A shift superintendent holds a meeting with miners at DTEK’s Blahodatna mine in Ukraine. (Photo: Euracoal)

In July, the Ukrainian government launched a pilot project to shut down coal mines and establish a carbon-neutral economy in Myrnograd, Donetsk, region, and Chervonograd, Lviv, region.

The move is part of the Ukraine-EU Green Deal and is partly funded by Germany, which allocated EUR 35 million ($41 million) under the pilot project. Under the Green Deal, Ukraine intends to close up to 90% of coal mines in the country by 2030.

“The scale of the transformation program is broad, covering 60 areas in five regions, with a population of 1 million people,” Ukraine Prime Minister
Denis Shmigal said.

Shmigal promised to establish new production facilities and develop infrastructure in the involved areas to replace coal mines and avoid unemployment. For example, the government hopes to turn Myrnograd into a popular tourist destination, rebuilding some coal mines into museums to attract visitors.

In 2020, Ukraine produced 28.8 million metric tons (mt) of coal, 7.7% down compared to the previous year, the State Statistical Service estimated. In total, 148 coal mines were registered in the country, including 102 state-owned, of which 67 are located at the territories controlled by pro-Russian rebels and are not reflected in official statistics.

The Energy Ministry estimated that 29 state-owned mines were loss-making last year, with only four mines generating profit. Two state-owned mines were not operating in 2020.

The Ukrainian government has been gradually closing loss-making coal mines during the past several years, decreasing production from 40.9 million mt in 2016 to 34.9 million mt in 2017, and 31.2 million mt in 2019.

In early August, the Russian Federal Antimonopoly Service allowed Ukraine power generation company DTEK to sell three mines in Rostov Oblast, Russia, to Valleyton Investments Ltd.

This may be a first step in a major sell off campaign, as DTEK is reportedly mulling plans to get rid of coal mines and thermal power plants, according to Maksym Timchenko. Timchenko told local press in July the Ukrainian mines may be put up for sale only if there were a clear economic rationale behind this move, “otherwise they would continue operation.”

DTEK’s Russian division has been experiencing major problems in supplying coal to Ukraine due to difficult political relations between two countries, said Sergey Grishunin, executive director of the Russian National Rating Agency. Inability to deliver coal to Ukraine makes owning those assets senseless for DTEK, he added.