As Ukraine’s military engages separatists (above), the country considers coal imports. Imports from Russia are not on the table.

By Vladislav Vorotnikov

Continued armed conflict in the eastern regions of Ukraine has brought great losses to the coal industry; in fact, this year the country may face acute energy shortages. The country’s government already admits that the situation is critical. Ultimately, Ukraine may lose its position as a coal exporter and it might also have to allocate up to $700 million to import coal.

Since military actions began in the Donbass, Ukraine’s largest coal region, coal production has declined every month, according to the Ministry of Energy and Coal of Ukraine.

In addition, Ukraine’s coal industry faces difficult logistical problems. Most of Donbass production cannot be supplied to the central parts of the country as well as to the thermal power plants as rail operations have ceased. Many roads and bridges have been damaged or completely destroyed in battles between Ukraine troops and rebels.

So, in mid-August and due to the fighting, one of the largest mines in Donetsk Oblast, Komsomolets Donbas near Kirovsk, was de-energized. Normally the operation produced 4 million metric tons (mt) of coal per year, about 8% of Ukraine’s total coal production. A number of miners have been killed and injured, and about 30 miners who were trapped at the mine due to fighting were eventually freed. Miners from neighboring operations are understandably refusing to report to work.

“As of today, there are nine mines flooded in Donbass,” said Anton Kovalishin, a spokesman for the anti-crisis staff of DTEK (Donbass Fuel-Energy Co.). “About half of the mines in the Donbass today are not engaged in the extraction of coal, so there are about 65,000 miners who have temporarily lost their jobs.” Even after the fighting ends, production will not resume until the water can be pumped down.

“Coal mines in Donbass are working erratically: they stop or resume production depending on the availability of electricity and on how close military operations are taking place,” said Mykhailo Volynets, leader of Ukraine’s Independent Miners’ Union.

“There are production problems related to coal mining and there are transportation issues,” said Sergey Pikin, director of the Energy Development Fund. “A large portion of the current transport infrastructure has been blown away and cannot be used to move coal within the country.”

Energy Crisis Forecast
The current situation has already forced Ukraine’s Cabinet of Ministers to introduce a state of emergency for electricity generation. The measure, a force majeure of sorts, protects producers who can’t supply coal according to the regulations of the energy market, explained Energy Minister Yuriy Prodan. He warned that, in the near future, the situation might cause restrictions on the export of electricity and energy from Ukraine, which means that the country soon may place a ban on any export of coal.

“The law gives us such right, but in what amounts [we will need coal] and how we decide to do this, will depend on the development of the situation and the supplies of domestic coal at the country’s TPP,” said Prodan.
In July, coal mining in Ukraine fell by almost 22% year-on-year because of the situation in the Donbass — up to 5.6 million mt. For the first seven months of the year, the mines in the Donetsk Oblast produced 20.2 million mt of coal; the Luhansk mine produced about 14 million mt. Luhansk and Donetsk Oblast account for 80% of all coal mining in Ukraine.

In June, coal mining enterprises of all forms of ownership decreased production by 6.5% year-on-year, or by 435,000 mt to 2.98 million mt, according to the country’s Ministry of Energy and Coal. Coking coal production decreased by 7.7% year-on-year, or 141,400 mt, to 1.7 million mt.

Experts also warn that actual figures don’t correspond to the real problems in coal mining as the most serious losses faced the illegal mines, which Ukrainians refer to as “Copanka.” According to various estimates, the share of illegal mining in the total structure of coal production may amount to as much as 30-40%.

“The volume of coal production in the Donbass has now reached a minimum level in the history of the region,” according to Vyacheslav Il’yashenko, researcher at the Institute of Economics of the National Academy of Science of Ukraine. “The situation in the energy sector can be very severe.” According to him, the level of coal production in the Don