Who are they, modern Russian billionaires who grew up in the Soviet Union? How did they manage to earn such capital? The director and sole owner of the company “Pipe Innovative Technologies” is one of those people who built their business after the collapse of the USSR. Biography of Ivan Shabalov is the answer to the questions asked.
The first steps
The future entrepreneur was born on January 16, 1959 in Uzbekistan. The family of Ivan Shabalov then lived in the small town of Chirchik, which was 40 km from Tashkent. Behind the southern gates of the city, a city-forming enterprise, the Uzbek Refractory and Heat-Resistant Metals Plant OJSC, spread its hulls, and young Ivan Shabalov got a job after leaving school.
Note that in Soviet times it was not easy to enter a higher educational institution, especially in the capital. Therefore, there was a practice of directions: when the leadership of a large enterprise or collective farm sent its workers to a specific institution. There was a condition that after graduation, a person will return to work for the enterprise. Admission commissions considered applicants with such directions in the first place, therefore the chance of admission was higher. Perhaps, the entrepreneurialism of the future billionaire already began to appear, but after a short work at the plant, he got this direction and entered the Moscow Institute of Steel and Alloys (MISiS).
Scientific activity
After graduating from the institute with honors in 1983, Shabalov did not leave to work at the plant, but entered graduate school. In the same year he got a job at the Central Research Institute of Ferrous Metallurgy. I.P. Bardina. Started as an ordinary employee. During the ten years of work at the institute, Ivan Pavlovich Shabalov climbed the career ladder to the deputy director. At this time, he received his doctorate in technical sciences.
Shabalov's scientific interests extended to the steel and pipe industries. Ivan Pavlovich published over 100 scientific papers in his life. Here are some of them: “The study of the formation of peals on a 2800 plate mill” (2004), “The efficiency of gas pipeline construction using pipes of various strength classes of steel” (2007), “Current state and features of the economy of the pipe industry” (2008). For the development of new-generation steels using natural-alloyed ores of the Khalilovsky deposit for critical metal structures in bridge building, construction, mechanical engineering and the introduction of an integrated production technology, Ivan Pavlovich Shabalov was awarded the Russian Federation Government Prize in 2004 in the field of science and technology.
Healthy ambition
At 32, being a deputy director of a scientific institute is a good career for a provincial guy. As Ivan Shabalov recalls those days, in 1990 he received a very large salary of 2, 000 rubles a month, when compared with prices. For example, he then bought a Zhiguli car for 9, 000 rubles. But he did not plan to spend his whole life within the walls of the institute. Acquired contacts during his work in him served a good service.
In 1991, Oleg Soskovets, the former general director of the Karaganda Metallurgical Plant, headed the Ministry of Metallurgy. Shabalov made an appointment with the minister, because they had known each other when Soskovets was the general director of the plant. After a conversation on the same day, Shabalov was appointed CEO of the TSK-Steel foreign trade company.
The first lessons of entrepreneurship
Joint ventures with foreign firms - this was a new trend in perestroika. There were not many of them, and they were strikingly different from Soviet enterprises. The joint venture had western equipment, the salary was not an example higher and in foreign currency. For TSK-Steel employees, foreign currency accounts were opened in the then cult store Birch. It was one of the few stores in the Soviet Union where imported scarce goods could be purchased for foreign currency.
TSK-Steel was established in 1989 by the Karaganda Iron and Steel Works and the Swiss trader Sytco. The company employed several hundred people. A small factory processed rejected steel and exported it. Here, Ivan Shabalov received his first experience in managing an enterprise and interacting with foreign buyers. Despite the fact that then, according to the law, steel could be exported only by state enterprises, there was no such ban on steel marriage. Therefore, the commercial organization led by Shabalov freely exported its products.
When one door closes, the other opens
The joint venture was a gold mine. The profit was very significant: up to tens of millions of dollars per month. Part of the money went into the purchase of parts for tape recorders, food processors, radio receivers, which were later collected at the factory. All these products were in great demand. Company managers went on permanent business trips, could afford mobile phones, which cost the then-only operator $ 4, 000. Of course, such wealth could not but attract the attention of the criminal world.
The rampant gangsterism in the 90s was widespread. No one was surprised by the criminal showdowns, murders, the division of territories of influence, racketeering. We can say that Shabalov was lucky when in 1993 he took the post of adviser to the First Deputy Prime Minister of the Russian Government Oleg Soskovets. Because then the heads of enterprises were shot with enviable regularity. Shabalov avoided such a fate, but as a result, when the USSR completely collapsed, the joint venture ceased to exist due to non-payments and lost ties between enterprises in the post-Soviet space.
Gift
A leapfrog began in the country. Many enterprises were closed, salaries were not paid, contractual obligations were not fulfilled. Due to lack of money, they were calculated by manufactured products. Barter (interchange) was then the only way to survive. At that moment, Ivan Mikhailovich manifested the talent of a trader, thanks to numerous connections and his own authority. In 1995, he registered the trading company Russian Chrome, which was engaged in the settlement of issues of interchange between many enterprises and the supply of steel products.
Here is one of the barter chains built by Shabalov. The Kachkanar mining and processing plant received gas from Gazprom, and could only pay with ore. Gazprom did not need ore, so the ore was transported to the Orsk-Khalilovsk plant, which produced billets. These billets were taken to pipe plants, and the finished pipes were delivered to Gazprom. In this way, Kachkanarsky GOK paid for gas. The time was vague and unreliable. Over the years, built relationships have collapsed with the advent of new enterprise managers, who then changed very often. To survive in those difficult conditions, of course, a strong character and the gift of foresight were needed.
Sharks business
One interesting episode in the life of Ivan Shabalov reveals another facet of his character, which helped him survive and rise in the metallurgical business. This is the acceptance of any situations and concession if there are no other solutions. This happened with the Orsk-Khalilovsky Combine. In 1999, the owner of the plant Andrey Andreev invited Shabalov to the position of general director, in the hope that he, as an expert on the metallurgical industry and the owner of a trading company, would be useful to the enterprise. In fact, Shabalov provided the plant with raw materials and managed well.
But from the beginning of the 2000s, “hitting” by business sharks began on Andreev. And in 2001, the Orsk-Khalilovsky Combine, along with other assets of Andreev, transferred to the Oleg Deripaska concern. Naturally, Shabalov vacates the general director’s chair, but the plant did not pay for raw materials with a trading company. The new management agreed to repay the debt, but with a 50% discount. Shabalov preferred to “present” the debt than agree to a predatory discount.
Gazprom
Thanks to work on set-up schemes, Ivan Shabalov was known throughout the country's metallurgical industry. When the problem arose of supplying large-diameter pipes (LDP) for Gazprom, Shabalov invited leading pipe plants to create an Association of pipe manufacturers. In 2002, he became chairman of the coordination council of the Association. And with his proposals goes to the leadership of Gazprom. Rem Vyakhirev did not consider these proposals then, but a year later the new head of the concern, Alexey Miller, approved the cooperation.
Forbes
Ivan Pavlovich Shabalov in 2005 established the trading company Northern European Pipe Project (CEPT), which supplied LDP for Gazprom. In addition, he went to foreign suppliers. The German company Europipe supplied large-diameter pipes for Gazprom. Ivan Pavlovich offered the Germans his services to expand the Russian market, adding oilmen and atomic workers there. This is how Eurotub, the intermediary organization, came about, which a year later reached a turnover of about 100 million euros.
The expanding business required new steps from Shabalov Ivan Pavlovich. Pipe Innovative Technologies is a new trading company in the entrepreneur’s assets, which he opened in 2006. Both of his firms work closely with Gazprom. Shabalov in these years is one of the largest suppliers. According to Forbes, Ivan Shabalov is part of an elite group of entrepreneurs who are called the kings of state orders.
Pets
Gazprom is the largest consumer in the Russian pipe market. For the implementation of the South Stream, Nord Stream, and Nord Stream 2 projects, billions of contracts were developed. The tender for the supply of pipes involved not many enterprises that produced products of this nature. In the early 2000s, there was still a great risk of running into one-day firms and losing money, which is why Gazprom signs contracts with trusted partners. In 2003, in order to minimize risks, Gazprom organized Gaztaged, a 25% stake in Boris Rotenberg.
In 2010, the company had to be liquidated due to scandals that erupted around it. The liquidation of the company entrusted to Shabalov. Since then, little has changed. Tenders for the supply of large-diameter pipes, as a rule, are won by the same entrepreneurs: the Rotenberg brothers, Valery Komarov, Anatoly Sedykh, Dmitry Pumpyansky and Ivan Shabalov.
We had a nice chat
One gets the impression that Shabalov is a minion of fate, and everything is easy for him. He alone knows what it is worth to part with an established business when a stronger competitor comes. In 2007, the Rotenberg brothers began to look closely at Shabalov’s companies. Businessmen have known each other since 2002, when Boris Rotenberg met with Shabalov to find out the prospects of the pipe business. According to Ivan Pavlovich, the conversation was comfortable.
And already in 2007, he sold two-thirds of the shares of 50% of Eurotub to the Rotenbergs. And in 2010, after another comfortable conversation, the Rotenbergs received 60% of CEPT. The amount of the transaction was not disclosed.
