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The mining landscape (Part Two)

World Coal,

In an effort to meet internal and external coal demand, domestic coal mining companies, in association with the Russian Government and several financial institutions, proposed new investments in the domestic coal industry. OJSC Kuzbassrazrezugol and Ural Mining and Metallurgical Co. hope to build a new coal-fired power plant of 500 MW in the Kemerovo region, with the project costing US$ 1.3 billion. Construction of a coal mine and concentrator with a coal production capacity of 8 million tpa will also be built during 2011 –  2018 by OJSC Mine Nina. Investment to the tune of US$ 100 million is expected by OJSC Kuzbassrazrezugol for the construction of the Krasnobrodsky coal mine and a concentrator with a production capacity of 2.6 million tpa). Construction of the Bachatsky coal mine and a concentrator with a coal production capacity of 4.5 million tpa is planned during 2015 – 2016 by the OJSC Kuzbassrazrezugol for a cost of US$ 100 million.

Several other projects are also expected including:

  • The development of the Zhernovsky field in the Kuznetsk Basin, including construction of the Zhernovski mine and processing plant with a capacity of 4.5 million tpa by OJSC NLMK with an investment of US$ 1.2 billion from 2011 – 2020.
  • The construction of a 900 MW capacity coal-fired power plant and the development the N3 opencast mine in the Mugunskogo fields by OJSC EvroSibEnergo, together with Chinese energy companies at a cost of US$ 1.7 billion from 2015 – 2025.
  • During the same period, OJSC EvroSibEnergo aims to introduce opencast mining sites 1, 2 and 4 in the Ishideyskoye fields, as well as a new coal-fired power plant of 2000 MW, near the Upper Burbuk village, at a total cost of US$ 3.4 billion.

Uplifting the Russian coal industry

Over the past 10 years, the Russian Government has continued its effort in restructuring and developing the coal sector. Between 1992 – 2010, as a measure to restructure the coal sector, around 188 coal mines and 15 pits were shut down, the restoration of mining affected areas took place and construction and reconstruction of social infrastructure undertaken. Despite vast coal reserves and its strategic location near to major coal consuming nations, the domestic coal industry has not realised its full potential and competitive advantage at the global coal market. A variety of issues have severely affected the domestic coal mining industry over the past years. These include:

  1. Adverse geological conditions in a few mining regions.
  2. A high proportion allocated to transport costs in the total coal price amid transportation bottlenecks.
  3. A lack of advanced quality coal processing technologies.
  4. Hazardous mining conditions, increasing dependency on imported mining technology and equipment.
  5. Environmental challenges.
  6. Low average return on coal sales.
  7. A growing shortage of skilled labour.
  8. A decrease in domestic demand for thermal coal.
  9. High interest on bank loans.

In an effort to overcome these impediments and to help develop the Russian coal mining industry, the government set out a long-term programme for the development of the coal industry for the period up to 2030. The programme, worth US$ 112.4 billion, includes eight sub-programmes, which focus on the development of coal resource bases, new coal deposits, improvement in production capacities, extraction and processing capacities, the completion of the coal industry restructuring programme, developing of the domestic coal market, and strengthening of Russia’s position in international coal market. The sub-programme also includes technological development, forming research centres for testing mining equipment and methods, providing safety measures and developing industrial relations and the corporate social responsibilities of coal mining companies. With these sub-programmes, the domestic coal industry is expected to achieve improvement in labour productivity by 1.3 times in 2015, 2.4 times by 2020 and 5 times by 2030.

The improvement in the competitiveness and profitability of mining companies, the higher level of industrial and environmental safety, the increase in ports and terminals capacity to 140 million t by 2020 and 190 million t in 2030, and a reduction in the injuries and accidents in the coal mining industry by 30% are also expected to be achieved during the course of the programme.

This article first appeared in the September issue of World Coal. To read Part One of the article, please click here.

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