Russian coal industry update

THE Russian coal industry remains in a slump with production falling to 119.3 million tons in first half of 2002; some 15.9 million tons lower than during the same period of 2001, writes Ukrainian correspondent, Alex Salyayev.

Staff Reporter

Russia’s national coal industry has 113 underground mines, 128 open-cut mines and 40 preparation plants, employing about 328,000 people. State subsidies to the coal industry in the first half of 2002 totaled about $US99.5 million. In 2001, private companies share of coal production was 72% and by the time privatization of the industry is over, at the beginning of 2004, this proportion is expected to reach 95%.


The ongoing process of privatization of Russia’s coal industry is accompanied by unprecedented scandals, some of which have criminal links. Two of the biggest national financial-industrial groups – Siberian Coal Energy Company (SCEC, controlled by MDM) and Russian Coal (controlled by Mezhprombank and Rusoil) are battling to gain control over the industry’s tastier morsels.


Russian Coal demanded of Oleg Misevra, Head of SCEC to pass them 30% of shares in Far East Coal Company by threatening to produce evidence implicating Misevra in the murder of his colleague.


In early December an auction to sell 60.5% of federal share holding of Inta Coal, was declared abortive because there was only one contender – there must be at least two. The starting price was $US26 million, which will now be decreased. Russian Fund of Federal Property announced the next auction to sell 41% federal share holding of Tula Coal would be held January 17, 2003. The starting price of the share holding is about $US 0.95 million.


The biggest player in the Russian coal industry - Siberian Coal Energy Company – plans to register English-language name SIBENCO. It comprises such big coal producing companies as Krasnoyarsk Coal (Krasugol), East Siberian Coal (Vostsibugol), Chita Coal (Chitaugol), Khackasia Coal (Khackasugol), Sakhalin Coal Corporation and others and produces about one third of total Russia’s production – some 70 million tons per year.


Another company, South Kuzbass Coal Company, was recognized by analyst company Rosinformugol, as the leading coal company. The assessment took into account production, production dynamics, performance, efficiency and so on. Kuzbass Coal produced about 8.5 million tons of coal during January-September 2002, with a monthly productivity of face workers measuring 184 tons.


Things for Russia’s coal industry are not all bleak. Above all, there is an understanding of the problems and need for development among state leaders.


“The situation in the coal industry has to be changed because coal is our future”, said Vladimir Putin, President of Russia.


In his view the main problems are coal/gas price disbalance and the absence of a consolidated export strategy. The President also stressed the necessity of investments.


“It is not so important which they (investments) would be – foreign or domestic, the important is they have to be,” Putin said.