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The economic future for Russia's Kuzbass coal mining region

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390
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nt. J. Oil, Gas and Coal Technology, Vol. 16, No. 4, 201
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Copyright © 2017 Inderscience Enterprises Ltd.
The economic future for Russia’s Kuzbass coal
mining region
Gleb Cherdantsev and Thomas Thurner*
Institute for Statistical Studies and Economics of Knowledge,
Higher School of Economics,
Myasnitskaya 20, 101000 Moscow, Russia
Email: grcherdantsev@edu.hse.ru
Email: tthurner@hse.ru
*corresponding author
Abstract: Russia’s Kemerovskaya oblast, often referred to as Kuzbass, is the
most prominent coal mining region of the country. By the end of 2015,
215.6 million tons of coal or 58% of Russia’s overall coal production came
from this region, among them 70% of Russia’s 87 million tons of coking coal.
The region looks into an uncertain future, as demand for its coal is expected to
diminish and the price for coal is likely to decline further. New innovative
coal-based products may open up new market opportunities and could pave the
way into a prosperous future. Its regional innovation system benefits from
well-established R&D and educational institutes and a skilled workforce.
Recently, an industry cluster has been set up to combine worldwide science
with local production knowledge. Still, the success of these initiatives remains
to be seen. [Received: June 1, 2016; Accepted: December 29, 2016]
Keywords: coal mining; extractive industries; Russia; industrial change.
Reference to this paper should be made as follows: Cherdantsev, G. and
Thurner, T. (2017) ‘The economic future for Russia’s Kuzbass coal mining
region’, Int. J. Oil, Gas and Coal Technology, Vol. 16, No. 4, pp.390–401.
Biographical notes: Gleb Cherdantsev is a Master student at the Higher
School of Economics.
Thomas Thurner is a Professor at the Higher School of Economics in Moscow
and works in the field of innovation management.
1 Introduction
Today, coal has lost its former glory, as the energy carrier is blamed for most
human-caused CO2 emissions. The price for coal has come under pressure due to factors
outside the industry, like the expansion of shale gas production. As a consequence, the
USA started exporting coal that was previously consumed within the country. The coal
equivalent that could hit the market due to the shale gas expansion (including both coal
and gas) is estimated to reach 650–800 million tons of coal per year (Plakitkina, 2013a;
Plakitin, 2013), while the total global coal market reaches 1.0-1.2 billion tons per year.
Most research acknowledges the declining prospects for coal and revert their focus on to
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new ways of energy generation. Still, coal remains a necessary ingredient for steel
making, and large parts of the developing world still rely on coal for electricity
generation (Gstraunthaler and Proskuryakova, 2012). According to the World Energy
Council, China and India will be the hotspots for coal demand up to 2050 (WEC, 2013).
As a consequence of shutting down their nuclear power stations after the Fukushima
incident, Japan became one of the biggest coal consumers in the world. In general,
though, for thermal applications, coal is replaced by cleaner energy carriers (e.g., natural
gas). Very little interest is paid to the future of coal mining regions and how they
maintain business operations in a hostile environment. Emerging technologies though do
indeed hold great potential for coal. New refining methods help turning coal into a much
cleaner energy source, and nanomaterials based on carbon have great commercial
potential (see graphene for an example).
Russia’s most prominent coal mining region is Kemerovskaya oblast, often referred
to as Kuzbass. By the end of 2015, 215.6 million tons of coal or 58% of Russia’s overall
coal production came from this region, among them 70% of Russia’s 87 million tons of
coking coal. 114.4 million tons of the regional output went into export (76% of Russia’s
total coal export in 2015) (Tarazanov, 2016). The region looks into an uncertain future, as
demand for its coal is likely to diminish. Hopes rest on innovative coal-based products
which may open up new market opportunities and could pave the way into a prosperous
future. Consequently, an industry cluster has been set up to combine worldwide science
with local production knowledge. This paper studies Kuzbass’ current industry structure
and describes possible paths for future development. The present study builds on an
in-depth review of the academic literature with a focus on Russian journals. Furthermore,
we studied publications by local universities and research institutes like the Bulletin of
Siberian State Industrial University, Bulletin of Irkutsk State University, Bulletin of
Kuzbass State Technical University, or Tomsk and Kemerovo State University
publications. As Kuzbass holds a very unique position within the national and
international coal industries, this paper is of interest to scholars and practitioners alike.
2 Literature review
Although a number of papers in international journals thematised the Kuzbass coal
industry (e.g., Kazantseva, 2009), most papers are published in Russian journals, like
Gornaya Promyshlennost (Mining Industry), Gorny Zhurnal (Mining Journal) or the
journal Ugol (Coal). These contributors are often affiliated with the coal industry. Other
main contributors are policy makers, like Andrey Gammershmidt Deputy of the
Kemerovo Region Governor, whose paper provides valuable insights into the current
state of the industry (Gammerschmidt, 2015). An important source of information about
the coal industry in the Kuzbass is the Energy Research Institute of the Russian Academy
of Science which publishes analytical reports with the most relevant statistical data and
industry forecasts (e.g., Plakitkina, 2010, 2011a, 2011b, 2012, 2013a, 2013b, 2013c,
2014a, 2014b).
Coal combustion is known to be the largest contributor to the human-made emissions
of CO2 in the atmosphere (Iowa Utilities Board, 2007). Coal-based electricity generation
emits approximately twice the amount of greenhouse gasses per kilowatt compared to
natural gas. Furthermore, burning coal is also a leading cause of smog, acid rain, and
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toxic air pollution. The coal industry is considered to be the world’s leading carbon
dioxide emitter, and solid waste production and water pollution levels related to coal are
extremely high. Hence, one of the main topics among contributors is environmental
concerns. For an overview of the environmental impact of the Kuzbass coal industry, see
Bufina (2013), Mekush (2014) or Elgina and Mekush (2014). Consequently, the concept
of ‘clean coal’ has received great attention from the academic literature. There are though
quite critical attitudes towards the concept, and some sense mainly marketing reasons
behind it (e.g., Conniff, 2008; Fleischli, 2009; Miles, 2013). The same controversial
opinions are present in discussing the most promising coal industry innovations. Most
authors identify coal chemistry in general and coal gasification in particular to hold
potential for future economic growth of coal mining regions. Others see big risks
associated with these technologies as they are not yet ready for application (Islamov and
Stepanov, 2007; Islamov, 2013; Stepanov and Islamov, 2015). To strengthen the
innovation activities in the Kuzbass region and to find ways of cleaner usage of coal, an
industry cluster has been set up in the region. This policy initiative has attracted great
interest (e.g., Fridman et al., 2012a, 2014c).
3 Kuzbass coal industry characteristics
The majority of Russian coal (almost 60%) is being mined in the Kuznetsk coal basin.
The basin occupies a vast cavity in Western Siberia, which is bounded by the mountains
of Kuznetsk Alatau on the northeast end, the Shoria Mountains in the south and the Salair
Ridge in the southwest. Most of the coal basin lies within the administrative borders of
the Kemerovo region, which is why the region is often referred to as Kuzbass (from
Kuznetsk coal basin). The total reserves of coal in Kuzbass exceed 700 billion tons, of
which over 500 billion tons are suitable for industrial deployment. Kuzbass holds a great
variety of high quality coals from brown to anthracite, well suited for coking and
deep processing. Furthermore, Kuzbass coal is of high quality as it contains only low
amounts of ash (0.3%–0.65%), low levels of phosphorus and high energy content of
6,000–8,500 kilocalories per kilogram. Especially for coking coal, Kuzbass has the
largest reserves in Russia, exceeding 42 billion tons. The explored coal deposits suitable
for open-cut mining are more than 11 billion tons.
The history of coal mining in Kuzbass goes back to 1721 when Russian geologist
Mikhailo Volkov first discovered coal deposits near the place where later the city of
Kemerovo was founded. In 1851, the first coal enterprise, the Bachatskaya mine, was
established near the city of Gurievsk. The building of the Trans-Siberian railroad during
1890’s gave rise to the development of the Kuzbass coal industry. Scientific research
related to coal began in the 1950s when the Kuzbass Mining Institute (current name –
Kuzbass State Technical University) was established. Later on, the Kuzbassgiproshaht
research institute for designing coal mining and coal processing and the Institute of Coal
of Siberian Branch of Russian Academy of Science joined. At present more than 70% of
extracted coal is being refined, up from 40% in the year 2000. Some enterprises like
Kuzbassrazrezugol upgrade 90% of their extracted coal. During the past 15 years, around
28.000 jobs were created through new coal mining and coal refinement facilities. Today,
more than 110.000 people are employed in the Kuzbass coal industry, and the salaries
paid in the Kuzbass coal industry are 18% higher than the Russian average
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(Gammerschmidt, 2015). Around 20% of Kuzbass coal is used by the metallurgical
industry, up to 10% for electricity generation, 6% is consumed by farms, private
households and municipal housing services, and another 6% goes to miscellaneous
consumers. More than 60% of its output is exported to 76 Russian regions and
48 countries. Export numbers have risen by 8.3% in 2014 alone and continue to rise
(Plakitkina, 2015a).
The Kuzbass has several factors playing in its favour. Firstly, competing large
Russian coal deposits are mainly located in remote regions with permafrost conditions,
while the climate of the Kemerovo region is mainly continental. Secondly, coal seams in
Kuzbass lay close to the ground level, allowing for open-pit mining which reduces the
production costs significantly in comparison with underground mining operations. Those
underground mines that are active usually do not exceed 500 metres in depth. Thirdly,
unlike with most of the other coal basins, the Kuzbass coal deposits are very well
connected to the country’s railroad infrastructure.
Another specificity of Kuzbass is its industry organisation. Following the mass
privatisation of the 1990s, all coal mining assets in Russia came under private ownership.
In fact, the coal mining industry is the only branch of the national fuel-energy complex,
in which the government does not hold a controlling interest (Fridman et al., 2014d).
While this setting could eventually lead to more competition, the lack of consorted action
makes it difficult for companies to attract governmental subsidies required to implement
big modernisation projects. The largest coal enterprise in Kuzbass is Kuzbassrazrezugol.
This company specialises in open-pit extraction and in 2015 extracted 44.5 million tons
of coal from six pits with a workforce that exceeds 25 thousand people. More than 50%
of its production goes into export. SUEK-Kuzbass, a subsidiary company of Russia’s
number one producer Siberian Coal Energy Company (SUEK), produces over 30 million
tons of coal per year in eight mines and three open pits, of which two third goes into
export. The third largest coal producing enterprise in Kuzbass (and in Russia as well) is
SDS-Ugol, which extracts 30.2 million tons per year, of which almost 90% of its
production is exported mainly to Germany, UK, Turkey, Italy and Switzerland.
SDS-Ugol owns four open pits, ten mines and two coal-refinement plants and employs
13 thousand people. Among other leading Kuzbass coal enterprises are Kuzbasskaya
Toplivnaya Kompania, Sibuglemet Holding, Yuzhkuzbassugol, Raspadskaya and
Yuzhniy Kuzbass. Each of them produces 10–11 million tons of coal per year. A
common trend in all the Kuzbass coal companies is the growing export activities to Asia.
Thus, during the first half of 2015 the exports to the Asia-Pacific region equalled
68.8 million tons, which is 3% more than in the previous year (Fateeva and Kazachenko,
2015).
Most of Kuzbass’ coking coal producers belong to larger metallurgical holdings,
which consume most of the produced coke by themselves. Thus, Mechel controls
Yuzhkuzbassugol, EVRAZ owns 82% of Raspadskaya and Kuzbass’ largest coal
producer Kuzbassrazrezugol is a part of the UGMK metallurgical company. The level of
integration between thermal coal producers and its consumers is much lower than in the
coking coal segment. SUEK, EVRAZ and Mechel are the only three companies that own
solid fuel power plants. SUEK is affiliated with Siberian Generating Company, which is
the owner of all the coal power plants in the Kemerovo region. Its total market share of
total Kuzbass coal production does not exceed 15% (Fridman et al., 2012b, 2014a).
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4 Challenges for the future development
The major difficulties that Kuzbass is facing are transportation and infrastructural
challenges, combined with the environmental impact of coal production. Currently, coal
trades at 44% discount to 2011 price levels. The first half of 2015 alone saw both coking
and thermal coals declining 14% and 24% respectively. This decrease in prices is mainly
caused by an oversupply of coal. On one hand, big consumer markets like the USA began
to export coal. On the other hand, especially for thermal coal, the demand fell as coal is
increasingly replaced by other energy carriers with a lesser environmental impact.
Especially natural gas is an increasing competition – also through price-oriented policies.
The decreasing coal prices have affected the investment activity in the industry.
During the last 15 years, more than 600 billion roubles were invested into infrastructure
projects. While in 2012, the investments into fixed assets of the Kuzbass coal industry
reached 86.5 billion roubles, the value dropped down to 25% of this amount in the
following year (65.6 billion roubles). In subsequent years, investments never exceeded
the 50 billion roubles mark (Plakitkina, 2015a, 2015b). The falling price for coal
coincides with an economic slowdown in Russia. In the Belovo region for example, plans
for ten coal deep processing units with a total capacity of 3.5 million tons of coal were
put on hold. These units were to produce diesel fuel, bitumen and syngas, but the project
was suspended. Among the projects now under scrutiny are plans of TopProm to
invest 5 billion roubles in the restoration of the mine Yubileinaya; the plans of
Kuzbassrazrezugol to invest 6.5 billion roubles in a coal preparation plant at the
Taldinskiy open pit; the plans of Yuzhniy Kuzbass to invest 2 billion roubles into its
assets upgrade; the plans of KOKS group to invest almost 1 billion into the development
of Butovskaya mine, Shakhta imeni Tikhonova mine and Koksoviy open pit (Plakitkina,
2015a).
Another major issue for the industry is the geographical distance to its consumer
markets. Kuzbass coal producers ship their coal by railroad to consumer markets 3 to
5 thousand kilometres away (Karasev and Moreva, 2014). The railroad tariffs in Russia
are controlled by the Federal Government and are increasing rapidly. Consequently, more
than a half of the Kuzbass coal price is owed to transportation costs. Although Russia’s
railway system is well developed, the free capabilities in Siberia and the Far East are
almost exhausted. The changes in the organisational structure of the transport
infrastructure in recent years have seen a rising number of cars operated by private
companies (Thurner and Gershman, 2014). A further increase of goods traffic in the area
of 10–20 million tons might already cause serious delays and would place massive
constraints on export activities. This situation has already led to financial losses for
companies like Kuzbassrazrezugol, Yuzhkuzbassugol, SUEK-Kuzbass and others
(Karasev and Moreva, 2014). Thus, an increase in the export of coal will require
necessary investments into the transport infrastructure. Due to the weakening rouble, the
cost for imported technologies and equipment has risen drastically (Poderni, 2013) as all
the components and most of the maintenance are still priced in US dollars. The situation
is further complicated by the Ukrainian crisis, as many mining machinery manufacturers
are located in the Ukraine.
The third major issue of the Kuzbass coal industry is its environmental impact. Coal
mines and especially the open pits emit large amounts of dust which pollutes the air of
the surrounding areas. The structure of soil suffers, and the local microclimate is affected.
Already now, the total area of damaged soil in the Kuzbass area exceeds 100 thousand
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hectares, which is ten times more than Russia’s average (Bufina, 2013; Efimov et al.,
2015a, 2015b). The legal framework does not require rigid pollution control. There are no
real lobbying activities pushing for policy change, and miners are likely to oppose such
initiatives (Mekush, 2014). Also, there are illegal coal diggers active in the region. For
instance, in 2010 there were four big illegal open pits found near the cities of
Prokopievsk and Novokuznetsk. When such activities are finally shut down, the damaged
soil and landscape is left behind (Bufina, 2013). Very rarely are such perpetrators held
accountable. The law is only violated if the economic damage exceeds 2 million roubles.
Also, ordinary workers (even the illegal ones) cannot be held responsible for the actions
of their employer, and these are often out of reach. To solve this problem, the Kuzbass
officials have established ‘Coal Special Forces’ using helicopters to find illegal mining
pits and ensure rapid seizing of operations. Unfortunately, the problem remains urgent in
the region.
5 Kuzbass coal industry development opportunities
Kuzbass benefits from a well-developed infrastructure (the most industrialised region east
of the Urals) and the presence of a number of specialised educational and research
institutions (Klishin and Pisarenko, 2014; Klishin et al., 2015; Voskoboinik, 2011).
Moreover, new technologies allow producing up to 130 types of products and semi
products from coal that could then be further processed to more than 5,000 types of
products (Cherkasova et al., 2015).
Also, Kuzbass coal enterprises are adding new plants and factories: In 2011, the open
pit Inskoy and the open pit Energougol were put into operation, together with the coal
preparation plants Krasnobrodskaya-Koksovaya and Vakhrushevskaya. In 2012,
the Butovskaya mine near the city of Kemerovo started its activities, together with
the open pit Pervomaiskiy and the coal preparation plants Matyushinskaya,
Chernigovskaya-Koksovaya and Berezovskiy. Also in 2012, a so-called ‘smart’ open pit
Pervomaiskiy with a projected capacity of 15 million tons per year was put into
operation. In 2013, the Yerunakovskaya-XIII mine and the Butovskaya mine were
opened and the second phase of the coal preparation plant Shahta Imeni Kirova and coal
refinement plant Kaskad-2 (owned by the Kuzbasskaya Toplivnaya Kompaniya) were
completed. The latter has a capacity of producing coal concentrate with ash content levels
lower than 9%, which meets the highest quality standards. In 2014, the Karagailinskaya
mine, the open pit Kiyzasskiy near Myski and the open pit Taibinskiy near the city of
Kiselevsk were started operation with a total production capacity of 7.8 million tons per
year. The amount of investments into these three factories reached 18.3 billion roubles
(Gammerschmidt, 2015). In 2015, the Zarechnaya coal company completed the first
phase of the coal refinement plant Shahta Karagailinskaya. Also in 2015, the new coal
refinement plant Kaltanskaya-Energeticheskaya was put into operation, creating 250 new
jobs. According to the Regional Strategy of Coal Industry development up to 2025, 38
new coal pits in Kuzbass, including 15 mines, seven open pits and 16 coal refinement
plants will be added (Plakitkina, 2015a, 2015b).
In order to develop the export trade, Kuzbass coal producers invest heavily in
overhauling coal terminals in harbours on both eastern (Vanino, Nakhodka ports) and
western (Ust-Luga, Murmansk, Tamani ports) directions. Thus, already in 2005 the
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exclusive trader of Kuzbassrazrezugol – Krutrade AG Company – acquired a controlling
interest in Russia’s largest coal harbour – Vostochniy port. The capacity of this single
port is equivalent to all the other Russian specialised coal harbour terminals.
Furthermore, Kuzbassrazrezugol also owns the coal terminal in Ust-Luga port in the
Leningrad region with a capacity of 8 million tons of coal per year. The Ust-Luga
terminal plans to operate a shipping line to Germany, which will allow direct coal
transportation bypassing the Baltic states. To improve the export opportunities even
further, Kuzbassrazrezugol in cooperation with Holding Company Sibirskiy Delovoy
Suyuz (parental company of SDS-Ugol) plans a new coal port in Murmansk with the
capacity of 15 million tons per year (Plakitkina, 2011a).
To remain competitive, the region’s industry searches for access to new market
segments in Russia and abroad. Such commercially interesting markets require the
adaption of new production technologies to raise the energy efficiency of production of
the region’s coal. In general, Russian mining companies have been seen to have a high
absorptive capacity (Thurner and Zaichenko, 2014, 2016). The most suitable set of
innovations considered for implementation within the Kuzbass coal industry are coal
briquetting, coal gasification for power generation and liquid fuel synthesis (coal
chemistry) and methane utilisation. Coal briquetting is a technology commonly used for
technological upgrading in coal processing. This technology allows for extraction of fuel
from coal sand which is considered an unused by-product. Coal briquetting is cheap and
does not require much upgrading. These briquettes though produce large amounts of
smoke and dust during burning, which is why they are considered as ecological
unfriendly (Islamov and Stepanov, 2007). However, the Kuzbasskaya Toplivnaya
Kompania applies a unique technology which grinds the coal up to 50 microns before
pressing it into briquettes. This method burns without smoke and ashes and generates
more than 1,000 kilocalories of extra energy per kilogram compared with ordinary solid
coal (Fridman et al., 2012b).
Another prospective area for technological application is coal gasification. This
technology converts coal into syngas which can be used for power generation in
integrated gasification combined cycles. The process is very energy-efficient, allowing
significant power generation improvements by utilising the steam from coal gasifier in
addition to the syngas itself. Moreover, unlike the traditional solid fuel, syngas is much
lower in emissions of particulates, sulphur dioxide, mercury, and in some cases carbon
dioxide. Gasification technologies have great commercial potential in the coking coal
segment. Krasnoyarsk-based company Sibthermo offers a thermo-coke production
technology which provides a relatively cheap method for producing high-quality coke out
of low-cost brown coal through high-temperature processing and partial gasification. The
thermo-coke implementation is not limited to the metallurgical industry only and might
be used for instance by cement producers as well (Rozhkov and Babich, 2012). However,
gasification technologies are expensive and have long payback periods of around
7–8 years. For such investments, Kuzbass coal companies require financial support
through easier access to credits, tax incentives, etc. (Islamov, 2013; Yazev, 2014).
Methane utilisation is another promising technology path for the Kuzbass coal
industry. Coal deposits located in the Russian Federation hold around 72–79 trillion m3 of
methane, which accounts for up to 30% of the world’s total reserves. The region’s coal
deposits hold 29 trillion m3 of methane which can be used for fuel production (including
gasoline and diesel fuel) and other chemical products, such as methanol and ammonium
hydrate. The usage of methane that is currently emitted into the atmosphere could reduce
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the overall environmental impact and lower the risk of underground explosions. Gazprom
has started a 7 billion roubles’ methane utilisation project in 2008 in Kuzbass, and since
the beginning of the project, over 49 million cubic meters of methane have been
successfully extracted. Furthermore, 34 international patents were registered by the gas
extraction company Gazprom Dobycha Kuznetsk. Four module power plants with a total
capacity of 4.6 megawatts were put into operation. Also four gas stations were built
which fuel 110 cars. However, still up to 85% of methane is lost during coal extraction
(Shatirov, 2013).
Yet another technology of potential for the Kuzbass coal industry is coal-water slurry
fuel production (Trubetskoy et al., 2004). Coal-water slurry fuel is a combustible mixture
of coal powder suspended in water. This type of fuel could be used to power gas turbines,
diesel engines, boilers, heating or power stations. Its main advantage lies in its easy
transport through pipelines. Moreover, coal-water slurry fuel is a clean coal technology,
which could help reduce the negative environmental impact of solid fuel burning. An
experimental pipeline for coal-water slurry fuel from the Inskaya mine near Belovo City
(Kemerovo region) to the thermal power plant at Novosibirsk (Novosibirsk region) had
already been built in the 1980s. The long-term plans were to deliver coal-water slurry
fuel from the Kuzbass to central Russia and the Black sea ports. In 1989, the first line of
the Belovo-Novosibirsk pipeline was put into operation, but a series of accidents at the
Inskaya mine and the overall economic breakdown in Russia during 1990s brought the
Belovo-Novosibirsk project to an end (Trubetskoy et al., 2004). Although the technology
has been proven to be economically viable and environmentally friendly, coal-water
slurry fuel is viewed sceptically. Building coal fuel preparation plants, pipelines and
matching them with power stations and boilers require significant investments, with
payback periods over 15–17 years (Islamov, 2013).
In the macro-economic environment, short terms of lending, high interest rates and
the drift of qualified labour from mining cities to other areas are causing additional
distress for the industry (Government of the Russian Federation, 2012). In order to
address these issues and foster the innovative development of the coal industry in
Kuzbass, in 2012 the clustercomplex coal processing and industrial waste recycling’
was established (Fridman et al., 2015a, 2015b, 2014b). The cluster works on an entirely
new production cycle with coal being the basis for a wide range of innovative products.
The cluster is expected to cover all the main areas of coal industry development including
coal chemistry, power generation, coking chemistry, carbon materials synthesis and
industrial waste recycling. Carbon-based materials are rather new and offer tremendous
technological opportunities. Establishing the Kuzbass coal companies in the value chain
of these high-tech materials could well provide an opportunity to participate on the global
market of nano- and composite materials. However, the true impact of the Kuzbass
cluster remains to be seen. Many large regional coal companies originally stated their
interest in participating in the cluster project, but later decided to withdraw. Especially
the idea of competing against oil producers does not sound very appealing in times of low
oil prices. Furthermore, finding the required funding for the necessary modernisation of
the electric energy segment of the Kuzbass cluster is currently very difficult. Also, the
original plan to include a wide range of firms from other areas of economic activities like
manufacturing, etc. to the Kuzbass coal cluster proved more difficult than actually
thought.
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6 Summary
The Kuzbass coal deposits are of high quality and well suited for various industry
deployments. Also, the coal deposits are easily accessible and the region is well
connected to the country’s transportation system. Still, there are some inherent
difficulties that prevent the growth of the region. Most prominently ranks the decline of
the price for coal caused by increases in supply and declining demand which delays
necessary investments for the industry to stay competitive. Also, transportation
bottlenecks are an issue. Consequently, firms engaged in the Kuzbass have increased
their investment activities in the development of transportation roots, like seaports, etc.
Innovations in the energy sector create opportunities in different production lines.
New technologies refine coal into high quality briquettes, and the technological
development around the gasification processes allows coal miners to harvest previously
unused energy sources. These new business fields would require better support for the
necessary investments, which is probably not easy to achieve in the current overall
economic climate in Russia. Also, a deeper economic integration with regional industries
would facilitate such upgrades. The long-term economic outlook would certainly favour
high added value business fields like carbon-based nanomaterials. The necessary upgrade
of the knowledge base will not be a trivial task and will require major initiatives that go
way beyond the current cluster activity. As our study has shown, the available literature
does not really cover economic opportunities for coal-mining region. Whether the region
will benefit, depends on concerted actions of the involved stakeholders.
Acknowledgements
The authors would like to show sincere appreciation to the Renova Group for the support
of the study. We would like to extend a personal note of thanks to Mr. Viktor Vekselberg,
President of ‘Skolkovo’ Foundation, Chairman of the Board of Directors of Renova
Group.
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As the world’s largest fossil fuels exporter, Russia is one of the key countries for addressing global climate change. However, it has never demonstrated any significant ambitions to reduce greenhouse gas (GHG) emissions. This paper applies ideational research methodology to identify the structural differences in economic, political, and social normative contexts between industrialized fossil fuel importing economies and Russia that lead to the fundamental gap in motivations driving decarbonization efforts. Consequently, Russia is unlikely to replicate the approach to the green transition and use instruments of climate policies which are utilized in energy-importing countries. In order to launch decarbonization in Russia, interested stakeholders need to frame climate policies in Russia differently. Specifically, the framing must address the priority of diversification as a means to adapting the national economy to a new green landscape, the combination of diverse channels for decarbonization, the promotion of energy-efficiency, closer attention to climate-related forest projects and linkage of climate change with other environmental problems. Moreover, considering Russia’s emissions as a part of the global economic system and shifting from a simplistic national focus on GHG emissions reduction would help coordinate policies through dialogue between exporters and importers of fossil fuels energy-intensive goods, which is essential for the global movement towards a net-zero future.
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The article presents the state of development in the coal industry in the Kuznetsk Coal Basin, including reserves, production and supply of coal. The main mines, open-cuts and processing plants constructed recently in Kuzbass are listed. Coal production strategies of the leading coal mining companies and the required investment in 2015 and for the future are described. The list of unprofitable mines and open-cuts to be closed is given. The new terms and conditions of bidding for new mining licenses are presented. These terms and conditions had been developed by the Ministry of Natural Resources in 2014 and obligate a licensee to close at his own expense old unprofitable mines adjacent to the licensee's mining site. The most probable development corridor for coal mining in the Kemerovo Region is described for the period to 2035. On the whole, the Kemerovo Region might enjoy higher coal production up to 235 Mt of (best scenario) given favorable commercial opportunities on the world and domestic market of energy resources. To implement this scenario, it is planned to commission new coal mines, including Tagaryshskaya, Polysaevskaya, Olzherasskaya-Glubokaya, Yuzhno-Sibirskaya, Erunakovskaya-1, Uvalnaya, Sibirskaya, Butovskaya, Mrasskaya Mines and Osinniki open-cut as well as Erunakovsky-4, Alardisnky-Vostochny-1, Teshsky and other mining sites. The first-order requirement is modernization of operating mines and, most importantly, deep beneficiation of coal. Otherwise, it is not excluded that Kuznetsk coal production drops by 19.4% as compared with 2014 (worst scenario). The author gives forecasts of coal production and average price per 1 t of Kuznetsk coal. According to the draft Energy Strategy of Russia for the period until 2035, in the Kuznetsk Basin, it is anticipated to produce up to 209 Mt under "conservative" scenario and up to 233 Mt of coal under "target" scenario. Based on the analysis of international data, the average price of Kuzbass thermal coal evaluated in U.S. dollars at the rate of 2013, using simulation model developed at the Energy Research Institute, can rise from USD 32 in 2013 to USD 58.2-58.4 in 2035.
Problems of regional economic security and possible solutions (on the example of Kemerovo region
  • E G Kazantseva
Kazantseva, E.G. (2009) 'Problems of regional economic security and possible solutions (on the example of Kemerovo region', Regional Economics, No. 2, pp.180-191.