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. Last Updated: 07/27/2016

Troubled Coal Industry Looks Ahead

SALTIKOFKA, Russia -- The problems of Russia's troubled coal industry -- rising on-the-job injury rates, looming unemployment, stalled privatization efforts and declining social safety nets in one-dimensional mining towns -- were the focus of a week-long American-led seminar in this Moscow suburb.


"For 70 years we did nothing and waited for somebody to tell us what to do", said Alexander Yevtushenko, Deputy Minister of Fuel and Energy. "The seminar helped us shape our thoughts, but it confirmed that we can't wait for some super solution. We must start working".


The program, organized by The Coal Project, a division of the nonprofit American group Partners in Economic Reform, brought together top industry officials, union organizers, the World Bank and leaders of the largest coal companies in Russia and the United States last week.


Topics at the conference, which ended Friday, included how to generate American investment in Russian coal companies and how to provide social guarantees to workers once Russia's 338 coal mines become privatized.


Under the current system, coal mines use their profits to build factories to feed their workers and to fund local hospitals, schools and other social welfare programs. But to make coal mines profitable under privatization, funds generated by selling coal should be reinvested in the coal mines, labor analysts say.


This potential loss of welfare programs would coincide with rising unemployment, creating a dangerous social problem, according to Mary Louise Vitelli, director of the Coal Project, who organized the seminar. She said that industry, government and union officials must create a plan to ensure that social welfare guarantees will still be provided to workers.


But such concrete plans are a long way off. Industry experts like Vitelli say that the laws for privatization are still too unclear to encourage investment and promote privatization.


"Investors need legal title to land and resources so they can promote social programs while earning a profit", said Joseph Farrell, chairman of Pittston Co. , one of the largest U. S. coal companies.


There are also still no concrete plans on how to retrain workers once companies are downsized. Because many coal mining areas in the Kuzbass region of Siberia and the Arctic towns of Vorkuta and Inta are dominated by the coal industry, unemployed coal miners will also have to move to other areas of the country, coal experts say.


According to Yevtushenko, 43 mines will be closed soon, with a loss of up to 400, 000 jobs. He gave no exact schedule for the closings.


"We need time. It may take one to five years to restructure only one coal mine", Yevtushenko said. "This is not just a technical problem but a social problem as well.


"When some mines close, workers can be transferred to different mines. But in other towns, when a coal mine closes the entire population will have to be moved", he added.


Coal miners, who earn up to 80, 000 rubles a month, are one of the highest paid groups in Russia. But work can be so difficult and fatal that coal miners can often retire at age 40.


According to Alexander Sergeyev, president of the Independent Miners Union, 319 miners were killed on the job in 1992.


Accidents are high, labor analysts say, because wages are linked to production, encouraging workers to shrug off time-consuming safety requirements. In addition, coal mine directors often have little money to invest in new equipment - or even repair old equipment,


"We need incentives for miners to abide by safety regulations", said Viktor Trashenko, a union leader from Kuzbass. "We now walk on the razor's edge, escaping death by narrow margins. The present system of wages is the culprit".


While over 60 percent of domestic energy in the former Soviet Union is produced in Russia, Ukraine and Kazakhstan, Russia's coal production fell to 327 million tons last year from 416 million tons in 1989, Vitelli said.