NUST MISIS Experts: $13.2 billion government subsidy to restructure coal industry a boon

The international forum of the mining field “Miner`s Week-2017” opened at NUST MISIS. Experts summarized the results of the 20-year restructuring of the Russian coal industry, as well as discussing the issues of international cooperation in the mining field, the industry’s environmental issues, and prospects of development.

More than 400 rectors from leading Russian and international universities, over 1000 representatives of the business community, and scientists from more than 45 countries participated in the work of the 25th anniversary of the International Scientific Symposium “Miner`s Week — 2017” — one of the key annual international forums in the mining field.

Georgy Krasnyansky, the Chairman of the Board of Directors of the “Karakan-Invest” group of companies, delivered a speech on “20 Years of Restructuring the Coal Industry in Russia: The Results”. He noted that in 1993-1994, before the reorganization, the coal industry operated 261 mines, 90 sections and 68 processing plants. More than half of those presented low-power enterprises which had an operating life of 40-50 years. 43% of coal was extracted by underground methods in difficult mining and geological conditions. The number of employees in the sector exceeded 841,000 people, but only 43% of them were employed in core operations. The number of fatalities was more than 1 person per 1 million tons of coal production.

After fully restructuring the field, including the optimization of the structure of mines and borrow funds, the closure of unprofitable enterprises, the privatization of profitable productions, and the implementation of standards of social protection for redundant employees, the sector has weaned itself off subsidies and begun to turn a profit.

“In 1994-2015, the state allocated $13.2 billion for the full restructuring, from which 35% was allocated for workers’ social protection. But these costs have already more than paid off due to tax payments between 1999 and 2016, even taking into account the depreciation of the ruble, which have amounted to $15.6 billion. During this period, mining companies invested $24.5 billion in capital stock, which allowed companies to completely upgrade the production capacity of the industry”, said Georgy Krasnyansky.

According to Krasnyansky, the industry introduced 425 million tons of production capacity during this period, and the number of fatalities decreased 900%.

“Geological survey and mining industries are one of key aspects for our country`s development. NUST MISIS, as a leading Russian university for the training of engineers in the mining field, plays a key role not only in training the market`s labor but also in the development of innovative technologies. The Expert Mining Council, consisting of leading scientists, representatives of government entities, and the business community, was created at NUST MISIS. Members of the Expert Mining Council contribute to the development of the university’s interaction with business partners and assist in the strategy development of the NUST MISIS College of Mining”, said Alevtina Chernikova, Rector of NUST MISIS.

Today, Russia is one of world leaders in coal reserves with an annual production of over 380 million tons. 31 mono towns depend on the coal industry, and they include 145,000 people working in the coal industry and 500,000 people working in related industries. Among the industry’s problems, Georgy Krasnyansky noted, is the contraction of the market and decreasing demand for coal, as well as a growing share of shipping costs and the industry’s growing dependence on the importation of necessary technologies and equipment.

According to Krasnyansky, in the future it will be necessary to conduct another audit of the coal industry’s enterprises. Inefficient and unsafe enterprises must be closed, and efficient plants close to the Asian-Pacific market must be export-oriented, while efficient plants located far from eastern ports should be oriented to domestic consumption and export to the West. Finally, Enterprises which have the best properties of coal chemistry must get the state`s support to transfer power to the chemistry side of the operation.

Igor Schelkunov, Head of HR, HSE, and Business Support at EuroChem; Alexander Chaadaev, Vice President for Innovations at ALROSA, and Valery Zakharov, a Corresponding Member of the Russian Academy of Sciences and the Director of IPKON Russian Academy of Sciences, also took part in a plenary session.