Falling Demand Is Key Challenge Faced by Coal Mining Industry

24 august 2017

The Analytical Center and the Russian Ministry of Energy have together held a round-table conference titled "Coal Mining in Russia: 295 Years of History and New Opportunities", which involved experts discussing both the current situation and the long-term trends in the industry, including the assessment of the goals and objectives and the existing obstacles to growth, as well as examining the strategic plans of the coal-mining companies and the regional contexts of development.

Deputy Minister of Energy Anatoly Yanovsky believes that the key challenge currently faced by the coal-mining industry is associated with falling demand. "When it comes to the rest of the world, the current curtailment is due to environmental and climatic considerations implied by the Paris Agreement. Russia has a different situation: coal fuel is being replaced with gas, due to its cheapness, add to this the vast distances to which coal needs to be transported and the remaining infrastructural limitations."

Yet another challenge for the coal industry lies in the volatility of the situation in the coal markets, notes Mr. Yanovsky. The expert believes that "in Russia, such volatility may result in coal-mining companies finding themselves in financial imbalance in the context of a growing financial burden associated with subsurface management and coal transportation, existing fund raising restrictions, high dependence on imports, and a lack of skilled personnel." It may also lead to a mass winding-up of coal mining facilities, he says.

The minister announced that since 2015, investment projects in the Far East have been receiving support from the government and key investment projects in the coal mining sector in Eastern Siberia are now subject to preferential taxation. The government supports efforts to restructure the coal mining industry and provides financing for rehousing from dilapidated buildings as part of a comprehensive program implemented in Kuzbass.

Deputy Head of Federal Subsoil Resources Management Agency Sergey Aksenov reported that a new classification of solid mineral reserves and forecast resources has been developed. It has been submitted to the Russian Ministry of Natural Resources for approval, the plan being to introduce it in 2020. "One of the key solutions introduced by the new classification is the possibility to obtain an approval of project documents under a "one-stop" system, simultaneously with holding a state expert examination of the reserves," explains the Deputy Head. He believes that the development prospects for the coal mining industry will largely depend on maintaining the required level of resources supply for the operating coal mining facilities, on major relocation of coal-mining operations to regions further east, on the building of the country's coal export potential, including the development of fields in the Arctic zone. Mr. Aksenov believes that it is equally important to develop economic cooperation with China and to form territorial industrial complexes.

The event was timed to coincide with the celebration of the 70th Miner's Day and the 295th anniversary of coal mining in Russia. This prompted the participants of the round-table to remember the history of Russia's coal mining industry and to discuss the goals, opportunities and challenges that its future development presents.