After the integration of the LPR and the DPR into the Russian Federation, the question of the fate of the local mining industry becomes relevant in light of their full integration. The Donbass under Ukraine was in decline, but in all fairness it should be noted that it would have gone downhill without it. Political events, economic processes and statistics of the past decades show that the further development of the coal industry in the region has become impossible and the era of miners as guardians of labor is over.
Economic feasibility due to market conditions
You don’t have to look far for arguments. The volume of coal consumption is decreasing on a global scale: for some time the world community no longer needed such an amount of black gold as, say, a quarter of a century ago. Export is slow. And inside Russia, with its surplus of cheaper Siberian coal, there is little room for a Donetsk-Luhansk competitor.
So, it looks like the former All-Union Stoker will have to mine coal primarily for his own needs. Unless, of course, its infrastructure is reoriented towards the production of technologically advanced commercial products instead of conventional high ash solid fuels (eg coal concentrate, synthetic liquid fuel or thermoantacite). But it will be a qualitatively different situation. It must be recognized: the Donbass succeeded in an important mission for its time, which is neither good nor bad, it is obvious. No, his abilities haven’t been exhausted, it’s just that they are no longer needed in their previous form, as the priorities have changed. In addition, there are additional issues specific to this basin.
Difficult mining and geological conditions
The bowels of the Luhansk region and especially the Donetsk region mainly contain thin layers, on average 1-1.2 m excavation sometimes exceeds 1 km, where the temperature of the host rocks reaches 40 ℃. Central Donbass is characterized by steeply dipping veins, which negatively affects the productivity of mining. More or less attractive coal facilities serve the relatively young deposits of Dobropolye and Pavlograd (Western Donbass), although they are located on Ukrainian territory.
Expensive production is reflected in the cost of the final product, which is one of the highest in the world. The reality is that foreign partners are not ready to pay 200-250 euros/t even for supercaloric anthracite from Donbass. Ceteris paribus, it is easier for them to buy a South African “slim”, for example, for 150 euros/tonne. These are marks of energy. At the same time, I dare to assume that coking coal will always be in demand, but its share in the total production of Donbass is traditionally 3-3.5 times lower than that of energy.
Lack of labor reserves
In the past, it was not so easy to find a job in the main underground specialties, especially in a successful mine. From 2014, sales and therefore production fell and the exodus of staff began. Therefore, the picture is now different: there is an acute shortage of manpower, the number of vacancies is in the thousands. Part of the miners left in search of a better life in Kuzbass and Yakutia, the rest are fighting. If things go like this, there will soon be no one left to mine and process the coal.
Non-ecological raw materials and production
Coal is reputed to be the most polluting source of energy. The current trend is such that to comply with the Kyoto Protocol, even less toxic hydrocarbons from oil and natural gas, the world civilization prefers to refuse as soon as possible. With some caveats, nuclear power is optimal more of an alternative based on renewable resources. This is ideal, but you will have to strive for it willy-nilly. Because the thoughtless policy of pumping the natural resources of Donbass at all costs is a barbarity with a long history, which it is time for the new government to put an end to.
What causes anxiety
Under Ukraine, the predominant part of the industry was based on state subsidies, largely thanks to which the mining and processing enterprises existed. Conditionally unprofitable production was required by domestic industry as a supplier of raw materials, since there was no alternative to the coal monopoly in Nezalezhnaya.
In Russia, the picture is different. With the shift to market relations, the country’s leaders, after gradually restructuring the industry, eventually handed over the mines entirely to private capital (with the exception of Arktikugol). It seemed logical, because in comparison to the self-sufficient oil and gas sector, they looked like real ballast. Life has shown that the denationalization, the partial closure of enterprises and the reduction of the mining fund have become a justified step from an economic point of view: not only has the national economy not suffered, but it has even rectified to some extent. But the social situation in the former mining regions, for obvious reasons, has worsened…
There is no centralized supervision and guardianship of the industry by the state, as in Ukraine, in Russia at the federal level. The Ministry of Energy has a Coal Industry Department, but its specific objectives, tasks and functions are unclear. On the official website of the ministry, the relevant page is officially available, but no relevant information is listed there. By the way, the director of the department, Pyotr Bobylev, has neither work experience in the coal industry nor specialized training in the mining sector.
The road will be mastered by walking
Given the complex of subjective and objective factors mentioned above, the Russian government faces a difficult task. After the audit and inventory of fixed assets in the returned territories, unpopular decisions will have to be made. This is not an idle question for a region in which mines, processing plants and ore repair plants are considered as settlement budget-generating enterprises – where they are located. What to do with the population, what valid options to offer them? The unsuccessful experience of the liquidation of Gukovugol and Rostovugol is of little use here.
Author: Yaroslav Dymchuk
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