formaldehyde, etc.); (4) advanced organic synthesis (e.g., plastics, rubber, and pesticides); and (5) other types, including biomedical, microbiological, and photochemical production.

The chemical industry of the U.S.S.R. was well developed and accounted for a bit less than 10% of all industrial output. In Russia today, chemical products account for about 5% of the total industrial output, but remain important both for domestic consumption and for exports. As in the rest of the industry, the early reforms of the 1990s hit the sector hard: Production of sulfuric acid, for example, decreased by about 40% from 12.8 mmt in 1990 to 8.5 in 2002. At the same time, production of synthetic fibers and paints dropped by 75%, production of tires dropped by 25%, and so on. Since 2002, there have been some increases in chemical production again. Russia remains one of the world's leaders in exporting fertilizers; it is also a large producer of plastics, rubber, and paints.

Within Russia, about 40% of the chemical industry today is concentrated in the Urals (if Permsky Kray is included, with its giant fertilizer operations) and another 20% in the Central federal district surrounding Moscow. Substantial concentration of chemical enterprises is also found along the Volga, especially in the middle part of the basin from Nizhniy Novgorod to Kazan, Samara, and Saratov. Some types of chemistry production are localized in just a few places. For example, virtually all potassium fertilizer in Russia is produced in Permsky Kray, centered on the giant deposits of potash near Solikamsk and Berezniki. Russia is the second largest producer of potash in the world after Canada (6.3 mmt vs. 11 million in the latter in 2007), while Belarus is third (5.4 mmt). Nitrogen fertilizer is produced in many places where coal or natural gas is available. Russia is the second largest producer of ammonia in the world after China; much of it is produced using cheap natural gas. Ammonia is one of the main export items for Russia.

Table salt has traditionally been produced in the Urals and the lower Volga. Plastics are made in many places (e.g., Dzerzhinsk, Kazan, Volgograd, Yekaterinburg, Ufa, Salavat, Nizhniy Tagil, Tyumen, Kemerovo, Tomsk), but largely along the Volga (35%), in the Urals, and in Central Siberia. In contrast, production of synthetic fibers (e.g., polyester) is concentrated overwhelmingly (79%) in the Central district, near the large textile centers in Ivanovo, Shuya, Tver, Ryazan, and Kursk.

The Soviet Union was one of only five countries in the world known to stockpile chemical weapons (along with the United States, India, Libya, and Albania). Although new chemical weapons are supposedly no longer produced, there are some stashed away. About one-quarter of them were known to have been destroyed by 2007, in compliance with the international Chemical Weapons Convention. The chemical industry in Russia continues to produce many types of explosives at a few dozen factories, however. Solid and liquid fuels for missiles are widely manufactured as well.

Russia is a major producer of hundreds of medical drugs, including very sophisticated modern medicines developed either in the late Soviet period or since the fall of the Soviet Union; there are 340 pharmaceutical producers in Russia. Nevertheless, over half of all medical drugs are now imported. Only 2 Russian companies were in the top 20 suppliers of medical drugs in Russia in 2007: Farmstandard and Otechestvennye Lekarstva. The rest were well-known transnational corporations (e.g., Sanofi-Aventis, Berlin-Chemie, Gedeon Richter, Pfizer, Novartis, Bayer, and others from France, Germany, Switzerland, and the United States). The domestic pharmaceutical industry is also seeing increased competition from India. Little is being done to improve the investments in local production, and pharmacies are known for their corrupt business practices, resulting in high local costs.

Outside Russia, the largest chemical enterprises are found in Belarus, Ukraine, and Kazakhstan. All depend to some extent on raw materials from Russia as inputs or sell their products to Russian enterprises. Many of Russia's chemical exports to Europe are shipped via railroads going through Belarus or by trucks through Belarus, the Baltics, or Ukraine.

Overall, heavy industry remains the backbone of Russia's economy and provides a major share of the country's exports. It is also well represented in Ukraine, Belarus, and Kazakhstan, and the industries of these four countries remain integrated to a large extent. Light industry, considered in the following chapter, has fared less well.