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#2' 2003 print version
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COAL AND STEEL DETERMINE THE DEVELOPMENT OF KUZBASS



Andrei Karunos

The Erunakovskoye deposit (Kemerovo region) is one of the most promising ones
The Erunakovskoye deposit (Kemerovo region) is one of the most promising ones

S
iberia’s industrial core. That is how this relatively small region is often described. And like in some fairy tale, its borders by their outline do resemble a human heart. The compact Kemerovo region (Kuzbass) with a well-developed network of roads and strong diversified economy plays a key role in Siberia. By its potential the Kuzbass is one of the largest territorial production complexes of the Russian Federation. The region accounts for 44% of all Russian coal, 13% of steel and 23% of bar iron.
The Kemerovo region was formed in January 1943. Such a decision was dictated by war conditions, when dozens of enterprises were evacuated to Siberia from the country’s occupied territories. However, the industrial development of the region’s resources started as far back as the 18th century and received a powerful boost a hundred years ago thanks to building the Trans-Siberian Railway. During the first three decades of the 20th century the Kuzbass was turned into a major construction site. In those years a base of modern industry – metallurgy, chemistry, fuel-and-energy complex – was being created. In April 1932 the Kuznetsky integrated metallurgical mill (KMK), which was built just in 23 months, produced its first batch of cast iron.

COAL AND POLITICS
Coal in the Kuzbass is produced by 52 mines and 37 open pits, there are 17 mills that prepare it. The basin’s reserves amount to 690 billion tons and there are practically all kinds of coking and power-generating coals known to the world.
In the recent past the situation in the coal industry led to the explosion of the country’s political and social stability quite a few times. Precisely miners’ strikes, which broke out in the Kuzbass in 1989 and swept across other coal-mining regions, compelled authorities to undertake economic and political reforms that two years later resulted in the breakdown of the Soviet Union and change of the state system. In 1998 there was another powerful wave of protests directed this time against the government’s new policies. As the time showed, the restructuring and privatization of the coal industry not only failed to solve miners’ problems but also aggravated them. As a result of mass closures of enterprises, thousands lost jobs. Then, miners blocked for several days the major railways, including the Trans-Siberian Railway. Only the intervention of the country’s leaders and the authority of the Kuzbass’ governor Aman Tuleev, a highly respected politician, helped smooth over that conflict.
As everywhere in Russia, there is an economic upturn in the Kuzbass today. Although 2002 was not the most favorable year for miners – the supply in the coal market was obviously higher than the demand – its production in the Kemerovo region was on the rise. The coal output amounted to 131.7 million tons or by almost 4 million tons more than in 2001. Three new mines, one open pit and two coal-preparation mills were put into operation. The joint venture Byelorussky Pit was set up.
In all, 15 new coal-producing enterprises with the total capacity of 11.4 million tons a year were open in the Kemerovo region in the last four years.
In August 2002 Russia’s president Vladimir Putin chaired a session of the State Council in the Kuzbass that dealt with problems of the coal-mining industry (Eurasian Metals No.3/2002). At that time a program of holding tenders for subsoil use was worked out. Implementation of this program will permit the Kuzbass to increase production of coal to 170 million tons by 2010 and create thousands of new jobs. It is expected that construction of 37 new mines and open pits will already start in 2003 and 2004.
In March 2003 there was a meeting in the Kremlin between president Putin and governor Tuleev. The head of the Kemerovo region reported to the president results of carrying out the State Council’s decisions. On that same day Aman Tuleev was awarded an order, which was given him, as the president’s decree stated, for an outstanding contribution to the Russian economy.

P  R  O  F  I  L  E
Aman Tuleev
Aman Tuleev, the governor of the Kemerovo region, is one of the most outstanding regional leaders in Russia today. Born on May 13, 1944 in the city of Krasnovodsk of the Turkmen Soviet Socialist Republic. Started his working life as a switchman at a small Siberian railway stations. Graduated later from the Novosibirsk institute of railway transport engineers and became the chief of the Kemerovo railway.
Some local people still remember his words: "Once I was a switchman and I thought – what a fool the station chief is. But later I became the station chief myself...".
At the beginning of 1990 he became a deputy of the Supreme Soviet of the Russian Federation representing the Kuzbass. In March of that same year he was elected chairman of the Kemerovo regional council, the region’s highest legislative body. Again that same year he became the head of the region’s executive power moving to the post of the chairman of the regional executive committee.
In October 1993 Tuleev sided with defenders of Moscow’s White House and in December 1993 he was elected to the new Russian Parliament. In February 1994 won elections to the Legislative Assembly of the Kemerovo region and became its chairman.
In August 1996 Aman Tuleev was appointed minister of the Russian Federation for cooperation with CIS member countries.
At the first elections of the Kemerovo region’s governor in October 1997 he achieved an unprecedented victory receiving 94.4% of the votes. Four years later he was re-elected.
He ran twice as a candidate in Russia’s presidential elections.
Governor Tuleev likes to spend his spare time gathering mushrooms, skiing, riding snowmobiles and relaxing in a Russian banya (a bath house sauna).

METAL AND MODERNIZATION
Metallurgy is the Kuzbass’ second important industry that has a clear all-Russian specialization. The metallurgical complex enterprises account for about one third of the total industrial production volume of the Kemerovo region. The largest among them are the West Siberian Steel Corporation (ZSMK, ZapSib), Kuznetsk Steel Corporation, Kuznetsky integrated metallurgical mill (KMK), Novokuznetsky aluminum mill (NKAZ) and Kuznetsk Ferroalloys Co.
Both integrated mills of ferrous metallurgy, ZapSib and KMK, belong to the management company EvrazHolding, which has put forward a program of their restructuring and upgrading. Today modern technologies are being introduced in the production processes at both mills with participation of Western companies. The primary production facilities are being radically reconstructed at the West Siberian Steel Corporation. A unique machine of steel billet continuous casting has already been put into operation. Some of those billets are being exported.
The Kuznetsk Steel Corporation is also undergoing a serious transformation. In order to overcome the inefficiency of this outdated integrated mill, several subsidiaries were set up on its basis. The technical re-equipment of the arc-furnace shop, modernization of the rail and structural as well as sheet-rolling shops, which were undertaken in 2002, permitted to significantly increase the competitiveness of rails, which are its basic product. Nowadays rails made by the corporation have the international quality certificate and are being shipped to foreign markets. The product has also been awarded the "Russian trademark" silver quality decoration. This honorary decoration is annually given by the Russian union of industrialists and entrepreneurs to the country’s best products.
In July 2002 Russia’s first installation for producing microsilica was commissioned at the Kuznetsk Ferroalloys Co. This material obtained from waste is used in the construction industry to increase strength of concrete and it is especially needed for constructing tunnels, bridges, high-strength trunk lines.
There are a number of programs adopted in the Kemerovo region aimed at long-term development of other industries as well. In particular, the implementation of programs to develop the timber industry and to reform the defense industrial complex is now underway.
In 2002 investments in the region’s economy amounted to $338M. Over 87% of investments went to large and middle-sized enterprises. Their main recipients are still such base industries as metallurgy, electric power generation, fuel production and chemistry.
By freight volumes the Kuzbass division of the West Siberian Railway has no equals in Russia. The Kuzbass’ share of the freight volume at the West Siberian Railway amounts to 84%. The trunk line transport operates in a single technological cycle with the coal-mining and energy industries, ferrous and non-ferrous metallurgies, machine-building and chemical industries. In 2002 the Railway brought to customers 178.4 million tons of cargo.

THE WAY OUT FROM DEATH VALLEY
Like any industrially developed region, the Kuzbass is facing very grave problems of the ecological safety. Coal-mining enterprises are placed first by volumes of releasing pollutants into the atmosphere. They account for 29.4% of their total volume. The coal-mining industry provides a strong man-caused influence on the environment. The open-cast mining is responsible for most pollutants.
Metallurgical enterprises rank next. According to the data by the Committee on natural resources of the Kemerovo region and the Ecological Information Agency (InEcA), they account for 25.6% of total volume of discharging pollutants in the region (23.6% by the ferrous metallurgy and 2% by the non-ferrous one). As results of studies show, in recent years the extent of intercepting contaminants at enterprises of the ferrous metallurgy remained practically unchanged. Complicated financial position and an unfavorable economic situation between 1995 and 2001 kept back rates of renovating and reconstructing gas-cleaning equipment. Only in the last years this situation started to change for the better. In 2001 current ecology expenses at the West Siberian Steel Corporation exceeded $23M.
The Kuznetsk Ferroalloys Co
The Kuznetsk Ferroalloys Co
The Kuznetsk Ferroalloys Co (incorporated in the Pipe-producing metallurgical company) and the Novokuznetsky aluminum mill (owned by the company Russian Aluminum) are located in the most ecologically adverse district of Novokuznetsk, which is sometimes called Death Valley. These enterprises have already started the stage-by-stage implementation of environment protection programs. This has become possible thanks to new owners, who started making investments in construction of modern cleaning complexes. NKAZ is introducing the ecological management system in accordance with the ISO 14001 international standard. As a result, discharges of pollutants into the atmosphere have already been reduced by 7%. The 2003 programs aimed at modernizing production facilities and contributing to the ecological safety provide, among other things, for construction of two needed gas-cleaning blocks for buildings of the electrolysis shop.
Silica is getting back to the production process in the form of fluorine-silica concentrate from gas-cleaning slime. The start-up of a fundamentally new flotation apparatus with the production capacity of up to 5,000 tons a year will permit to return to the production process of about 2,600 tons of concentrate. The modernization of the anode installations will also reduce harmful releases of tarry substances into the atmosphere.
Although the share of the Kuznetsk Ferroalloys Co (KWF JSC) of harmful atmospheric discharges does not exceed 2%, the enterprise worked out a program to reduce it even more. Thanks to supplemental equipment, dry dust from gas-cleaning installations of ferroalloy furnaces is not stored in a slime storage device but is reprocessed by a compression plant. The complete reconstruction of gas-cleaning facilities will permit the reduction of discharges of about 5,000 tons before 2007.
By joint efforts of enterprises’ owners and local authorities the Kuzbass managed to overcome the economic stagnation and start a business expansion. Companies are actively implementing programs to develop their enterprises. New production facilities are being constructed and new jobs are being created. Changes, which are taking shape in the country’s fuel-and-energy balance mainly because of growing prices for hydrocarbon fuel (gas and oil), give the coal-mining Kuzbass good prospects. Following the base industries, which determine dynamics of the region’s development, an upturn is inevitable in other economic sectors of this resource-rich land. 

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