Putin pledges billions for Russia coal sector boost

Tue Jan 24, 2012 11:49am EST

Related Topics

* Says to spend $8.17 bln on coal sector development by 2030

* Says coal output could reach 430 million tonnes by 2030

* Stresses mine safety after 2010 deadly accident

By Gleb Bryanski

KEMEROVO, Russia Jan 24 (Reuters) - Russian Prime Minister Vladimir Putin, standing for election in a March presidential poll, pledged $8 billion in development aid for the coal industry during a visit to a major mining region, a hotbed of political protest in the past.

He said Russia will spend 252 billion roubles ($8.17 billion) on coal industry development by 2030 as part of an overall 3.7 trillion rouble investment programme that will be driven by the private sector.

"The overall development of the economy, honourable colleagues, and the increased effectiveness of the coal sector...allows us to draw up such large scale plans," the prime minister said.

The Kuznetsk Basin (Kuzbass) is Russia's largest coal producing region, mining 192 million tonnes in 2011, or 57 percent of Russia's total output of 336 million tonnes.

Its miners played an instrumental role in the fall of the Soviet Union two decades ago when then-upstart politician Boris Yeltsin aligned himself with their long-running protests over wages and conditions to oppose Mikhail Gorbachev's platform.

Tensions flared in the region as recently as May 2010 after more than 60 miners died in a series of methane gas explosions at coking coal miner Raspadskaya's main mine.

Riot police were deployed that month in the city of Mezhdurechensk, where the mine is located, to quell several days of protest by miners and their families. Putin also paid a quick visit to the region, which is tightly controlled by long-serving governor and United Russia member Aman Tuleyev.

During Tuesday's trip the prime minister, in power since 2000 and favoured to win a six-year presidential term in the March 4 election, met with local officials and executives in Kemerovo, the Kuzbass's administrative centre, as part of a three-day trip to Siberia and other provinces.

He also met with relatives of the deceased from the 2010 accident and pledged to spend about 500 million roubles in federal research and development funds on mine safety this year.

"The funds will be spent on the development and introduction of modern mine-rescue and individual protection equipment," he said.

Russian coal mines are among the world's most dangerous, with a 2011 fatality rate of 0.15 for every million tonne mined, according to Russian industry consultancy Rosinformugol.

By comparison, Ukraine has about 1.0 fatalities per million tonne, while Australia has just 0.006 deaths, it said.

Raspadskaya has since restarted operations at the stricken mine, and the company expects to achieve overall production of 15 million tonnes in 2015, up from 6.25 million tonnes this year, Putin said, confirming earlier company forecasts.

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Putin also said that Russia should boost coal exports to Asia, where demand is surging.

"We need not only to maintain our market position, but also expand it, particularly in the promising markets of the Asia-Pacific region.

Russia, the world's third largest coal exporter, has opened or expanded a number of Far Eastern ports recently including SUEK's Vanino and Mechel's Posyet.

Russia also has a number of new projects in the works to supply this market, such as Mechel's Elga mine in the Sakha Republic as well as a series of undeveloped properties in the southern Siberian Republic of Tuva.

For a FACTBOX of Russia's major coal projects see .

In a note issued prior to the meeting, analysts at Russia's VTB said improved infrastructure is the key to the further industry growth.

"We welcome the government taking a lead in developing the export infrastructure for Russian coal, as this is the main containing factor for the industry, given its extensive growth pipeline," the bank's analysts wrote. "Railroad access points and major routes (BAM and Trans-Sib) are already overloaded, as is the rail infrastructure at main ports. ($1 = 30.8425 Russian roubles) (Writing By Alfred Kueppers; editing by James Jukwey)

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