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By Maria Golovnina MAGNITOGORSK, July 19 (Reuters) - Ivan spends half his working life face to face with a giant furnace shimmering with heat at 1,700 degrees Celsius (3,000 degrees Fahrenheit). "It's like working on the sun," he shouts through the thick air, gazing at tonnes of molten iron sparkling at this key production unit of Magnitogorsk Iron & Steel Works <MAGNI.RTS>. Standing just a few metres from the inferno and clad in space age protective gear, he monitors the metal until the magma surges out into special containers, a first step in the process of making steel. Magnitogorsk was built by prisoners during Josef Stalin's forced industrialisation drive of the 1930s, at a cost of over 30,000 lives. At the time it was hailed as one of the world's biggest and most efficient steel works, to the regime's socialist-realist poets a romantic symbol of the conquest of nature by Soviet 'new man'. For Stalin, whose assumed last name means "Man of Steel", it was the bastion of a new economy he created to defend the Soviet Union from its enemies and catch up with the West. Seventy years on, the sprawling tangle of belching chimneys, rusty pipes and ageing red-brick buildings is still Russia's leading steel mill. But working conditions, ecology and production efficiency -- which have become priorities as the company seeks to open up, work with Western partners and place shares abroad -- are still big headaches for its post-Soviet owners. "We know that what we have here, the way people work and their health situation, are not perfect. They are far from perfect," said Sergei Masyanov, head of one of Magnitogorsk's huge production units. "We are working on it. But things won't change overnight." MILL 500 Hidden in the grassy slopes of the Ural mountains dotted by herds of horses and cows, Magnitogorsk was the world's No.17 steel producer by 2003 output. It was closed to foreigners until the early 1980s. When President Vladimir Putin visited it a year after taking over Russia from Boris Yeltsin, he vowed to improve workers' living standards and urged them to draw inspiration from the brightest pages of Soviet history. Five years on, the residents of Magnitogorsk, a grim scattering of monolithic apartment blocks, factories and bleak boulevards, say things have changed -- but not much. Awash with export revenues from high global steel prices, Magnitogorsk has installed some new production facilities, replacing up to 70 percent of its dilapidated units with new technology and computerised control systems. "The legendary Mill No.500 will be closed by the end of this year," said Oleg Shiryayev, a production facility head, referring to one of the first units opened in the 1930s. "Its safety standards and pollution levels are no longer acceptable. This ancient mill is probably one of the last of its kind operating in the world." BLACK SNOW While belching out tonnes of sulphur dioxide and metal a day, Magnitogorsk says it has invested more than one billion roubles ($35 million) a year on environment projects. As a result, noxious emissions in one of Russia's most polluted cities have shrunk by more than a third, according to company data. Production, on the rise in recent years because of booming global demand for steel, is also about 30 percent lower than the Soviet peak of about 16 million tonnes. The average monthly wage is over 15,000 roubles ($520). Experts say pollution at Magnitogorsk, about 1,000 miles (1,600 km) southeast of Moscow, is lower than in the nearby smelter town of Karabash or the copper-to-nickel city of Norilsk in Arctic Russia. But residents are less positive. "Things have sort of improved in the past few years. At least the snow in winter is not black like it used to be," said Galina, a housewife in Magnitogorsk, known locally as Magnitka. "Last winter the snow was just grey. That alone is good."