“Despite European sanctions, we are focused not on reducing, but on increasing sales volumes”

— Maksim Dmitrievich, let me congratulate all the workers of the coal industry on Miner’s Day in your person! With what mood do the miners meet their professional holiday? Not hung up from Western sanctions?

– Miners are not the kind of people who lose heart because of difficulties. Our work does not exist without them. There was one set of problems, now another, but fundamentally the situation has not changed. Yes, Europe has closed, imposed an embargo on the import of Russian coal, this is unpleasant. But the European market was not a priority for us. Europe has been threatening to phase out coal for several years now and has persuaded every other country to do so, not because of a Russian special operation, but because of its supposedly harmful effect on climate change. They wanted to sign a declaration on a ban on the use of coal at the climate summit in Glasgow last November, but it did not work out, since many countries faced a real energy shortage. But we have followed this trend. We worked with our partners in other regions – in Asia, Latin America, Africa, expanded deliveries to the east, so the loss of the European market did not become catastrophic for us.

— Can you tell us more about the markets where Russian coal is still in demand?

– If you do not take politics, coal, not only Russian, is in demand everywhere. Last year, against the backdrop of talk about a coal ban and saving the climate, coal consumption in the world increased by 6% and set another record – 7.4 billion tons. And it is hardly possible to stop this growth now – the population of the Earth is growing, the electrification of the economy continues, and industrialization is in full swing in a number of countries. And there is simply nothing to replace coal in all these processes: renewable energy is too unstable and requires a complex energy infrastructure, the atom is expensive, and natural gas is not so easy to deliver to where it is needed. Therefore, even technologically advanced Europe, having abandoned Russian coal, is forced to open its mothballed mines and look for alternative suppliers, primarily in the United States and Australia. Who really benefits from European sanctions against Russia.

Do you know how coal consumption grew in Europe last year, before the Russian special operation? In Germany, the demand for coal increased by 24%, in France – by 51%, in Italy – by 72%, and in Spain by more than 4 times. In order to make up for the deficit formed as a result of sanctions, Europe has to increase coal purchases in alternative markets, literally intercept coal from other consumers. And they, in turn, have to increase exports from Russia. There are no other options. Therefore, our deliveries to China, South Korea, Japan, Taiwan, Vietnam, Turkey, Morocco, India remain stable and even grow, especially to India. Moreover, there are also new clients for us, for example in Brazil.

Yes, and Europe, I think, will also look for options to maintain some part of the supplies from Russia. Australian or Indonesian coal is perhaps more politically correct, but it still needs to be brought in from the other side of the Earth. Already, electricity prices in Europe are at historical highs, and by winter they may rise even more. This reduces the competitiveness of the European economy, which worries not only European politicians, but also ordinary citizens. No matter how high the standard of living in Europe is, Europeans do not want to pay a bill of 2,000 euros for energy. Maybe that’s why the Europeans are in no hurry to introduce sanctions against Russian energy companies.

– It turns out that the sanctions contributed to an increase in demand for coal and the emergence of a shortage in markets that had not previously suffered from a shortage of coal? Can we say that the sanctions have become a gift for Russian coal miners?

— No, this is a serious challenge for us, not a gift. The loss of the premium European market, in the direction of which we have created the most developed transport infrastructure, cannot be called a gift. In addition, sanctions limit the supply of equipment and components from technologically advanced countries, without which it is quite difficult to maintain the current level of production. And the demand in other markets can be very different from the European one. Other grades of coal are required, other products that were not a priority for us – the same coke, metallurgical coal, products of deep coal processing. We can produce all this, but it is a big capital expenditure, and logistics towards new markets is also associated with additional costs for freight, track construction, port expansion … So sanctions for us are a classic crisis, which, as we know, brings both threats and opportunities.

— Tell us more about the measures that SUEK is taking to reduce threats and seize opportunities in new markets.

“We are just trying to prevent threats from reaching a critical level for production. There were problems with the supply of equipment – we accelerated the implementation of our programs in the field of engineering development, which we have been working hard on for several years. Even a special department was opened in the company. We have good production facilities in Siberia and the Far East of Russia, on the basis of our service enterprises, they constantly master new types of products, produce spare parts for conveyors, excavators, loaders and other equipment, and they do it at an absolutely world level. I can’t remember a year when the products of one of our enterprises – Sib-Damel from Kuzbass, Chernogorsky RMZ from Khakassia, Artemovsky RMU from Primorye – did not receive prizes at specialized exhibitions of mining equipment. Today we are expanding our product line with the help of partners from China, India, Latin America, switching to Russian analogues, and looking for alternative suppliers. We participate in government import substitution programs. The West does not want to supply us with equipment – well, this is a problem, but we will solve it.

In addition, we do a lot of work to improve production efficiency, which is important for maintaining international competitiveness. We have built and continue to improve a modern coal quality management system in Buryatia and Kuzbass, we are introducing geopositioning systems at mines that are important for reducing injuries, robotization and automation of a number of processes are underway.

As for new markets, we also do not expect customers to run to us on their own. We try to study requests, actively work in new markets, open sales offices. We already have 3 offices in China, we have offices in Japan, Taiwan, Indonesia, Korea, Africa, the head office is in the UAE. We try to be as close as possible to consumers who need coal. And each office is also digital services for consumers, these are warehouses, transport, the ability to supply different volumes of products, this is a flexible approach and expanding the product line. So, despite the European sanctions, we are aimed not at reducing, but at increasing sales, which is extremely important for the country, and for the coal regions, and for our employees, for the financial well-being of mining families.

— The well-being of mining families and, more broadly, coal regions depends not only on wages, but also on social investment. In recent years, we have become accustomed to the fact that coal miners actively invested in both the social sphere and the environment, which made it possible to reduce the harm to nature that irritates society so much. Will it turn out that in the context of rising costs for logistics and production, the trend towards “greening” the coal industry will become less noticeable?

— You correctly noted that the “greening trend” of the industry is associated with large-scale investments that coal miners spent on the construction of treatment facilities and dust suppression systems in warehouses and ports. SUEK, by the way, has always been a leader in the implementation of treatment facilities and practically did not appear in scandals related to environmental damage. We annually spend about 3 billion rubles on soil reclamation, the construction of sewage treatment plants, modern filters for coal plants, the introduction of coal dust suppression systems and measures to restore natural resources. Among the latest high-performance projects that have really contributed to changing the image of the coal industry, I can name the construction of modular water treatment plants at all our mines in Kuzbass, the construction of electrostatic precipitators at stations in Krasnoyarsk, which allow capturing more than 95.5% of harmful substances from fuel combustion, old boiler houses with heat from power plants in Kuzbass, the Krasnoyarsk Territory and Altai, which makes it possible to reduce greenhouse gas emissions by 1 million tons per year. And we have no reason to reduce these investments, because this is important for the population, for the regions, and for our consumers around the world, who are now also concerned about environmental issues. This is a general trend, it is not associated exclusively with Europe or America.

The same can be said about social investments. If we stop investing in improving the quality of life in the territories where we operate, people from the mining single-industry towns will simply start to disperse, and then no global demand will help coal companies. So we will continue all our programs to create a favorable urban environment, support veterans, youth and other vulnerable social groups, and develop social infrastructure.

– Due to what reserves will all these plans be implemented? International financial markets for Russian companies are closed today…

— We rely on internal resources and increasing the efficiency of each of our divisions. In general, work in different segments of the economy has taught me that the role of managerial decisions should never be underestimated. Now the company has initiated a lot of work to improve the quality of management and reduce bureaucratization, we want to reach the level of the most efficient global companies in this indicator. This is already affecting the financial results. We pay increased attention to the system of training and evaluation of the work of employees, we try to unleash the creative potential of our teams. This is an almost inexhaustible reserve for growth and efficiency improvement.

Another important reserve for us is the digitalization and automation of production processes. This is a key issue in maintaining global competitiveness. During my previous work at Rusagro, we made this company one of the world leaders in the field of digital technologies, and now we face similar tasks at SUEK.

As you can see, we have a lot of tasks in the industrial, social and commercial spheres, we simply have no time to lose heart. We want to preserve and improve life in the mining regions and develop new types of products and new markets, and we want to maintain our place in the top three largest global coal suppliers. As long as people need a reliable source of energy and heat, we will do our job, extract and deliver coal to consumers. After all, it is the benefit for people, and not sanctions or their abolition, that determine the future of the coal industry.

Taking this opportunity, on behalf of our company, I would like to congratulate colleagues on the holiday, wish new successes and achievements, and most importantly, good health and family well-being.

Photo: SUEK Press Service

Interviewed by Alexander Yudelson