Who will get BSC’s assets and what will happen to Kushtau?

Who will get the money (where’s the money)?

14 October is a milestone for the fate of Bashkir Soda Company. The fight for the Kushtau hill, a world geological heritage, turned into a trial and a risk of losing the shares for the enterprise. The company not only lost a chance of getting Kushtau but also remained up in the air regarding its future. Who will receive income now and how will the situation develop? Residents of the republic, factory workers and activists had questions about the process of creation of BSC. But they were asked mainly during private talks, while the legitimacy of the merger of Kaustic CJSC and Soda PJSC wasn’t publicly questioned. And even when members of the Russian presidential Council for Human Rights arrived in Bashkortostan in 2019, this topic wasn’t considered to be a trouble in the situation with Kushtau. And this is quite explainable because the change of owners has nothing to do with the choice of the field. However, the turn of events in 2020 debunked this logic — precisely the doubt of the legitimacy of the deal on the merger of two big factories became a decisive drop in the case of the hill salvation.

The Court of Arbitration of Bashkortostan received two claims on reclamation of illegally obtained shares at once in September — to the Federal Agency for State Property Management and Bashkiria’s ownership. In fact, it is two different approaches to deciding the fate of Bashkir Soda Company and two different variants to seek justice.

If we follow the assumptions that a violation took place in the merger, such a deal must be recognised invalid, while the shares must be returned to the previous owners. As it is known, the Federal Agency for State Property Management wasn’t a shareholder of the factories on the eve of the union.

What will Themis decide in this situation? The situation is unclear. But whichever side judges choose, it is important that income will really stop being offshored. However, if the shares become federal property, the money won’t remain in the region. It is doubted if the money earned will return and help republican residents blossom. What’s more, the return of the shares to public ownership doesn’t mean that the assets can’t be sold and the enterprise can’t be privatised in the future.

Protected areas of Russia vs production licence

The presence of a document protecting the hill from economic activity (a decree on creation of a protected area of Russia) and documents permitting this (licence on geological exploration and mineral production, a permit for cutting down forests) became another debatable side in the fight for Kushtau.

On the one hand, the Federal Law on Protected Areas protects the natural landmark from any infringement on it. On the other hand, the permits must be cancelled to get rid of the threat completely — this step will become a decisive act in the case on the provision of juridical protection of Kushtau.

According to Dmitry Shamov, vice director of the Office of Geology of Hard Minerals of the Federal Agency for Mineral Resources, the only thing that can be done in the situation if Kushtau is a protected area is to suspend the right to use of minerals by the commission of the Federal Agency for Mineral Resources. The problem of the termination of the validity of the licence rests on the fact that the cases when the licence loses its power imperatively are enumerated in Part 1 Article 20 Law On Minerals. The appearance of a certain condition (if it is fixed in the licence) can be named the only probably foundation when the right to use minerals ends. While other clauses are unlikely possible (for instance, the licence owner’s voluntary refusal from the right to use seems incredible in the light of BSC Board Chairman Grigory Rapota’s statement that the company will study legal foundations for recognising Kushtau a natural landmark).

Premature suspension, termination or restriction of the right to use minerals is a right, in turn, not an obligation of the authorised agency.

Among the foundations for the possible suspension or termination of the validity of the licence, the violation of significant conditions of the licence by the exploiter of minerals can be pointed out; and if the mineral user didn’t start using minerals in envisaged amounts within a term fixed in the licence.

Heritage and Kushtau

As it is seen, trials around the shares of Bashkir Soda Company don’t solve the problem of the protection of the unique natural site (neither are they a guarantee of technology change, technical reequipment of the factory, a rise in workers’ salaries and costs on the town’s social sphere).

A convocation of a commission to suspend (or terminate) the validity of the licence depending on the will of the Federal Agency for Mineral Resources hasn’t been announced. Meanwhile, the cancellation of permits to cut down the forest and limestone production from Kushtau was and remains one of the most important requirements of Kushtau defenders.

The current circumstances set society a task of achieving the termination of the permits on their own. Filing a claim to the Court of Arbitration of the Republic of Bashkortostan from Heritage ANO became such a step. Members of the organisation assume that the damage that will be done to the state and society after the eradication of protected areas of the flora and fauna added to Russia’s Red List and Bashkortostan Republic’s Red List significantly increases the socioeconomic effect the continuation of geological exploration and limestone production can provide.

According to the decree No. 49 as of 30.11.2017 of the Plenum of the Russian Supreme Court, the risk of environmental damage in the future, including due to the use of the enterprise, construction or another activity can be a foundation to forbid the activity creating such a risk.

The claim was accepted for consideration, a trial will decide the further activity of Feedstock Company JSC on Kushtau on 27 October.