Irkutsk
Ulan-Ude

Blagoveshchensk
Chita
Yakutsk

Birobidzhan
Vladivostok
Khabarovsk

Magadan
Yuzhno-Sakhalinsk

Anadyr
Petropavlovsk-
Kamchatsky
Moscow

This text is translated into Russian by google automatic human level neural machine.
EastRussia is not responsible for any mistakes in the translated text. Sorry for the inconvinience.
Please refer to the text in Russian as a source.

Oleg Misevra: "We have everything our own"

The details of the project for the development of the Solntsevo coal mine in Sakhalin and the Omsukchan coal basin in the Magadan region, as well as the social responsibility of business and the work on attracting personnel to coal enterprises in Sakhalin, was told in an interview to East Russia by the president of the Eastern Ore Mining Company Oleg Misevra

- Oleg Anatolyevich, at the Eastern Economic Forum, the Eastern Mining Company (VGK) presented its project for the development of a coal deposit in Sakhalin. Potential investors are already showing interest in it. Different media outlets estimate its value differently - it was either about 70 billion rubles, then about 61 billion, then about 36 billion ... Which figure is more accurate and what does the final investment amount depend on?

Oleg Misevra: "We have everything our own"
Special project Coal of the East of Russia
- Oddly enough, all these figures are correct. 70 billion is a full assessment of the project until its completion, that is, the sum of all necessary investments. And 36 billion is the initial investment that is necessary to bring the work at the field to its design capacity. These funds will be required for the construction of the port, conveyor, open cut and the output of the enterprise to the planned volume of coal production. And then, when everything is already working, about 20 billion rubles will be invested in updating the equipment in 34 years.
 
- But the ruble exchange rate changes, crises happen ... Does the example of MECHEL scare you, when they, too, probably calculated everything, taking loans, and as a result, with a decrease in prices on the world market, they remained credited, and, in fact, without the ability to even service your debts?

- We consider the risks of the project at the current rate and in relation to today's realities, without trying to predict fluctuations in rates and world market conditions in the distant future. This is almost impossible to do. And the danger you are talking about does not exist for us, for the simple reason that we, unlike MECHEL, have nothing in the project that we could not influence. We do not have a railway, which tomorrow will suddenly set tariffs twice as high. We have everything our own: cut, port, conveyor line. We can be influenced only by the cost price - and also by the situation on the world market, since 99,9% of our production is exported.

- It seems that coal prices have nowhere to go?

 - They can fall even lower, no one is immune from this. But so far the price has remained stable for several months.

- Speaking about the global market, which competitors do you primarily take into account? Australia, given that it has 50 percent of the global coal market?

- No. It is not a competitor for us specifically. The entire coal industry of Russia competes with Australia, because it sells only coal and anthracite. And Australia also works in the hard coal segment. VGK sells brown coal. Let me explain for understanding: there are several types of coal, further subdivided into different grades. The youngest and least high-calorie (from 3000 to 5000 Kcal / kg) is brown coal. 5000 Kcal / kg is the border between brown and bituminous coal, although there are different gradations that are not very clear to a layman - the percentage of moisture, etc. In addition, in bituminous coal there is such a class as coking coal, which is used for the needs of metallurgy ... And the oldest and most high-calorific coal (from 7000 Kcal / kg and above) is anthracite. So, we sell brown coal and compete not with Australia, but with Indonesia. But we are very relative competitors: Indonesia exports about 400 million tons of brown coal a year. Only we supply brown coal from Russia, and the supplied volumes are insignificant - this year 3,5 million tons. Even if we bring this figure to 10 million, it will still be 40 times less than the Indonesian one. Dumping in order to "crush" us simply does not make sense; a large exporter will lose much more on this. Therefore, we can be relatively calm working in the traditional market for us in Japan, Korea and Taiwan. This year we started deliveries to India, which is not traditional not only for us, but also for other Russian coals.

- How do you plan to finance the Sakhalin project, and what own funds do you currently have?

- We are planning on 20-30% invest their own funds in it, and attract the rest from investors, as well as in the form of lending through the Far East Development Fund. After the EEF, many became interested in our project, but among these "interested parties" were mainly various investment funds, the so-called "portfolio companies". And we need a strategic investor who is ready to interact with us right up to the launch of the project and with whom there will be no internal corporate disagreements. In addition to the Solntsevsky coal mine project on Sakhalin, we also have a second project, the development of a coal deposit in the Omsukchansk basin (three areas with total reserves and resources for 100 million tons of raw coal - ed.) In the Magadan Region, it will cost about the same money ... Each of these projects has its own pros and cons. In Magadan, everything depends on the infrastructure, because coal can be mined (and we do this within the framework of our geological exploration licenses), but for its export we need a road and a port. There is a port of Shakhtersk on Sakhalin, and we have already begun to develop it, there is a road to the port. In Magadan, everything must be started from scratch, this is a start-up "in an open field." So far we only have a license for geological exploration, and everything else - from the road to the port and the field itself does not yet exist. It is necessary to carry out additional exploration work, put reserves on balance, obtain a license, build a road and a port, and only then begin work. On the other hand, if funds are invested in such an infrastructure, then we will be able to do the project jointly with other enterprises, since there are deposits of gold, metals, iron, etc. around this road. It's just that few people went there precisely because of the lack of infrastructure. We have already advanced to the stage of negotiations with the Ministry for the Development of the Russian Far East and the Far East Development Fund. On Sakhalin, despite the presence of a port and a road, we have a monoproject. We have rented the port of Shakhtersk for 49 years and so far it works only for a single consumer - for us. Of course, we would not give up the status of a free port, if it is granted, which is currently being discussed in this region, and receive some preferences there, but we do not particularly count on this. Although there will be some specifics regarding those three ports, the fate of which the Governor has already discussed with the Prime Minister, we have a chance to add to them our port, which is designed to receive barges with coal. Now the reconstruction of the port has cost about 20-30 million and the coastal infrastructure is about $ 10 million to bring it to the volume of 10-15 million, investments of $ 200-220 million are required. Initially, we were going to build a port in Izilmentievo, closer to the field , 14 km away. 14 and 30 km - the difference is noticeable. But it turned out that the short way lies through the mountains, along the passes. At a price it would be no less than a long one, operation would be more expensive, and we considered the construction of such a road economically inexpedient and decided to develop the Shakhtersk port.

- Is there any potential investor interested in the project and interesting to you for the further implementation of the project?

- The Australian company Tigers Realm Coal conducted preliminary negotiations with us. There was one familiarization meeting, 2 mutual visits are planned soon, them to us in Sakhalin and ours in Chukotka.

- What is their interest in you?

- I think it's better to ask them. And my interest is, perhaps, to create, perhaps by merging into one enterprise, in the future, coastal coal mining and trade, without the participation of the railway with its port and offer to the markets coal of all brands: brown, coal, energy , anthracid and coke. It will be a company with very good opportunities and maximum resistance to the impact of price, economic and other crises. But, so far, Tigers and I have not yet substantively discussed any possible options for the development of relations, both joint and separate. Our Russian investors also showed interest, but rather specific. A number of banks offered us to find a buyer for the stake. But, to be honest, I hardly believe that someone will buy 25% and then buy everything else. The project is just developing, no one will decide to come and buy everything at once - it is quite specific and requires sufficient knowledge and experience in this industry. But in general, we are not very much racking our brains now over where to get the money. Our project is quite profitable, with a payback period of 4 years. I am more than sure that even if due to sanctions Western banks will not work with us, we will find investors to finance it.

- One of the most painful issues for the Far East is personnel. It is constantly said that the locals are not allowed to work, they invite "guest workers", etc. And you have vacancies on your website with a decent salary for the region 50-60 thousand rubles. How do you recruit yourself and what challenges do you face in doing so?

- Even from Sakhalin we, unfortunately, hire people on a rotational basis. Infrastructure is too poorly developed - not only port or railway, but also related to transportation and accommodation of people. A person cannot go to work for 300 km, and return in the evening, and settlements are scattered throughout the island. We are not in Shanghai, where high-speed trains run, I hope so bye! Therefore, the rotational method is the only solution. The area itself is very sparsely populated. According to the census, about 20 thousand people live there, but in reality, it seems to me, the data is already outdated, and there are much fewer people there. And we have a mine where 800 people work, an open-pit mine - 800 more, a second open-pit mine - 800, two ports - 400 people, and our competitors also, plus an enrichment plant - another hundred, plus transportation ... In total, it turns out that need about 4-5 thousands of workers, and it is clear that the local labor resources will not be enough for this, because the specialties range from a drifter - an excavator to a driver. Our people also receive 100 thousand rubles, we are a coal company with the highest salaries on the island. Colleagues pay by 50-60 thousand. It's not that we are so generous or kind, but simply that we are too far away, and we have an acute shortage of qualified personnel. We are forced to overpay everyone, from workers to directors, otherwise they will not go to work for us, and the dynamics of our development is very fast. We are growing almost 100% per year in terms of volume.

- And what citizenship do your shift workers have?

- They are mostly Russians. Although we have experience of working with Vietnam, about a hundred Vietnamese are constantly working with us. Only not in Shakhtersk or Uglegorsk, but in Bashnyakovo, this is a small village 80 km from Shakhtersk with a population of less than a thousand people. Nobody wants to go there, because no infrastructure, including social, is developed. When a person comes home from work, he has nothing else to do except to fish in winter or summer. Therefore, we are bringing Vietnamese there who agree to such conditions. They are already satisfied with the fact that we provide them with good new equipment, with which we just have no problems.

- The authorities are not going to somehow develop this mono-district?

- A question for the authorities. Let's say Boshnyakovo is a mono-settlement. From employers - we are social. It all depends on our prospects. If we develop, the authorities will develop the village, we will not, it is unlikely, although this is my opinion, maybe the authorities have a different vision, maybe they want to develop tourism, fishing in Boshnyakovo ... but for now, only we. As regards Uglegorsk and Shakhtersk, it is more understandable, as I said, we are developing very dynamically there and will continue to grow. We are sure that we will restore the mine and take new deposits. There, the authorities will definitely invest and develop the social sector, and they are already doing this intensively. Builds kindergartens, repairs schools, hospitals, makes a road between cities, builds a new recreation center in Shakhtersk. We ourselves also began to make efforts to put cities in order. First of all, we offer high-paying jobs, pay taxes, and allied businesses and spheres of activity are created around us. Until today, we have been practically unprofitable, since we constantly incurred costs associated with development, purchase of equipment and other things. This year we have already made a profit and are covering the losses of previous years, from next year we will pay income tax, and quite a decent one. This money will be spent on the development of the social sphere. For example, for the construction of roads, which in fact were not there before. 12 years ago, when I went there for the first time, it took half a day to get from one enterprise to another. And now, we have already finished laying a dirt road, I think in a year and a half there will be an asphalt road connecting the cities of Uglegorsk and Shakhtersk. Schools, kindergartens are under construction, even an ice palace seems to be in the plans. Uglegorsk also receives money from Gazprom, since the company operates on the island and one of the corporation's top managers is a native of these places and does not forget his “small homeland”.

- What do you mean by the concept of "social responsibility of business"?

- I believe that everyone has their own responsibility. Someone is social, someone is economic, someone is different. My responsibility is to develop the company. If I only deal with social issues, then I need to go to the administration of the municipality and work there. Of course, this does not mean that we should not help the authorities. We recently built a church because there was no church in the area. And when I asked to be shown where their church was, they took me ... to the former Lenin's room. Blasphemy is simple. Therefore, of course, we have built a church, one of these days we will open a monument to Sergius of Radonezh, the mayor of the district has been hatching this idea for a long time and with our help the residents will receive a monument. Naturally, we do such things - but this does not mean that this is the main direction of our work. We are now negotiating with foreign companies that supply us with equipment, so that they supply simulators for training to work on it in our technical school for free. Exercise equipment is expensive, costing up to $ 1 million. I don't know if we will complete this process, maybe we will pay part of it ourselves. But all the same, the technical school will have simulators where people will have the opportunity to learn to work for Caterpillar or Komatsu. Then they will be able to find a good job, since specialists who know how to handle such equipment are paid far from a penny, including at our enterprises. Unless we always write that a high salary is "subject to the fulfillment of the plan." You can't lure people with big promises and then disappoint. And we'd rather write on the website that the salary is 60 thousand, and he will receive 100 thousand, than he will come to 100 thousand, receive 60 and be upset. We are trying to act correctly.

- Now there is a lot of talk about the fact that we can, taking advantage of the situation, invite cadres from Ukraine, as the people closest to us in language and mentality. Do those who come from Ukraine work for you?

- Yes, there were such visitors, both ordinary workers and highly qualified ones. One of them was building a conveyor line in Donbass - not as big as ours, only for 6-8 km, but new and modern. We negotiated with him even before the well-known events in Ukraine, and when the conflicts began, he and his family moved to Shakhtersk, lives and works normally. We have a lot of employees who have moved from Ukraine.

- You, having extensive experience in the coal industry, have worked in different regions. If we talk about the Sakhalin authorities, is it easier or more difficult to interact with them than it was, for example, in Kemerovo or Krasnoyarsk?

- I do not want the pure truth to sound like flattery or routine praise. But it is really very comfortable for us to work with the administration of the Sakhalin Region, especially now, with the arrival of a new governor. The region has always been deprived against the general background, it got everything according to the residual principle as the most distant region. Until the gas projects began, there was nothing particularly good here. And the administration is now trying in every way to develop the regional economy, to diversify it. The Governor is making great efforts to this, he always supports promising ideas. And he, too, clearly will not agree to dubious deals or collusion - this can be seen with the naked eye. It's just very difficult to praise a person - you have to make excuses in advance.

- And what, if we talk about your project, can a public-private partnership be expressed? What do you need from the state in the first place?

- To be honest, we don't need anything special from the state. The main thing is that it does not interfere with us and give us the opportunity to develop. To create comfortable conditions for this and not allow the clerks to fool their heads. We will now begin to take land for the conveyor and are ready to pay for it. But we all know how long and problematic is the mechanism for withdrawing land from agricultural purposes or forest resources. If the state starts helping us and gives us the green light, great. By the way, we are among the priority projects of the Sakhalin Oblast, so we have, in fact, been supported. We will certainly not give up the help in subsidizing the loan rate. Well, for the rest, of course, we rely on our own strength.

- Have you already signed an agreement with the Far East Development Fund?

- We will come to the signing of a specific agreement at the end of this year or at the beginning of the next. In addition to us, the government of the Sakhalin Oblast signed such a document with the fund, under the ruble-to-ruble scheme. If the fund gives, for example, 2 billion rubles, then the region will allocate the same amount, and without interest. Thus, the interest rate for us will be halved. Even if this is not such a large part of the required investments, it is important already because we are going to implement this project together with the state, it supports it and is interested in its implementation, since it provides jobs, employment, taxes ... now "has turned to face us," and we are happy about it.

Curriculum Vitae:

Was born on September 20, 1967 in Kiev, Ukraine.

In 1988 he graduated from the Kharkov Higher Military School of Logistics of the Ministry of Internal Affairs of the USSR with a degree in "engineer-economist", in 1995 - from the Higher School of Business with a degree in Management and Finance, in 2000 he was trained at the Siberian State Industrial University on a comprehensive educational system "Mining Academy" in the specialty "Underground mining of mineral deposits".

1984-1993 -
service in the Interior Ministry of the USSR and the Russian Federation; 1993-2000 - General Director of the Prodcontract company; 2000 - Director of OJSC Kuznetsk Ferroalloys (Kemerovo Region); from January 2001 - Acting General Director of OJSC Vostsibugol; in April 2001, the Board of Directors of the company was elected to the position of General Director of OJSC Vostsibugol; in May 2001 he was elected Chairman of the Board of Directors of OJSC Chita Coal Company; since September 2001 - General Director of the Siberian Coal Energy Company Baikal-Ugol (MDM Group), which includes OJSC Vostsibugol, OJSC Chita Coal Company, OJSC Krasnoyarsk Coal Company, OJSC Coal Corporation of Sakhalin », Coal companies of Khakassia; from May 2002 - Member of the Board of Directors of OJSC Krasnoyarsk Coal Company; from July 2002 - Chairman of the Board of Directors of OJSC Vostsibugol, from March 2003 President of OJSC Siberian Coal Energy Company (SUEK); since March 2005 President of LLC MC Sakhalinugol; from August 2013 to the present time - President of LLC Eastern Mining Company (VGK).
March 6: current information on coronavirus in the Far East
Digest of regional events and latest statistics