On the last Sunday of August, Russian miners celebrated their professional holiday – Miner’s Day. News agency RIA Novosti interviewed Sergei Grigoriev, Deputy CEO of SUEK and President of `SUEK to the Regions’ charity fund, to learn more about the coal mining industry today and the importance of corporate social responsibility in the sector.
- How do you rate the economic situation within the coal mining industry?
- International coal prices have declined by more than twofold in the last two years. The main reason is that coal production exceeds demand. This is due to a slowdown of economic growth within the world’s major coal users, first and foremost China. At the same time, export markets in some coal producing countries like Australia, Colombia, and Indonesia are showing higher activity while the pressure from other energy producers is increasing, particularly as a result of the ‘shale oil revolution’ in the US. As a result, even large global coal mining companies are closing their mines and some have declared bankruptcy. Russian coal mining companies are experiencing difficulties as well – many of them are operating below breakeven level. Coal prices are falling while production cost is growing.
- What can be done in this situation?
- We presume that any crisis has a cycle. Let me refer to Andrey Melnichenko, the Chairman of the Board of SUEK, who recently stated that global energy consumption is on the rise, and will continue to increase and that coal, as the most readily available and cheap fuel, will continue to play a critical role in the planet’s energy balance for a long time to come. Therefore, SUEK’s strategy is to be the most competitive and reliable supplier of Russian coal in the domestic and export markets. Consequently the company is busily expanding its mining and processing capacity in East Siberia and the Far East of Russia. We are making investments in order to maximise efficiency of coal transportation and to develop a robust sales network in our target markets. And of course we are working on improving our productivity at all levels. As a result, in 2015, SUEK mines have set several Russian and international productivity records. We continue to implement large-scale investment programmes, including the purchase of state-of-the-art machinery and equipment.
- SUEK is not only one of the largest tax payers and employers in Russia but also a major social investor in seven Russian regions. Has the economic environment had any effect on your social programmes?
- Despite the challenging economic situation, the management of the company has set a clear objective: to maintain tax support to the regions, to preserve and support our highly-skilled workforce and to fully meet our social commitments.
We have put in a great deal of time and resources into building up expertise levels within our workforce and in gaining the trust of our customers and society in general. To not continue with these efforts now would damage our reputation which might prove hard to restore. We are maintaining our existing social programmes, continuously improving them and introducing new projects.
- What issues are addressed by SUEK’s social policy?
- Working with the government, we realise our responsibility for stability in mining regions, we also tackle practical problems which could impact the company’s development. This includes creating a favourable social environment, improving housing conditions for inhabitants of mining towns and villages. We also introduce initiatives to develop education, sports, healthcare and culture. Our goal is to make the regions where we operate more attractive for the younger generation, thereby helping to recruit young people to the industry and ensuring sustainable development of these regions for years to come. We want our employees and their families to live in comfort and to be better off.
- How do you achieve this goal?
- We are running programmes to encourage local employment, to engage with local communities, to expand the services market and promote the creation of new jobs, and to introduce innovative technologies and approaches into the social services.
The large majority of our social programmes are universal. That is, once pilot projects have been introduced and tested in one of the regions we roll them out in the other regions. One of the better known ‘network’ initiatives is the SUEK Work Teams project aimed at engaging senior high school students in urban development and socially valuable work. Other projects include the School of Local Development, the School of Social Entrepreneurship, the Comfortable Living Environment, a social projects competition for developing local communities, as well as participation in the Golden Succession Pool competition.
We have a joint project with the Department of Presidential Affairs (DPA) for medical treatment and health improvement for children of our employees and children from socially disadvantaged families from mining towns. The project is in operation at the DPA’s medical facilities located in Moscow and the city’s suburbs. We have also introduced a joint medical treatment project for mining veterans in the DPA’s Herzen rehabilitation centre.
In total, every year we run about a hundred different social projects and each of these is really important for the regions where we operate, as they improve the living environment in mining towns and villages.
- Most towns where SUEK operates are known as single-industry towns. What is your approach to addressing their specific problems?
- The main problem with any single-industry town is that they depend on a single company which is the principal employer. These towns require development of the internal infrastructure, promotion of small and medium-sized businesses, and engagement of investors in projects which have nothing to do with the principal employer. We are doing a lot of things to resolve these issues and working in close cooperation with the regional and municipal authorities, the local communities and, of course, with the Single-Industry Towns Development Foundation and previously with the Ministry for Regional Development.
Many problems can be effectively solved using an intelligent and systematic approach. Take Kuzbass as an example. Historically, this region is socially very strong, though it is still is one of the top priorities for the regional governor Aman Tuleev. In terms of dealing with single-industry town issues, Kuzbass is a recognised role model. For instance, since 2010 the towns of Prokopievsk, Leninsk-Kuznetsky and Tashtagol have been receiving financial support from the government as part of the public/private partnership, which helped secure the total investment of RUB 40bn and create over 19,000 jobs. Recently Kuzbass received support from the Single-Industry Towns Development Foundation for two other towns – Yurga and Anzhero-Sudzhensk. And most recently the towns of Kiselevsk and Kaltan were included in the Federal Support Programme. They have prepared their applications and developed integrated investment plans. Kuzbass has acquired invaluable experience in developing documents, federal fund raising, attracting Russian and foreign investors and implementing large-scale infrastructure projects.
- I understand the Minister of Energy Alexander Novak spent this year’s Miner’s Day in Kuzbass?
- Yes, the minister visited coal mines and together with regional governor Aman Tuleev attended a formal meeting where miners and veterans received government awards. The minister confirmed once again that the country and the government appreciate the work miners do and believe in coal and in the future of the coal mining industry. This is really reassuring for coal miners.
- Just over a year ago you became a member of the Civic Chamber of the Russian Federation where you were put in charge of the Commission on Development of the Real Sector of the Economy. Have you been able to address the issues of social development of mining towns with the Chamber?
- Over the year we have held several important events focused on the issues of single-industry towns. For example, we have held hearings with the participation of federal, regional and municipal government representatives, the business community and non-governmental organisations. These hearings have produced several approved initiatives.
I believe that this work should be continued because for the federal authorities it is an opportunity to consider the needs and opinions of the regions, while for the regions it is an additional channel for establishing cooperation with the federal government.
In the Civic Chamber we focus on increasing the construction of affordable housing in Russia. This is a very important issue because infrastructure development and the building of affordable housing are powerful crisis- response measures which produce multiple benefits for the national economy. Infrastructure development and housebuilding is an internal resource which we should use. We have made several suggestions to the Presidential Administration, the Government and the State Duma. These include introduction of the term ‘affordable housing’ into legislation and establishment of large-scale, non-government contracts for housing construction. The new management team of the Housing Mortgage Lending Agency is actively involved in discussing these issues – we see their work as being highly constructive.
Today the Civic Chamber offers an effective forum for discussion, sharing of ideas and potential solving of social problems in the regions. For example, last winter we presented our Work Teams here, which are a popular youth movement in mining towns. We saw tremendous interest in the teams which help to address issues of youth employment, urban development and the care of war veterans. We believe the Work Teams will help to bring up a socially active generation. I know that this Work Team concept is being adopted by other regions.
In the summer, members of the Work Teams attended the final meeting of the inter-committee workgroup of the Civic Chamber of the Russian Federation in celebrating the 70th anniversary of victory in World War II. Members of the Work Teams explained how, amongst other things, the socially active young people had held remembrance services by the Victory Banner, how they managed to renovate monuments to WWII soldiers, how they had helped veterans.
- How was the Victory Day celebrated at SUEK mines?
- All SUEK mines held ‘remembrance work watches’, which means that the teams made increased production commitments. Workers set two international, three Russian and about a dozen mine production records. SUEK sponsored the opening of war memorials and Victory Avenues in all cities and towns where we operate. Mines organised meetings with the veterans. Our miners took part in the national Immortal Regiment celebration. A lot of activities were initiated by the Ministry of Energy and we actively participated in those, including honouring mining veterans.
Of course, remembering the heroic deeds of WWII veterans is not something that should be reserved only for special occasions. We honour our war veterans throughout the year through regular social events. We are doing our best to express our gratitude to these people for their glorious bravery.
Source: RIA Novosti