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"Getting coal underground is much more risky than flying into space"

Alexander Kovalchuk, Adviser to the General Director of OAO Russian Coal, Director General of the Institute of the Coal Market Conditions - on what "ceiling of opportunities" the Russian coal industry can count on

- Alexander Borisovich, the recent terrible accident at the Severnaya mine in Vorkuta has again stirred up talk about the "curse of the coal industry." Is it possible to prevent such disasters or are they really inevitable and will be repeated regardless of the technical equipment of the mines?

"Getting coal underground is much more risky than flying into space"
Special project Coal of the East of Russia
- I would not call it a "curse" - the term is too emotional. But as a specialist, I can say (and my colleagues, I think, will agree with me) - one hundred percent guarantees that an accident will not happen in the coal industry can never be given. This is an element, and so complex that flight into space seems more predictable in comparison with it. Everything in the sky can be calculated and determined, but under the ground there are solid probabilities. The same coal seam in different parts of the panel behaves differently. There is a mass of factors - from the eternal "human" to the unpredictable natural. Of course, preventive measures play an important role - for example, personal protection of miners, ventilation systems, monitoring of the atmosphere in the face. When they are at their height, the risk is minimized. But, unfortunately, it does not completely disappear.

- A question as to a specialist with many years of experience. What triggered the accident at Severnaya - people or equipment?

- Again, no one can name the real reason. Not because he doesn't want to - it's just very complicated. Such cases always represent a tragic overlap of several negative factors at once. In addition to violations of organizational and technological discipline, there is such a thing as manifestations of rock pressure. Severnaya is one of the most gas-hazardous mines in Russia. One spark in a gas-saturated atmosphere - and an explosion occurred in the worked-out space, a large-scale collapse of the roof, and then everything went on and on.

You see, the mine was equipped with atmospheric monitoring systems, and each of the miners had individual sensors. Gas outburst in the hazardous reservoir was predicted. And, nevertheless, the emergency happened - experts have yet to figure out its causes. Usually in such strata, in order to relieve stress, the underlying stratum is worked out, which seems to be the case at Severnaya. But how far the upper, four-meter layer was unloaded by the underlying lava, whether there were any obstacles and foreign objects left there, experts will study for several more months. And all the same, the conclusion will be standard: "In all likelihood, the reasons were ..." Usually there is no definite answer.

- Is there any chance at all to identify the most dangerous industries in Russia and close them? How much does the accident rate in our mines differ from, for example, South Africa, the USA, Australia, or China and Ukraine, which are closer to us in terms of technological level?

- In Soviet times, the statistics of injuries was - 1 case per 1 million tons of coal production. With the extraction of 750 million, consider for yourself how many people died or were seriously injured. Now these indicators have been reduced to the level of 0,07 per 1 million tons. Even despite those large-scale accidents that periodically, alas, occur. Comparison with other countries is not always correct, because coal is mined under different conditions. For example, in Australia and the USA, mines are much shallower than ours, no one works at depths of 800 meters. The open (career) method is mainly used. In addition, complex systems for degassing mines are used abroad - in this regard, the Australians are considered leaders, who can completely degasify the horizontal drilling layer. It is not always possible to apply such technologies here. A shallow mine is one thing and something like the Severnaya mine is quite another. The regulations state that it is necessary to supply air to the mine at least 9 cubic meters per ton of production. But when the depths are large, a more intense air flow is required, this causes strong dustiness, which is also unsafe for humans. There are a lot of nuances. Of course, as they say, "the best remedy for dandruff is the guillotine," and in our case, either the closure of the mine, or a huge investment in security. This, in turn, makes coal "gold" and unprofitable. So we balance. I repeat once again: mining is very dangerous, and people know it. In Soviet times, their relatively high salaries were the same "risk premium". Now it is necessary, first of all, to try to make the work as safe as possible, especially in super-category mines with a high content of methane in coal seams. And if investments in security do not justify themselves, then liquidate such enterprises.

My main profession is a mining engineer for underground mining of coal deposits. Nevertheless, at one time I headed a fund that was engaged in the closure of unprofitable, unprofitable mines. We honestly worked it all out - from 1993 to 2000 we closed 200 mines in Kuzbass, Rostov region and other regions. In many respects, the coal industry has survived precisely because we liquidated unprofitable and dangerous industries (in contrast to the same Ukrainians). Now 70% of Russian coal is mined by open pit mining. In a number of fields, conditions are still favorable for underground mining - there is no gas or its concentration is insignificant, and the mine workings are well ventilated. Therefore, from an economic point of view, some underground facilities are comparable to those who mine open pit mines. But these are few. Usually, with the deepening of mines, conditions also worsen, gas appears, rock pressure is more and more noticeable - and safety requires money, money, and again money. In open work, I note that not everything is so easy and simple either. Seams can lie at an angle, when a large volume of rock is removed, then the so-called overburden appears and grows, and you need to know how to handle it. But this, of course, is a different level of security and the costs for it are much less.

- What place does Russia now occupy in the world in terms of production of hard coal, brown coal and anthracite? How much competition is driving us?

- In terms of the total production volume, we are approximately in fifth place - about 370 million tons per year. China produces about 3,6 billion US mines 820-830 million tons, Indonesia, Australia, India are on their heels - they have from 430 to 670 million tons. As for the qualitative composition, approximately 80-90 million tons of our production is brown coals, about 85 million tons are coking coal, the rest is bituminous coal. Anthracite is about 7 million, they are mined in Novosibirsk at Sibanthracite and in the Rostov region - however, now only at Satkinskaya, the rest of the mines are practically closed. The share of "Russian coal" in the all-Russian volume accounts for 14,3 million tons of annual production (4,5 million tons - hard coal, the rest brown). A quarter of the products are exported, the rest goes to the domestic Russian market.

Due to the devaluation of the ruble, we now have a good advantage in the foreign market. But it can come to naught as soon as we begin to update our equipment (it is 60% imported). A dollar for 30 rubles and for 65 - different money. We need to earn twice as much in order to maintain at least some balance. At the same time, I would like to note that, on the whole, labor productivity in the Russian coal industry is five times less than in the Australian one.

- You were a member of the working group to clarify the Energy Strategy of Russia for the period up to 2030. What long-term tasks and prospects does the coal industry have now? How were they affected by the fall in world prices and the general crisis?

- It is clear that export of coal is more profitable than supplies to the domestic market. In the post-Soviet years, when world prices for coal went up, it steadily increased. From 2007 to 2009, there was some failure, then new growth. However, from 2012 to the present day, world prices for this raw material have been declining. One way or another, from 2002 to 2012. Only this export provided our industry with growth due to high world prices, and now it is profitable due to the devaluation of the ruble. Naturally, we work in the domestic market, the price there is also constantly growing, but strictly within the framework of somewhat lower inflation. At the same time, profitability is very low, especially you will not turn around. What to do - a free market. The complete liberalization of prices took place back in 1996, we have no state-owned companies in the coal industry. Thanks to exports, it was possible to maintain business interest in the industry and modernize production, build processing plants, etc. In the Soviet Union, the enrichment of power-generating coals was a serious problem; only coking coal was subjected to such processing. Now we sell cleaned coal for the needs of the electric power industry in Europe, South Korea, Taiwan, China, Japan ...

The program we talked about has been extended until 2035. True, I no longer participate in the development of this document. I only see that the document is constantly being corrected, and in times of crisis, few are ready to take full responsibility for its implementation. The program includes a modest 400 million tons of coal production per year, compared to today's 372 - an insignificant increase. It is obvious that the export of coal, which is now at the level of 156 million tons in Russia, will still gradually grow. True, not at the fastest pace, since prices have dropped significantly. However, by increasing production volumes, it is possible at least to reduce unit costs. Other exporting countries will do the same. But no one can do this endlessly - neither we, nor the Australians, nor the Chinese. And domestic consumption of coal will not be able to grow, almost no one believes in this. The reasons are clear to everyone - this is the crisis, which inevitably reduces the volume of coal consumption, and the tightening of environmental requirements for the electric power industry. One way or another, the initial plans of our strategists to bring production to 2035 million tons and exports to 500 million tons by 250 do not look very realistic now.

The era of industrial development of the world economy has passed its peak. The technologies of steel smelting, production of iron ore raw materials and coke are changing. More and more scrap is used in smelting - a recyclable metal. This amount of primary pig iron (for the smelting of which coke is needed) is no longer required. In these conditions, even China slowed down the rate of coal production, and obviously not of its own free will.

- How should Russia act against this background so as not to bring down its coal mining industry?

- I will say carefully: the best that we can achieve is to remain competitive in the world market in the marketing niches we have already mastered. We are not talking about breakthroughs now. But even if we can hold on to the same positions, in the end it will allow us to achieve a lot. Sooner or later, the price of coal, I think, will start to grow. Although today's 50-60 dollars per ton of thermal coal is also not the worst figure.

It is difficult to call the situation on the domestic market favorable either. It seems that the state has a huge amount of plans in its energy strategy, there are projects for the construction of coal-fired power plants. But for all the years that I have been participating in this work, hopes for an increase in energy consumption due to the construction of new coal blocks have never been realized. There are unique stations - for example, the long-suffering and finally commissioned third block of the Berezovskaya GRES, where coal is located 13 km from the station and from a logistic point of view, the use of this fuel becomes profitable. But in most cases, the cost of transporting coal by rail to the destination eats up all the possible profit.

- Can the arrival of foreign investors in the industry, about which so much is being said now, improve the situation?

- Honestly, I would not associate too high expectations with them. Foreign investors are still very cautious about cooperation with Russia. This is not facilitated by a whole range of problems: we do not have the best mining and geological conditions, vast geography and complex logistics. It is not easy to understand the intricacies of laws and establish contacts with regional authorities. Which business will love this? Even in gold mining, foreign investors do not risk carrying their funds. And in the coal industry, the product is even more peculiar - it is both difficult to extract and sell ...

- How do you assess the idea of ​​TORs in the Far East?

- In my opinion, the idea is theoretically correct, but practically unrealizable. TOP is good because the state gives business the maximum favored nation treatment. But this is not enough - you also need an engineering infrastructure and much more. The budget will not handle such a load. State participation alone cannot raise the TOP. And foreign and domestic investors, in order to invest in this taiga, need something more weighty than fervent assurances and honest eyes of government officials. It is very difficult to judge a project that has not yet really "breathed" and has not begun to bear fruit. When taxes and lending rates will really be reduced, when infrastructure appears - railways, airports, highways, then we'll see if these territories will really "outstrip" the rest of the country in development. So far, the number of residents in the TOP is very small.

- “Russian Coal” doesn't count on TOPs?

- In my opinion, there are no pure coal ASEZs in the Far East at all. We do not exclude our participation in any project if it is beneficial and promising for us. But in this case, we are not making such plans for the near future. In the Raichikhinsky District of the Amur Region, where we have been working for another ten years, there are at least enough resources for quiet work without deteriorating the quality characteristics of coal, plus there are many areas worked out in Soviet times. Their resources allow the additional use of modern mining technology. There is also the Erkovetskiy open-pit mine, where there is a huge field with total reserves of about 3 billion tons. So far, we are the only ones in this territory, and if the circle of stable consumers of products expands, the opportunities for development are practically unlimited. The Blagoveshchenskaya CHPP operates entirely on our Yerkovets coals, and the resources are rather rigidly scheduled taking into account its needs - supplies are focused exclusively on the Amur Region. A project for the joint construction of the Erkovetskaya hydroelectric power station was supposed together with Chinese partners, but so far it is frozen

The Ogodzhinskoye field is closer to the ASEZ, where we own a small operating area with reserves of 34 million tons. If a zone with tax and other benefits appears there over time, perhaps such a TOP will be of interest to us. In the meantime, in those places there is no infrastructure, it is necessary to lay there 130-kilometer railway, and this creates problems with the sale of products. As a matter of fact, even with the presence of railways, not everything is simple and easy: the economy of the end consumer is formed by the railway tariff set by Russian Railways. In this sense, the Amur coals are uncompetitive in the Trans-Baikal Territory or in Primorye: local raw materials are of about the same quality, but they are cheaper due to the lower cost of transportation. It turns out that all the Amur coal goes to the Amur Region, the Jewish Autonomous Region and the Khabarovsk Territory. A step to the left, a step to the right - no options. And this "no options" is getting worse and worse. There are boundaries that we cannot jump over. In addition, if a gas pipe comes to any region, this also affects the volume of coal supplies not for the better.

- Now there is a lot of talk about the fact that coal should be used not only in energy and metallurgy, to apply methods of its deep processing, to make petroleum products from it ... How do you look at the prospects for the development of coal chemistry in Russia?

- In the near future, in my opinion, one should not expect any particular progress in this direction. Yes, there has long been a technology for producing synthetic fuel from coal in the world - it is based on a method developed in 20-e years of the twentieth century by Franz Fischer and Hans Tropsch. The Fischer-Tropsch process was actively used during the Second World War (it was no coincidence that Hitler began his campaign in Europe on tanks with gasoline engines, the fuel for which was produced from coal by hydrogenation). After the war, the Soviet Union received this equipment as reparations, and Irkutskneftesintez was built on its basis. But then the oil and gas-bearing western province was discovered, and the relevance of obtaining liquid hydrocarbons from coal disappeared. The second such precedent in the world is South Africa, which was subject to an oil embargo due to the policy of apartheid. There, too, they created a production using the Fischer-Tropsch method and more than covered the needs of the state. But the fact is that the construction of such factories requires billions of dollars in investment. For every 1 million tons of oil - about 10 billion dollars of capital investment. In Russia in 79-x biennium also tried to figure out whether we need a program for the development of the production of synthetic fuel from coal. They ran into a lot of technical difficulties and eventually abandoned the idea, and then perestroika began and there was no time for technical revolutions at all. In the middle 2000-x they returned to the idea and everything died out too. Meanwhile, China launched its own production. Today it is clear that the technology for producing oil from coal is rather unstable and unreliable; it does not make much sense for Russia.

Other areas of coal chemistry (including the production of methanol from coal, etc.) are several times more expensive than using gas or oil. Therefore, I personally don’t believe in the large-scale development of coal chemistry. Coal is a massive resource, it must be mined and disposed of immediately. All other ideas to make kerosene, gasoline, various chemicals, fertilizers from it are too expensive, the investment and efforts do not justify.

- Investments in the social sphere of the “regions of presence”, in the life support of single-industry towns at the mining settlements, in environmental and educational programs also do not bring profit. The crisis forces us to cut such costs. How are you going to strike a balance between the necessary and the possible?

- It so happened, and there is nothing to be done: big business should always take on social responsibility. We do not intend to abandon such obligations. In three regions where our enterprises operate, we annually conclude agreements on interaction with local authorities. We invest tens of millions in social programs, in the development of culture, sports and education. In the same Raichikhinsk, a concert was recently held on the Miner's Day (crowds of spectators went there from Blagoveshchensk). The indoor skating rink, which had not worked for ten years, was restored ... It can take a long time to list. Yes, these are costs. But in another way, if you live and work on this land, it is simply impossible.

As far as personnel programs are concerned, such expenditures are investments in the future. We can proudly say that despite the difficult climate, people began to strive for us - for example, for enterprises operating in Khakassia. Despite the fact that even from the relatively prosperous Kemerovo region there is a serious outflow of personnel.

Environmental responsibility is a separate issue. Coal warehouses do not ennoble nature, to put it mildly. There are also "peculiarities of national reluctance" to do something according to the experience of Western countries - the same Spain. It is sometimes easier for a small business to pay a fine than to invest huge amounts of money in improving coal storage systems.

We are a large company, we are quite capable of purchasing good equipment, training qualified employees, and debugging technology in accordance with modern world standards. And to supply products to the market, too, of the highest quality. Will such investments immediately pay off? No, it will take a long time. Should we still do them in order to secure ourselves an equally long-term advantage and clear prospects? Definitely yes.
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