Norway prolongs coal mining at Svalbard until 2025
“The coal will be used in production of steel in Europe,” says Minister of Industry, Jan Christian Vestre in a prepared statement.
He argues that there are serious uncertainties in regard to European industries’ access to critical raw materials, including the production of steel. The war in Ukraine causes an extraordinary situation.
“Norway will take its share of responsibility to secure supply of raw materials,” Vestre says.
The majority of the coal export from Svalbard will be used for reductions in steel mills and not to be burned in power plants in Europe.
Mine No. 7 is located some 15 kilometers southeast of Longyearbyen and is the only remaining Norwegian-operated coal mine in the Arctic archipelago. The mine supplies the local coal-power plant with about 30,000 tons of coal annually, while another 80,000 tons are exported to customers in the European metallurgical and chemical industry.
Additional to Norway, a Russian state-owned coal mine is operated in Barentsburg.
In 2020, Mine No. 7 was flooded by water from an above melting glacier. The first water penetration was discovered the day after temperatures in the area reached a record hit of 21,7°C. Production was halted from late July to early November that year.
Svalbard sees the most extreme increase in temperatures due to global climate changes.
The region around the northern Barents Sea has over the last years seen a warming that is 2 to 2,5 times higher than average in the Arctic and 5 to 7 times higher than global average, according to the Norwegian Meteorological Institute.
This June, average temperature at Svalbard airport Longyearbyen was 6,0°C, which is 2,4°C above average for June and the warmest ever recorded, Barents Observer writes.
After reporting on Russian coal producer, Sakhalin Newspaper shut down
Sakhalin Island port town has some 10,000 residents. On July 14th events moved quickly at the offices of the municipal newspaper; around 10 a.m., two deputy directors of the Eastern Mining Company (VGK), Aleksandr Bosoi and Andrei Motovilov, showed up at the office of newspaper Editor in Chief Zinaida Makarova to discuss “the direction” of the paper’s coverage of the company.
According to audio of the tense confrontation posted on the newspaper’s Telegram channel the same day, Makarova challenged the men to find any errors in the paper’s journalism, pledged to continue telling “the truth” to local residents, and urged VGK to “mine coal and not interfere” in other areas of the life of the region.
Meanwhile, other staffers were preparing the latest issue of the weekly Uglegorskiye Novosti featuring a front-page feature on an ecological crisis caused when a coal dump at the firm’s open-pit mine collapsed into and blocked the Zhyoltaya River.
At 4 p.m. the same day, Makarova was summoned to the mayor’s office, where she was handed formal notice that she had been fired.
“Literally five or seven minutes after [Makarova] left for the mayor’s office, about 10 men entered the editorial office,” journalist Alina Goloskok, who wrote the feature on the accident, told RFE/RL. “Three of them went straight into the accounting office and began copying files from the computers. The others took up positions in the corridor. They acted like they owned the place.”
According to Goloskok, one of the men told staff that “Makarova is no longer your boss.”
“We were completely shocked since we were just doing what we always do, putting together the latest edition,” she recalled. “And suddenly this takeover.”
When Makarova returned to the office, the electricity had been turned off.
“The office is on the first floor of a five-story residential building,” she said. “The power was only off on our floor. Electricians said the cable was severed.”
Nonetheless, power was briefly restored just as Uglegorsk Mayor Sergei Doroshchuk appeared.
“He demanded that everyone leave,” Makarova recalled. “We said that we needed to put out the paper, but he insisted that we leave. Then the power went out again.”
A repair crew did not show up until July 16. As of July 19, the power was still out. As of July 21, the newspaper’s website was unavailable, and no issues have been published.
A press release from Doroshchuk’s office on July 15 said Makarova had been dismissed “after the discovery of financial violations.”
“In order to secure the office space and property for the newly appointed director, the premises were placed under guard,” the statement added.
“When he came to order us home, we asked Doroshchuk why Makarova had been fired,” Goloskok said. “We didn’t get a coherent answer. And then we asked why the electricity had been turned off if it was just a matter of changing the management. But there was no need to guess the reason — it was about my article about the coal-dump collapse that was being prepared for publication. As far as I know, there has never been an emergency situation as bad as this in Uglegorsk.”
VGK was formed in 2013 with initial capital of 10,000 rubles ($300). It is 99 percent owned by a Cyprus-registered holding called Altraso Venchurz Ltd. Although Altraso’s ownership is unclear, it is believed to be controlled by businessman Oleg Misevra, who runs the company and is listed as its “founder and coproprietor,” although formally he holds only a 0.55 percent stake. VGK’s two major assets are the Solntsevsky coal mine and the Sakhalin Island port of Shakhtyorsk — both in the Uglegorsk district.
It is the 26th-largest coal firm in Russia, as of 2016, and accounts for about 70 percent of the coal produced on Sakhalin. Virtually all of its production is exported through the Shaktyorsk port. In 2019, it reported 46 billion rubles ($618 million) in profits and paid 192 million ($2.6 million) in taxes. Its tax burden is substantially reduced because Uglegorsk is a free-trade zone.
Directly employing more than 1,000 people, VGK is the region’s major employer. Various local construction, transportation, food-production, and other firms, although formally independent, are connected with VGK.
Locals consider Misevra the unofficial head of the region. In 2019, he was named Russia’s “exporter of the year.”
“I believe the VGK management, having learned about the article we were going to publish, ordered Doroshchuk to prevent its appearance — both in print and on television. And so I was fired,” Makarova said.
VGK did not respond to repeated requests from RFE/RL for comment. It has not issued any public statements about the newspaper’s situation.
Throughout her eight years running the newspaper, Makarova has “constantly felt the unspoken presence” of Misevra, she said.
“Mayor Doroshchuk told me directly that he had no problem with me but that he has to do what Misevra told him,” Makarova said. “I heard that all the time. Either Doroshchuk was proposing closing the newspaper because ‘no one reads it’ or he was saying the printing press needed to be closed down to save money or that there was no need for a television channel. ‘Misevra says it is better to develop YouTube,’ he’d say.”
Locals in Uglegorsk — the name means ‘Coal Mountain’ in Russian — have been complaining about VGK polluting local waterways for many years now. In addition, the trucks from the mine pass directly through Uglegorsk on their way to the port and a dark cloud of coal dust regularly engulfs the entire area. Residents regularly recorded videos on the topic for President Vladimir Putin’s annual Direct Line call-in show, but their appeals were never broadcast, although Uglegorskiye Novosti reported on them locally.
On July 9, Uglegorskiye Novosti published a letter from local resident Sergei Bondaryov warning that coal-dump was in a critical state. The next day, it suffered two major collapses, dumping tons of rock and debris into the Yellow River channel.
“There are houses in that area, families live there,” Bondaryov told RFE/RL. “I immediately began calling the Emergency Situations Ministry, the forestry service, and Uglegorskiye Novosti, because they had to report what was going on. The situation could not remain as it was — people had to know about it and act. I reported about the danger to everyone I could think of. Everyone knew — right up to the governor’s office…. Everyone knew but no one did anything.”
A press statement from the office of the governor of Sakhalin Island on July 18 said the regional administration was in charge of “liquidating the consequences of the collapse in the Uglegorsk region.”
It quoted Solntsevsky mine Deputy Director Aleksei Sharabarin as saying the company was building an emergency canal for the river around the site of the collapse and that construction was “70 percent complete.” He promised to begin releasing the damned-up water as early as July 21.
Makarova and her team at Uglegorskiye Novosti have seen a wave of support since the story about her dismissal broke. The Union of Journalists has asked the Investigative Committee to look into the legality of Doroshchuk’s actions, while about 1,200 people have signed an online petition calling for the mayor’s resignation.
“What has happened to Uglegorskiye Novosti is part of our overall misfortune,” said former Sakhalin State University journalism lecturer Irina Kudina.
“I can’t avoid using the word ‘politics,’” she said. “It is the desire to create a false bubble of positive news. And it is the attitude of the region’s ‘master’ to the ‘little people.’… There was nothing in the article that was not a fact. Did the coal-dump collapse into the river? Yes. There are photographs. Are people worried? Yes. The journalists did their job — they described what was happening.”
The staff of Uglegorskiye Novosti continue reporting on events through the paper’s Telegram channel.
“I’ve never had a complaint about my editorial policies in eight years,” Makarova said. “The people want to hear the truth. Not the mayor’s truth, but the truth about the mayor and about what is happening in this region.”
Poland extends Turow mine concession to 2044
EU countries have agreed to cut their combined net greenhouse gas emissions to zero by 2050. Poland, which generates around 70% of its electricity from coal, was the only EU country that did not commit to the goal when the bloc set it in 2019.
Poland’s climate ministry has extended a mining concession for the open-pit coal mine in Turów until 2044, outraging environmental campaigners, who said the move would worsen the climate crisis. The decision comes as the Court of Justice of the European Union is poised to decide in early May whether the mine, located near the Czech and German borders, must close immediately, following a lawsuit filed by the Czech Republic in February.
The Czech Republic said Warsaw had violated the bloc’s law with an earlier extension of mining at Turów until 2026. Meanwhile, Czech residents close to the mine say it has contaminated drinking water and they have suffered from noise, dust and subsidence.
“Extending the concession means a further deepening of the climate crisis,” Greenpeace said in a statement.
“Poland’s actions show a total disregard for EU law,” Zala Primc, campaigner at Europe Beyond Coal, said.
Poland’s climate ministry said its decision was in the public interest as Turów supplies lignite, or brown coal, to a nearby electricity plant, which provides around 5% of Poland’s power, the owner, state-run energy group PGE, says.
PGE has said a sudden closure of Turów, which together with the power plant is a major employer, could lead to economic collapse in the province and shake “the stability of Poland’s power system”.
The company, which plans a new 496 MW unit at the Turów power station, said has begun work to reduce dust and noise.
Poland asks CJEU to reject halting of Turów coal mine
In February, the Czech government decided to take Poland to the court in connection with the building out of the Turów opencast mine. The main justifications were the mine’s impact on cross-border regions, reduction of the level of groundwater, and as a result lack of drinking water in the region.
Poland has requested the Court of Justice of the European Union (CJEU) to reject a Czech motion to halt mining at the Turów lignite mine.
The Czech government had applied to the CJEU for the implementation of interim measures to stop the mining of lignite at the colliery, which is on the Polish-Czech border, citing environmental concerns.
Poland’s Ministry of Climate told PAP that Warsaw’s response to the Czech government’s request had been forwarded to the court on April 6. In its response, the Polish government argued that interim measures are disproportionate and do not ensure a proper balance of interests.
“The application (of interim measures – PAP) would expose the Republic of Poland and its citizens to significant and irreversible harm,” the Polish authorities argue. “Halting mining activities at the Turów colliery until the issuance of a verdict terminating the main proceedings would have severe economic, social and environmental effects for the Republic of Poland, including the country’s energy security.”
The climate ministry pointed out that Poland also believes that the Czech Republic’s request does not fulfil the necessary urgency criteria.
Poland argues that the Czech government’s position is unjustified as the Czech government analysis omits other significant factors.
The Turów mine and power station belong to the PGE Mining and Conventional Energy company (PGE GiEK). In 2020, the mine’s lignite mining licence was extended until 2026.
In the opinion of PGE GiEK President, Wioletta Czemiel-Grzybowska, on the EU court’s decision on Turów rests the future success of the ‘just energy transformation’ at the EU level.
“‘Wild’ energy transformation is extremely dangerous and stands in opposition to the planned, stable and just transformation foreseen by the EU within the framework of the Green Deal,” she said.
The Turów mine delivers 7 percent of electricity used in Poland. Closing the mine would also entail closing the Turów power plant that it supplies, threating up to 80,000 Polish citizens.
Romania’s coal transition, a new chance for Jiu Valley
‘Jiu Valley Strategy for the transition from coal’ document is being prepared by the consulting firm PricewaterhouseCoopers.
According to a draft of this development strategy that extends until 2030, the analysis of the historical evolution of the mono-industrial area of Jiu Valley and of the current profile of the microregion highlights significant differences of development in relation to the rest of the country. Moreover, the prospect of closing the last four operational mines brings new challenges.
Through this document the officials of the local administration in Jiu Valley undertake the ‘just transition strategy’, which will be approved at central government level, in the perspective of a significant transformation of the area during 2021-2030 in terms of recalibrating the perception of inhabitants on the local identity and their role in the energy transition process, as well as unlocking the potential of the area for the economic development of Jiu Valley on multiple levels, for improving the life of the inhabitants, for promoting innovation and decarbonization.
The prospect for developing the area is carefully calibrated to be sustainable in the long run by preparing specific projects that are the basis for the implementation of the strategy. All these objectives are aligned to the good European practices specific to coal regions in transition and the directions targeted through important European initiatives, such as the Just Transition Mechanism, the European Green Deal, the EU Cohesion Policy, capitalizing on the local competitive advantages of Jiu Valley.
The current structure of Jiu Valley economy reflects the results of both the initiatives of transformation aimed at phasing out the dominant mining activity and the attempts of diversification implemented in the region. The latter have focused mainly on sectors characterized by a low level of technology, low technical skills and limited investment capital. Consequently, the current economic profile of Jiu Valley is dominated by the service sector – especially trade, over 40% of the total number of active companies in the private environment in Jiu Valley operating in this sector.
General objectives of the strategy
According to the draft strategy, the general objectives of transition from coal in Jiu Valley are the following:
-Sustainable development of urban multi-modal mobility, in a unitary manner, facilitating accessibility in all areas of the microregion by consolidating connectivity between the component towns/municipalities and immediately adjacent areas would open the Jiu Valley to new opportunities for all industries.
-Creating a diversified economic environment, focused on consolidating growth and competitiveness of small and medium sized enterprises with activities and products with high added value, supported by initiatives favouring innovation and local entrepreneurship.
-Consistent and sustainable development of tourism and creative industries in Jiu Valley, by stimulating local producers, enhancement of natural and cultural heritage of the area and connecting to the neighbouring regions.
-Creating a dynamic and performing social and professional climate in order to optimize standards of living and ensuring in a responsible manner the transition of Jiu Valley to green economy.
Reshaping the energy sector
Maintaining electricity production in Jiu Valley will continue to remain an objective of the transition. From this perspective, projects in this field will aim at making investments in new capacities to produce energy from renewable sources, using the viable energy assets in Jiu Valley to produce electricity and heat based on a different fuel than coal, as well as supporting the development of a centre of excellence in the energy sector in Jiu Valley. It will focus on research-development-innovation and should contribute to creating opportunities for the whole ecosystem starting from public institutions, large companies, technological SMEs that could contract studies in the field or could implement the results of research.
According to UN Climate Agreement, signed in Paris, Europe and OECD countries must give up coal by 2030 and even earlier, an evolution assumed by the signatory governments of Powering Past Coal Alliance. Romania has postponed the decision of giving up coal, but amid increased economic pressure on the energy sector, in 2018 the Ministry of Energy announced for the first time the prospect of considering the process of coal transition by 2040.
To capitalize on opportunities given by energy transition at global level, Romania has committed to address new directions of development of the energy sector according to the Energy Union Strategy and Clean Energy Package. Reaching the decarbonization targets set under the 2021-2030 Integrated National Energy and Climate Plan (INECP) will require significant investments, in the following main dimensions: Decarbonization – GHG emissions and removals; Decarbonization – energy from renewable sources; Energy efficiency; Energy security; Internal energy market; Research, innovation and competitiveness.
Sources of funding in the support of coal transition
An important component of this strategy is funding projects proposed for development on the dimensions related to the development pillars, funding following to be ensured mainly from European and national funds, the quoted document mentions. It is relevant to mention The Just Transition Mechanism, which also includes the Operational Program for Just Transition, dedicated to coal regions for supporting transition to a climate neutral economy, which will be implemented through three pillars:
-The Just Transition Fund, which is not dedicated to energy transition, but to the social and economic costs of transition (economic diversification, retraining etc.) and provides for the allocation of sources of funding in addition to those for the cohesion policy, to which transfers from European Regional Development Fund and the European Social Fund Plus national allocations will be added, as well as national co-financing.
-Dedicated scheme under InvestEU
-A loan facility granted by the European Investment Bank for the public sector (EUR 10bn) for investment projects in energy and transport infrastructure, heating networks, public transport, energy efficiency measures, social infrastructure and other projects directly benefiting the communities in the affected areas and which will contribute to reducing the social and economic costs of transition. Also, financing mechanisms aimed at supporting the energy intensive industrial sectors and the electricity sector will be capitalized, in order to answer the needs in the field of innovation necessary for transition to a low carbon economy, respectively:
– The Innovation Fund will finance highly innovative technologies and flagship projects with European added value, which can bring significant emission reductions;
– The Modernization Fund will support investments in the generation and use of energy from renewable sources; energy efficiency; energy storage; modernization of energy networks, including heating, pipelines and networks; just transition for carbon-dependent regions: redistribution of labour, retraining of workers, education, job search initiatives and start-ups.
In the context of post-COVID-19 economic recovery efforts of Member States, the European Commission has launched a new initiative of interest – a budget of EUR 166.7 billion for 2021, which will be complemented by EUR 211 billion in grants and approximately EUR 133 billion in loans under Next Generation EU, the temporary recovery tool for mobilizing investment and reviving the European economy.
The budget is fully in line with the commitment to invest in the future for a greener, more digital and more resilient Europe. Once adopted, it will be the first budget in the new multiannual financial framework 2021-2027 and the first annual budget proposed by the European Commission under the von der Leyen mandate.
In addition to the European programs and mechanisms, co-financing through the national operational programs proposed by the Ministry of European Funds for the new financial year will be added:
-Operational Program Just Transition (OPJT)
-Operational Program Sustainable Development (OPSD)
-Operational Program Transport (OPT)
-Operational Program Smart Growth, Digitization and Financial Instruments (OPSGDFI)
-Operational Program Health (OPH)
-Operational Program Education and Employment (OPEE)
-Operational Program Inclusion and Social Dignity (OPISD)
-Regional Operational Programs – implemented at region level (ROP West) the National Recovery and Resilience Plan prepared to use the funds allocated through the Recovery and Resilience Mechanism through three pillars: green transition and climate change, public services, urban development and capitalization on heritage and economic competitiveness and resilience.
Electricity production will not disappear from Jiu Valley
Maintaining electricity production in Jiu Valley will continue to remain a desideratum of transition; therefore, projects in this field will be prioritized, their feasibility following to be analysed from both the perspective of potential (especially of renewable energy sources in order to identify the optimal sites for promoting and attracting private investors for making investments in new production capacities) and from the perspective of technical limitations and possibilities of additional investments.
Depending on renewable energy sources available and exploitable in the Jiu Valley, it will be considered to attract and/or make investments in new capacities to produce energy from renewable sources, both operational (connected to the grid) and for the use of renewable energy at the level of public, economic and/or industrial operators. Depending on the identified potential, including investments in building capacities to produce energy from renewable sources placed on lands belonging to former mines will be considered, therefore developing integrated projects of decontamination – regeneration – reconversion.
To assess the potential of renewable energy sources in Jiu Valley it will be considered to start a study in order to identify the types of renewable energy (solar, wind, hydro, geothermal, bioenergy – biomass, waste etc.) available and exploitable in Jiu Valley and the optimal sites for these types of investments.
The possibility of using the viable energy assets in Jiu Valley to produce electricity and heat based on a different fuel than coal within Paroseni thermal power plant will also be analysed. In order to identify the best solutions, the aim will be to streamline electricity and heat production, diversify the energy mix (for example, using natural gas as transition fuel, unconventional energy sources, hydrogen), contribute to the safety and adequacy of NPS, reduce CO2 emissions and ensure a long-term sustainable economic viability.
Taking into account the social benefits of large-scale use of district heating systems (for example, accessibility of thermal energy for population with low income) and the economic and environmental benefits (for example, the reduction of the number of individual heating systems and implicitly of pollution), while analysing the opportunity to converting Paroseni thermal power plant, including the potential of modernization, rehabilitation, retrofitting and extension of the district heating system in Jiu Valley will be analysed, to ensure heating for the localities in Jiu Valley.
The viability of these initiatives will be assessed following evaluations and technical and economic analyses and will require the favourable opinion of the Ministry of Economy, Energy and Business Environment, of Transelectrica and of ATUs (if it is decided that they take over certain assets).
Modernization, rehabilitation, retrofitting and extension of the district heating system will consider the efficiency of the district heating system by reducing the consumption of energy resources and reducing greenhouse gas emissions. The social benefits of large-scale use of district heating systems will also be considered (accessibility of thermal energy for the population with low income), as well as the economic and environmental benefits (from the point of view of energy efficiency and control of pollution) and the contribution of these systems to strengthening energy security and facilitating flexibility in the use of the various categories of primary resources.
The establishment and development of a centre of excellence in energy in the Jiu Valley, focused on research-development-innovation will be able to contribute positively to creating opportunities for the entire ecosystem starting from public institutions, large companies, technological SMEs that could contract studies in the field or could implement the results of research (including by starting strategic projects in the field of advanced technologies, in order to develop a hydrogen industry).
The focus will be on identifying viable solutions and projects in the field of energy production /distribution /storage and reducing carbon emissions. Pilot projects to exploit the energy potential of the area will be considered (e.g. recovery of methane gas from the degassing of operational coal deposits using cogeneration plants for the production of electricity and heat, extraction and recovery of methane gas from coal deposits which are no longer in operation using surface drilling, underground pumped storage hydropower plant etc.) in order to identify viable solutions and projects in the field of energy production, distribution and storage (e.g. implementation of a pilot energy supply project using as fuel with ‘zero carbon’ green hydrogen, produced by electrolysis using solar energy converted into electricity by photovoltaic panels), followed by the scaling of these pilot projects, depending on the demonstrated technical and economic potential.
Finally, the improvement of the energy performance of the housing stock and public buildings will be considered, by continuing the projects of thermal rehabilitation and modernization of buildings (both public and residential), in parallel with population information and awareness campaigns in the Jiu Valley on responsible energy consumption and energy efficiency measures.
The projects of thermal rehabilitation and modernization of buildings will be carried out on the basis of energy audits (the aim will be to identify the energy situation of each building, as well as the concrete measures to be applied to improve the energy efficiency of buildings, reduce electricity and heat costs and implicitly the reduction of adverse effects on the environment) and technical expertise where appropriate (the identification of the necessary measures on seismic risk/fire protection will be considered). These investments will aim at reducing energy costs, increasing comfort and standard of living and creating new economic opportunities and jobs (within specialized companies).
-Identifying the types of renewable energy (solar, wind, hydro, geothermal, bioenergy – biomass, waste etc.) available and exploitable in Jiu Valley by conducting a study in order to capitalize on potential from renewable energy sources in Jiu Valley.
-Identifying the optimal sites for these types of investments (developing maps).
-Attracting/making investments in new capacities to produce energy from renewable sources depending on the potential identified as a result of studies conducted, both operational (connected to the grid) and for the use of renewable energy at the level of public, economic and/or industrial operators.
-Using the viable energy assets in Jiu Valley to produce electricity and heat based on a different fuel than coal within Paroseni thermal power plant.
-Reducing GHG emissions and increasing energy efficiency by developing the district heating system in Jiu Valley, by launching an advisability study to establish the potential for modernization, rehabilitation, retrofitting and extension of the district heating system from Jiu Valley to ensure the thermal agent in the localities from Jiu Valley in conditions of economic efficiency.
-Starting the investment, depending on the result of the study and the feasibility.
-Establishing a centre of excellence in the field of energy in Jiu Valley, focused on research-development-innovation.
-Carrying out research-development-innovation projects in order to identify and start pilot projects for capitalizing on energy resources in Jiu Valley and integration with smart technologies and low emissions.
-Starting strategic projects in the field of advanced technologies, in order to develop a hydrogen industry.
-Scaling pilot projects, based on studies and research conducted, depending on the demonstrated technical and economic potential.
-Improving energy efficiency in public buildings (including consolidation measures if necessary).
-Improving energy efficiency in residential buildings (including consolidation measures if necessary).
-Carrying out information and awareness campaigns for the population of Jiu Valley on responsible energy consumption and energy efficiency measures.
-Providing support/advice for the preparation and submission of financing files and subsequent settlement for individuals wishing to access financing through national programs (for example, carried out through the Environment Fund Administration – Energy Efficient House).
Summing up the cost of heavy coal dependence in Russia
Up to 70% of Russia’s coal is mined in Kuzbass – an area in southwest Siberia and most of the coal produced there is shipped to Europe and Asia.
Bringing together the official pollution, health, and mortality records released in the last 15 years, as well as local testimonies, expert conclusions, and media stories, Race to the Bottom, a new comprehensive report published by the Russian environmental group Ecodefense, details the massive impact of coal mining on the environment and public health of Kemerovo Region, also called Kuzbass.
The immense rise in coal production (primarily, by surface mining) and exports seen in Kemerovo Region in the past decade and a half – a boost spurred along by the authorities’ lax approach to the coal companies’ neglect of social and environmental responsibility – came with skyrocketing pollution and waste accumulation levels. Those, in turn, have led to severe damage to the health of the local population, reduced life expectancy, and higher-than-average mortality rates. Trapped in a predominantly coal-reliant economy and unable to secure compensation or relocation money, local residents are effectively held hostage to Russia’s goal of sustaining a competitive edge in a declining coal market. And the already extensive harm can grow worse yet if Russian and Kuzbass governments press ahead with further plans to increase coal production in the region.
Between 2005 and 2019, coal production in Kuzbass increased by 1.5 times (from 164 m tons to 249 m tons), and export volumes by 2,5 times (from 55 m tons to 135 m tons). As per the targets set in the regional development strategy, coal mining volumes may grow additionally by almost 1.5 times within the next 15 years, or to 380 m tons. Overall mortality in Kuzbass was 16% higher in 2019 than on average in Russia, with 1425.7 deaths per 100,000 population in this main coal-producing region compared to the Russia-wide average of 1228.1 deaths per 100,000 population. Cancer mortality rate per 100,000 population increased noticeably in Kuzbass between 2003 and 2019, rising steadily from 208.94 in 2003 to 240.8 in 2019. Annual respiratory disease mortality in Kemerovo Region has over the past nearly 30 years remained significantly and invariably higher than the national levels, with official statistics showing since 1990 an average of 75.95 deaths per 100,000 population in Kuzbass compared to 58.98 on average over the same period in Russia. And life expectancy at birth in 1990 to 2018 has been on average 3.14 years less in Kuzbass than the average across Russia.
In 2019, according to Russia’s Federal Service for Supervision of Natural Resources, enterprises of Kemerovo Region released 1.760 m tons of atmospheric pollutants –just over the total amount of emissions of the Northwestern Federal District, whose territory exceeds that of Kuzbass by about 18 times. In the decade since 2009, according to Kuzbass’s regional Ministry of Natural Resources and Environment, the total volume of emissions from stationary sources in Kemerovo Region has risen by 22.3%, and over the past 15 years, the yearly amount of emissions from the coal mining enterprises has nearly doubled, growing from approximately 591,000 tons in 2005 to 1,147,048 tons as of 2019. In 2019 data, the average annual amount of pollutants emitted from stationary sources per each Kuzbass resident was 662 kg; in the past five years the emissions-per-capita rate has increased by 167 kg. By comparison, on average in Russia, the value of emissions of the most common pollutants from both stationary and mobile sources as calculated per capita was in 2018 220 kg per person.
Coal mining is one of the main sources of greenhouse gas emissions, which are forcing global climate change. In Kuzbass, over 50% in the total volume of registered emissions from all stationary sources is taken up by methane, one of the most aggressive greenhouse gases. In methane emissions, Kemerovo Region is the unequivocal leader among all Russian regions, with 1,086,570 tons released in 2019.
In 2018, 3.6 bn tons of waste was generated in the region – almost half of the 7.3 bn tons generated in the entire country. Of the total industrial and municipal waste generated in Kuzbass, 99% is waste produced by coal mining. Between 2010 and 2019, the yearly volume of waste generated by coal mining grew in Kuzbass from 1.8 bn tons to 3.8 bn tons – or more than twofold. Calculated per ton of coal mined, waste generation rate grew from 10 tons in 2010 to 11.7 tons in 2017. The coal industry’s waste may contain, in varying concentrations, combustible carbonaceous materials, sulphur, and the naturally occurring radionuclides radium-226, thorium-228, and potassium-40, as well as their fission products. The specific land disturbance rate increased between 2010 and 2017 from 7.8 to 16.4 hectares per million tons of coal produced, or by 2.1 times. Existing regulations require establishing buffer areas around coal development sites – 1,000 kilometers from the edge of an open-pit mine and 500 meters from spoil tips, which are piles of waste rock excavated during mining – with zoning restrictions in place to protect the residents in nearby areas. In Kuzbass, this requirement is routinely disregarded throughout the region, especially in such cities as Kiselyovsk and Prokopyevsk, where the distance between residential houses and the closest open-pit mine may be less than 200 meters.
Ecodefense urges Kemerovo Region’s government to take immediate action toward diversification of the regional economy to reduce its dependence on coal. Other urgently needed steps include forcing the coal companies to establish proper buffer zones around their mining sites, forbidding coal mining and reloading within the limits of population centers, and banning rezoning of agricultural lands for mining purposes, among other measures.
“The consequences of coal mining are large-scale environmental pollution, severe illnesses, and increased mortality. This does not just mean terrible living conditions for people residing near the coal mines, but a detriment to the economy. Coal-mining regions are in need of a strategy to address the environmental crisis and diversify their economies,” says Vladimir Slivyak, co-chairman of Ecodefense and one of the authors of Race to the Bottom.
“The mining and reloading of coal within city limits, the billions of tons of spoil heaps that are burning and releasing dust into the air – this is a typical scene in Kuzbass. Because of climate change, many countries are planning to discontinue coal use, which will lead to a fall in demand. Kuzbass needs options in its jobs market, or we will face a social upheaval,” says Anton Lementuyev, Ecodefense’s coordinator in Kuzbass.
Russian Evraz considers selling its coal business
On Jan. 26, the company’s board gave approval for Russian mining and steel company Evraz to consider the move, which it said might have the potential to maximize long-term value for shareholders. Evraz is considering spinning off its coal business and is in the process of assessing the strategic merits of a potential demerger and its possible structures, the company said in a statement. The move, creating a purely steel business, would likely be a positive for the company in terms of environmental, social and governance (ESG) concerns, analysts at Moscow-based investment bank VTB Capital said Jan. 27.
At this stage, there is no commitment that the demerger will be undertaken, and the company has provided no timing for the final decision and potential completion of any deal. A demerger would allow Evraz to focus on developing its steel operations and establish its coal business, currently consolidated under Raspadskaya, as an independent leading regional producer of high-quality metallurgical coal, it said. If undertaken, the move would be subject to regulatory, shareholder and other third-party approvals.
Evraz started optimizing the structure of its two coking coal assets under public company Raspadskaya (90.9% owned by Evraz) in November 2020. That envisaged Raspadskaya acquiring Yuzhkuzbassugol from Evraz, and the shares were transferred by the end of 2020. The merged company has eight underground mines, two open pits and three washing plants in the Kemerovo region in the Kuzbass Basin and in the Tyva Republic, with a combined 1.9 billion mt of coking coal reserves and saleable output of 13.5 million mt in 2020.
Optimizing the structure of the coal assets would be a prerequisite for the potential demerger of the company’s coal business, according to analysts at VTB.
“There is no final decision on the deal and no structure has been announced, so it is impossible to assess the fundamental effect on Evraz’s equity value,” they said.
There might be some focus on the security of coking coal supply after the potential demerger, but it should primarily improve the company’s ESG positioning, according to VTB. Analysts from Moscow-based BCS Investment Group said that, although Evraz has coal presence, which is a “no-go” for some investors, they do not see demerging as a major positive. BCS analysts see the sale of Raspadskaya as the most viable option, and value its assets at $1.4-1.6 billion, noting their estimate represents 12%-13% of the current Evraz’s enterprise value.
“After the deal, the company’s coal integration will fall from 239% to zero with iron ore integration remaining at 79%,” they said.
The analysts said they do not believe the spinoff will have any strong fundamental impact given that the coal business is not a part of Evraz’s profit and loss basis. They added that, due to falling steel prices globally, any positive sentiment from the deal may be short-lived.
Evraz has steelmaking, mining and vanadium operations in Russia, the US, Canada, the Czech Republic and Kazakhstan. In Russia, long-rolled construction products comprise up to two-thirds of its finished steel output, with railway products making up a quarter. In North America, tubular products represent roughly a third of the company’s overall production, and flat-rolled steel and railway products just over 20% each.
Aspire Mining in Mongolia to benefit from China’s shift away from Australian coal
China recently introduced tariffs on Australian goods including wine, barley and beef and the unofficial coal ban has only increased tensions between the two countries.
Aspire Mining Ltd is the only ASX-listed company to have coking coal assets in Mongolia and could be well-placed to benefit from recent speculation that China is shifting away from Australian coal.
The company owns the world-class Ovoot Coking Coal Project, and while rumours around the Chinese sentiment focus on thermal coal, the company experienced a sharp share price bump last week as investors anticipated a complete coal ban. The company sat at around 7.2 cents per share and after Chinese State Media alluded to restrictions on Australian coal and a refocus to prioritise imports from Mongolia, Russia and Indonesia, the share price doubled before levelling out at around 8.6 cents.
Coal market in Mongolia
Mongolian coking coal export volumes to China have been recovering from a border shutdown between the two countries earlier in the year. For the six months ended June 2020, China imported 7.2 million tonnes of coking coal from Mongolia (a 56% decline from the prior year) while imports from Australia rose 65% year-on-year to 24 million tonnes. However, for the balance of the second half of the year Mongolian coking coal exports are expected to revert to more normalised levels while Australian exports to China slow. In September 2020 Mongolia exported 3.9 million tonnes to China, which represented 58% of China’s coking coal exports. In contrast, Australia exported just 2 million tonnes to China that month. The first news of curtailments to Australian coal imports was reported in October, placing Aspire in the perfect position to benefit from any increase in Mongolian exports going forward.
Ovoot Project development
The company is targeting early production of washed coking coal from a first-stage development of the Ovoot Project, known as the Ovoot Early Development Plan (OEDP). The start of development is linked to the completion of the Definitive Environmental Impact Assessment (DEIA), which has been impacted with access the site to commence the ground activities halted by the deferral of local community engagement meetings due to COVID-19 control measures.The OEDP and pre-feasibility study is focused on a truck and rail operation to deliver up to 4 million tonnes per annum to end markets in China and Russia.
September trial shipment
During the September quarter, a trial shipment of 3,300 tonnes of coking coal was moved by rail from an existing mine in Mongolia to the city of Ulanqab in China, which after beneficiation will be railed further to Tangshan and the Port of Caofeidian. This is an important target market for Ovoot coking coal as the company plans to truck coking coal from the mine site to access rail at the city of Erdenet.
Strong financial outlook
At the end of the September quarter, the company was fully cashed up, with a cash balance of A$38.5 million to fund the Ovoot Project development and no debt. This strong financial outlook is partially due to a $33.5 million placement in September 2019, which saw major shareholder Tserenpuntsag Tserendamba increase his holding to 51% and strategically reposition Aspire as a Mongolian led company. Notably, the placement price was 2.1 cents per share, and with a share consolidation of 10 to 1 in December 19– makes for a placement price the equivalent of 21 cents today which is substantially higher than the current share price.
Funding commitments through to production
In addition, financial support is secure with Tserenpuntsag supplying a letter of intent around provision of a corporate guarantee for up to $100 million to support future project financing for the OEDP and pro-rata equity contributions to maintain a 51% shareholding in Aspire alongside all shareholders to fund Ovoot into production. The company is confident that the development of the Ovoot Coking Coal Project will leave Aspire well placed to take advantage of any shift from China away from Australian coal.
Poland agreed to phase out coal mines by 2049
At the end of September, the Polish government and trade unions agreed to phase out coal by 2049.
Coal mining has long been considered the pride of Poland and it is responsible for 80% of the country’s electricity production, according to 2018 figures, and employs around 80,000 people, down from 400,000 in 1990. Coal reserves in Upper Silesia, in the south of the country, are perceived as key to energy security and a patriotic alternative to gas and oil imported from Russia. Their volumes were believed to be sufficient to last for decades.
But the industry is in decline for a number of reasons. Piotr Lewandowski, president of the Institute for Structural Research in Warsaw, says it is being pushed to a “tipping point” by several factors: falling demand for coal because of warmer winters; wind and other renewables becoming cheaper; rising costs of carbon emissions; and a society less willing to tolerate high levels of air pollution.
Poland is also under pressure from the 27-member European Union to lower carbon emissions and is seeing the coronavirus pandemic complicate its coal troubles.
More than half of the EU’s most polluted cities are located in Poland. This is the problem that is proving hard to solve for the Polish government: it is linked to Poles being dependent on coal for heating their homes. Both Poland and the European Union has invested money into transitioning to cleaner ways of heating the country’s households.
But for some coal is the only way to survive the cold season. Like for Mariola, who lives in Zabrze with her three children. Mariola’s partner, a former miner, went to the UK to work in construction, while she stayed in a ‘familok”, a type of residential building in Silesia, built in the proximity of mines, for the workers and their families to live.
The slag heap of the Marcel coal mine in Radlin, Upper Silesia, contains the spoils that are being thrown away during the coal excavation. It became one of the examples of the ecological impact of the coal mining in the region. The waste and active chemical substances contained in materials stored on the site have caused fires. Locals have called for the works to stop in the area, as the smoke and toxic gases have become unbearable to live with. There are already positive examples of transition of the industrial areas. “The familoks” built by the surrounding coal mines in the Nikiszowiec district were completely renovated a few years ago. Since then, it’s considered to be one of the most pleasant areas in Katowice and has even listed on Silesia’s ‘Industrial Monuments Route’ offered by the tourism office.
Coal sector will have decrease in production this year in EU
The COVID-19 pandemic and its economic consequences has already resulted in a significant decline of coal demand in the EU, forcing many leading local producers to cut their production and reduce wages to personnel by 20-25%. In addition, some of them have already called on their national governments as well as the European Commission – the EU’s executive body – to provide needed support this year, with the aim of avoiding massive lay-offs of workers and the prevention of possible social unrest.
The volume of coal mining in the European Union and the United Kingdom may significantly decline this year, due to the ever tightening environmental regulations in Europe and the ever growing pressure from renewables, according to recent statements made by some leading EU coal mining companies and local mining analysts. This situation reflects the trend of some leading Western European economies rejecting coal and shifting to cleaner energy sources.
An example of this trend is the UK, whose government recently announced plans to close at least seven large coal-fired power plants during the period 2022-2023. In the meantime, according to some EU media reports, the UK is not the only European country which is considering a significant cut in coal usage in the near future, notably Italy.
Perhaps the most complex situation is currently observed in Poland, a country which has been historically considered as one of the centres of coal production in Europe and which its coal sector employs more than 80,000 people. According to a recent Reuters report, due to the current complex environment, PGG, Poland’s largest coal producer, is considering conducting restructuring its business that may result in the closure of its Ruda and Wujek coal mines. Currently, there are only 12 large-scale coal mines in Poland, which is almost two to three times lower than in the 1980s when the country accounted for 19% in the global coal production. At that time the annual volume of exports of Polish coal were estimated at 40-45 million tonnes, with the annual output of more than 200 million tonnes.
In general, the European coal industry went through several serious crises during the 20th century, each of which resulted in restructuring and the reduction of output and the terminating of workers employed in the sector. Those crises have also led to the almost complete suspension of coal mining a number of European countries that were previously considered as centres of coal production in Europe – for example, the Dutch region of Limburg.
Still, despite this, active coal mining is currently ongoing in 41 regions of 12 countries of the EU (including ten regions in the United Kingdom). However, the possible closure of local coal-fired power plants – their main customers – will put to an end to the coal industry in these regions. In addition to Poland, the list of major coal-producing nations in Europe is currently comprised of Czech Republic, Germany, the UK and Spain to a lesser extent.
In the majority of these nations, the volume of coal production has significantly declined in recent years, which was also due to the current policy implemented by the European Commission that involved the provision of huge financial compensation to European governments and their major coal producers to convince them to close their coal mines.
Prior to the 2010s, the coal mining sector of many EU states received subsidies in both directly and indirectly from their national governments. An example is Spain, where coal mining has been directly and indirectly subsidized by the state in recent decades. Most subsidies are allocated in the form of direct payments to coal-fired power plants for the maintenance of capacity, as well as the provision of obligations to purchase a minimum share of coal from Spanish mines.
Such practices have repeatedly criticized by the European Commission and have become the subject of numerous litigations. In 2016, Spain received the approval of the EU state subsidy program for its remaining 26 coal mines in the Castile and Leon regions, as well as Asturias and Aragon in the amount of 2.13 billion euros.
The condition of this program was closure of mines by the end of 2018. Otherwise, companies must return the subsidies received. As a result, as of early 2020, there was only one small Escondida mine left in Spain in the region of Castile and Leon, the owner of which had entered into an open confrontation with the government. Over the next ten years, the Spanish government with the financial support of the European Commission will invest more than 250 million euros in the rehabilitation of coal regions. The dismissed mine workers will be given the opportunity to retire early, as well as other social benefits and retraining programs. Practically, the same processes are currently seen in coal sectors of other major EU major nations.
For example, several months ago the last coal mine was closed in the Ruhr area in Germany and the Italian island of Sardinia. The current EU coal mining policy also resulted in the closure of the only mine in Slovenia, three coal mines in Romania, and the Paskov mine in the Moravian-Silesian Region in the Czech Republic, where only two mines currently remain in operation.