Black Hole

As their industry declines, Ukraine’s angry coal miners take their grievances to Kyiv. by Nataliya Boyko 15 July 2009 KYIV | Viktor, a miner from the eastern town of Makeyevka, stood by the steps of the government building one day in early June, looking thin. He was used to working hard underground, he said, but he didn’t realize how difficult striking would be. After three days, he was terribly tired but wouldn’t think of turning back.

“Look at me,” he said. “Look at any miner in the crowd. Practically every one of them is the only breadwinner in his family. They want to get paid for their work, go back to their workplaces, and earn money again. Today they can’t. Private mines can’t operate.”

Viktor was one of perhaps thousands of miners taking part in protests last month in towns across Ukraine. In some places, they refused to leave the mines. In Kyiv, the air rang out with the sounds of miners’ helmets being banged upon the flagstones near the government building.

Negotiations with the government put an end to the strikes, but whether the peace is lasting or temporary is an open question.

The miners were angry about changes in the coal industry that they say will deprive them of a chance to make a living. On 1 June, Ugol Ukrainy, a company that buys coal for the country’s state-owned power plants, announced that it would buy coal only from state mines.


A protest leader shouts his demands before the government building in Kyiv. The nearby placard reads, "Ukrainian Coal for Ukraine."

The industry has been hit by a slowdown in industrial activity and cheaper coal imports. Viktor Poltavets, minister for the coal industry, said state mines needed urgent help, citing a 2.5 million ton stockpile and an 11.5 percent drop in production since last year. “It’s a critical moment,” he said at a press briefing. “It’s impossible to cut production capacity further. The state [industry] cannot purchase coal from private companies.”

That leaves private mines with few markets. From January through April, only 3 percent of the coal mined in the country was exported, according to government statistics, and the few private power plants in Ukraine are owned by large corporations that also own their own mines.

Backed into a corner, the miners union called for a protest on 2 June. The union represents some 500,000 workers, or about 88 percent of those employed in the industry. About 1,000 turned out in Kyiv, shouting slogans and carrying signs that read, “We came not to ask. We came to demand,” “The government leaves towns without work,” and “We have to eat, too.”

Those mines that participated in the strikes employ about 4,500 people.

Three days later, First Vice Prime Minister Aleksandr Turchinov met with union representatives, offering more meetings “at which new concrete decisions on miners’ demands will be made,” according to a statement on the union’s website.

The strikers packed up their placards and went home.

When they met a week later, both sides restated their positions. Turchinov and other officials from the government and Ugol Ukrainy said they could not buy surplus coal as stockpiles sat untouched around the country, although they eventually relented and agreed to buy some from the mines that had participated in the strike.

For their part, union representatives argued that some power plants are buying coal from kopankas, or small, illegal mines, worsening a drop in demand from legal mines that had already occurred in the economic downturn.

The union says that Ukraine’s estimated 6,000 kopankas employ about 60,000 illegal workers, who mine as much as 5 million tons of coal annually. By comparison, about 77.8 million tons of coal were mined legally last year, including about 51 million tons of power station coal, according to the Coal Ministry.

Kopankas are an open secret in Ukraine, where many miners are out of work and the coal is relatively easy to reach, unlike in the nearly exhausted legal mines. Authorities periodically shut down the operations, which typically re-open later. Frequent shutdowns of legal mines, for safety or financial reasons, have exacerbated the problem.

At their mid-June meeting with union representatives, government officials promised to establish a panel to deal with kopankas.

OLD AND UNSAFE

Even before the protest in Kyiv, workers in some mines that had been unable to sell their coal to the state company staged their own actions, some by refusing to come aboveground.

Olga, the wife of a 25-year-old miner in the eastern town of Shakhtersk who stayed underground, said she got through the ordeal only with the help of medication.

“Anyone who has visited a Ukrainian mining town after an accident, and seen the coffins and the crying widows and mothers, understands,” she said.

“In Soviet times miners got paid well for doing dangerous work. But now sometimes miners have to wait months for their money. … Evidently, striking is the only way to get your money today. But it’s terribly difficult for strikers and their families. I had a nervous a breakdown when my husband and his crew went underground indefinitely. I took tranquilizers and shared them with my neighbor. She was pregnant and the father of her child was among those who refused to come out of mine.”

It was after several days of these unsuccessful actions that miners converged on the capital. The short-term fix that resulted will not solve the industry’s long-term woes, however.

A bulwark of the Soviet economy, Ukraine’s coal industry has become obsolete. In the 1970s, about 350 coal companies operated. Last year, the country had 142 state and 22 private mines Today, most of their customers no longer exist and many others refuse to buy coal from local mines, where outdated and inefficient production methods drive up costs.

Strapped for funds, some mines have not been upgraded since they opened decades ago, and one result is a tragically high accident rate. According to government statistics, every million tons of coal produced in Ukraine so far this year has cost two human lives, tying the country’s mines with China’s for the title of world’s most dangerous. From January through May, 61 people died and 2,138 were injured in Ukrainian mines.

Long exploited, mines here tend to be dangerous because they are deeper, their top layers having been exhausted. In addition, the government estimates that more than 90 percent of mines have dangerous levels of gas buildup.

But shutting down the mines, especially without the proper environmental safeguards, which can be expensive, might only lead to more problems.

Although the jobless rate in mining regions is slightly lower than the national rate, many mines are the only employers in their towns. Ukraine is littered with places where a mine’s closure has led to massive unemployment, poverty, and often a spike in substance abuse and crime.

Looking to replicate the experience of some European countries that closed their mines but were able to replace the lost jobs, Ukraine established low-tax zones in 1999-2000. Investment in the zones that were in mining towns mushroomed, from 42 new projects worth $165 million in 1999 to 175 worth nearly $1.2 billion in 2004.

But when a new government came to power in 2004, it abolished the zones, arguing that the value of the corporate tax breaks had exceeded the taxes collected by the government from the new investments. Economic activity in the zones largely dried up. At a 2007 conference, a Donetsk official estimated that his region had lost about 60 million hryvnya ($7.8 million) worth of investments after the zones were abolished.

Ildar Gazizullin, an economist at the Kyiv-based International Center for Policy Studies who has studied the coal industry, said in the long term the government is going to have to revive the idea of industrial zones while not handing out the excessive tax privileges that doomed the previous effort.

In the short term, he said, there are no alternatives for laid-off miners, so the state should continue to subsidize many of the unprofitable mining companies.

Meanwhile the mines limp on, unable to sell their coal but unable to shut down, lest the psychological and environmental consequences be even more drastic. It’s likely that miners like Viktor will converge on Kyiv once again.