Sustainability of the Energy Complex of the Regions Development

Maria G. Grishina

, Elena A. Kabachevskaya

, Svetlana G. Kosenko

, Ekaterina I. Lopatina

Ekaterina N. Novikova

Branch of Kuban State University in Armavir, Armavir, Russia

novikovakatya_06@mail.ru

Keywords: Coal-Mining Territories, Condition, Problems, Prospects Of Coal Industry.

Abstract: The scale of the sphere of economic, social development dictates the need to consider the issues caused by

the condition, problems, and prospects of the coal mining industry, which is the foundation of the regions'

energy complex. The capacity of the raw material base of the coal mining industry is determined by the

presence and localization of coal basins, rich in mineral resources, located in the eastern, European part of

Russia, where there are coal reserves of all types, grades, with high-quality characteristics and technological

properties. Consideration of the economic status, issues, and potential development of the coal industry will

be given by the Rostov region example, which is a vivid example of coal mining territory, which clearly

shows the prospects of development and problems of functioning of economic entities of the coal industry.

The choice of this area is conditioned by the fact that this sphere is an urban-forming branch of the coal-

mining industry for this region. The possibility of optimizing the coal-mining sphere as energy basis in

conditions of economic, social instability, and tension is revealed, which is characterized by the closing of

mines, decrease in volume of coal mining, availability of huge debts. Negative impacts, risk factors in the

coal-mining territories include the manifestations caused by external economic instability, low investment

attractiveness, and innovation activity. The abovementioned requires unceasing attention to today's realities,

displaying of which will activate actions aimed at revival and upliftment of coal sector enterprises, the

tendency of which will be an opportunity to improve the social environment, economic climate, assist

prospective development of regions.

1 INTRODUCTION

The vector of economic development is the coal

mining industry, the development of which forms the

stable functioning of all spheres of economic

management, predetermining the introduction of new

technologies, the maintenance of environmental and

economic efficiency of territories (Islamov, 2017),

the optimization of economic scenarios (Plakitkina

and Plakitkin, 2019).

The article aims to study the coal mining industry,

considering the issues of negative impact and

prospects for the development of this sphere of

management. The solution of the target orientation is

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https://orcid.org/0000-0002-3812-1567

conditioned by representing the functioning and

assessment of the coal mining industry, overcoming

risk situations with possible transformations in this

sphere of activity.

The issues conditioned by the functioning of the

coal mining industry are reflected in the works of the

following authors:

 status, coal basin assessments, and export

potential analysis: articles by Linnik Y.N.

(Linnik et al., 2019), Galiyev J.K. (Galiyev and

Galiyeva, 2019), Yutyayev et al. (2019),

Gorbunova M.L. (Gorbunova et al., 2020),

Medvedev A.V. (Medvedev et al., 2019);

 problems of product realization: article by

Bazhin V.Yu. (Bazhin et al., 2019);

260

Grishina, M., Kabachevskaya, E., Kosenko, S., Lopatina, E. and Novikova, E.

Sustainability of the Energy Complex of the Regions Development.

DOI: 10.5220/0010589102600265

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 260-265

ISBN: 978-989-758-519-7

 development, competitiveness: an article by

Boyko N.A. (Boyko et al., 2019).

The magnitude of consideration of the state issues,

assessment, problems, prospects of the coal mining

industry in Russia requires consideration of the

regional positioning of the coal sector, detailing the

existing negative and optimizing factors of the above-

mentioned industry.

2 METHODOLOGICAL

APPROACHES DETERMINING

THE STATE, PROBLEMS OF

THE COAL MINING INDUSTRY

IN THE REGIONS

Situational definition of the state, problems, prospects

of development of the coal mining industry should be

based on a comprehensive assessment that

predetermines the construction of a system of priority

areas, highlighting the trends of negative factors,

positioning the possibility of a promising approach

aimed at minimizing the risk situations in the coal

mining industry. This trend predetermines the

following directions:

1. Analysis of the coal mining industry's state. In

assessing the coal mining industry's state, we note that

there are 129 coal deposits and 22 coal basins in

Russia. The coal mining sector is an urban-forming

sector in 15 Russian regions (Tarazanov and

Gubanov, 2020). Highlighting the volume of coal

production, we note the following trend: in 2016 the

value of the extracted raw material resource was

417.514 million tons, 2017. - 442.189 mln t, 2018. -

468.945 million tons, 2019 - 470.938 million tons,

2020. - 435.913 million tonnes. The data presented

speak of the alarming aspect caused by the decline in

production of the coal mining industry. The leaders in

the coal mining industry are the Kemerovo Region,

Krasnoyarsk Territory, Trans-Baikal Territory, and

the Republics of Buryatia and Khakassia. In

presenting the assessment of the state of the coal

mining industry in the Rostov region, we note that the

link coal base of Russia is the Rostov region, in which

43% of the area is coal-bearing. The value of coal

resources is indicated as 24.5 billion tons, reserves as

of the beginning of January 2019 - 13.5 billion tons.

The structure of reserves and grade composition of

coal is shown in Figure 1,2.

Figure 1: Structure of coal reserves, %.

Figure 2: Coal grade composition, %.

For the period 2018-2020, anthracite production was

16.48 million tonnes, and enriched anthracite

production was 11.85 million tonnes.

Let us highlight and evaluate the performance of

the coal industry in the Rostov region. The data of the

turnover value, production index, and volume of

shipped products in the Rostov Oblast coal mining

industry are presented in Table 1.

Table 1: Analysis of coal mining companies in Rostov region.

Name of indicators Time period

2018 2019 2020

Turnover, million 22,658.4 21,670.1 19,277.2

Volume of products shipped, RUR mln. 22,138.7 21,700.5 34,742.4

Share of the volume of shipped products in the turnover, % 97.71 100.14 180.23

The data presented shows that coal mining

companies' turnover value has decreased in 2019-

2020 compared to the same period in 2018. The

volume of shipped products undergoes positive

dynamics. The highest share of the volume of shipped

products is seen in 2020, which amounted to more

48,15

23,7

28,15

Explored Pre-estimated Off-balance sheet

86,2

13,4

0,4

Anthracite Stone Brown

Sustainability of the Energy Complex of the Regions Development

261

than 180% of the turnover of enterprises of the coal

mining industry of the Rostov Region.

The lowest volume of coal produced is indicated

in 2019 for the period 2018-2020. The volume of coal

mined in 2020 is similar to that in 2018.

The value of monthly coal production for the period

2018-2020 is shown in Figure 3.

Figure 3: Coal production 2018-2020, thousand tonnes.

The data presented in Figure 3 shows an increase

in coal production in 2018, 2020. The highest peak of

coal production in 2018 is in the month of October,

December. The year 2019 is characterized by a

decline in coal production at mines in the Rostov

Region. Beginning in March 2019, there has been a

decline in coal production. The critical volume of

coal production at mines in the Rostov region is

defined by the value of 490.3 thousand tons, which

was recorded in December 2019.

Potential increase of coal mining volumes is seen

in 2020, which is determined by the growth of

demand for this type of natural resource.

2. Problems of the coal industry in the regions.

The reflection of this aspect is determined by the

presence of the reduction of the coal industry risk

resilience index in 2020 by 0.2 units.

A variety of factors of instability in the coal

mining sector of the regions can be grouped into

groups, defined by problems of external and internal

nature. Despite their multiplicity, let us single out the

most capacious of them, which include:

 uncertainties in the economic environment

caused by Covid-19 in the first quarter of 2020.

(Dagilis,2020);

 high level of taxation and low level of available

credit resources, presence of financial

difficulties. The average tax rate in 2019 for

coal mining industry is 52.5%. The amount of

credit resources provided can be judged from

the information provided by the Bank of

Russia. In 2019, the share of lending to

industries engaged in the extraction of fuel and

energy minerals in the total volume of lending

to the industrial production sector was 1.11%.

In 2020, this indicator is undergoing a positive

trend, increasing by 0.24%. Financial

difficulties in the coal mining industry are

determined by the growing financial burden

and limited attraction of borrowed, credit

resources. The financial instability of

enterprises, low liquidity ratios make it difficult

to obtain loans and generate low investment

activity. Thus, in the first 9 months of 2020

compared to the same period of 2019, the level

of investment decreased by 7.13%;

 wear and tear on equipment. Let us note the

following data: the share of fully worn-out

fixed assets in 2019 was 25.2%, which is higher

than the same period in 2018 by 1.3%, the level

of depreciation is more than 54%, the renewal

rate in 2019 was 8.1%, the reduction of

activities aimed at modernization,

reconstruction works (Zhukova and Lobunets,

2014);

 high level of logistics costs and import

dependence. When highlighting the logistics

costs in the coal mining industry, it can be

noted that barriers constitute a constraint on the

industry's infrastructure. The presence of

underdeveloped logistics of railroad

transportation, restrictions in the acceptance of

goods by sea ports predetermine the presence

of arrhythmic work of the industry, untimely

delivery of products. High costs of coal

transportation to the destination impact the

price of products, increasing it, which

negatively affects the competitiveness of coal

mining enterprises. Import dependence is

determined by the underdevelopment of the

Russian machine-building industry. The high

level of import dependence of domestic

500

1000

1500

123456789101112

2020 г. 2019 г. 2018 г.

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

262

machine-building enterprises has caused

investment tensions in the machine-building

industry, which has affected all economic

sectors' functioning problems, including the

coal mining industry (Parakhina et al., 2017).

Purchasing special coal-mining equipment, spare

parts from foreign companies, coal-mining

enterprises incurs additional costs. Rising costs are

driven by large project capacity and high capital

expenditures.

- changing demand for the products of coal mining

enterprises. Global coal demand is undergoing a

decline of 8% in early 2020 compared to 2019. 8%

compared to 2019, driven by pandemic processes in

China, lower gas prices, increased use of renewable

energy sources, and transition to low-carbon

strategies by foreign territorial units;

- low innovative motivation manifested in the

following aspects. First, innovation processes carried

out in terms of updating the active part of the main

production assets. The slowdown of innovation

processes in this area is determined by the low level

of adaptation of foreign equipment to Russian

deposits' geological conditions; lack of consistency in

the reconstruction work; low qualification level of

employees of coal mining enterprises, which affects

the development of new technologies, equipment.

Second, weak innovation processes in terms of

product innovation.

Impacting negative factors affecting regional coal

mining operations include (Dulin et al., 2019):

1. Management of business processes

determined by the presence of not fully developed

and approved plans; low efficiency of conducted

operational processes; actions of inconsistency in the

procurement field; occurrence of emergency

processes.

2. Weak innovation project management

processes, caused by: lack a central apparatus whose

functional feature is strategic and tactical decision-

making; fuzzy prioritization in design processes; low

cross-functional interaction; lack of unified

standards.

3. Ongoing personnel management processes

including: presence of factors of information tension,

low level of personnel activity, level of corporate

culture and ethics, professionalism; lack of

motivational processes.

4. General industry problems, which include:

mining of favorable high-quality reserves, deep

mining, availability of multistage transport supplies,

which increase the cost of production, raising the

price, the end result of which is a decrease in the

competitiveness of products of the coal mining

industry of the Rostov region.

The coal mining industry's considered negative

factors are typical in most cases for all territorial units

and coal basins. The general nature of the highlighted

problems requires consideration of the potential of

coal mining areas, an example of which will be the

Rostov region's territory.

3 RESULTS OF RESEARCH

Representation of the coal mining industry,

significant in the sphere of energy supply, despite the

appearance of new resources, innovative technologies

for energy conversion, suggests that a more thorough

development of issues, limiting the destruction of this

industry, is required, as the scale of application of this

raw material resource accompanies the sectoral

development of various spheres of economic

management. The current situation in the coal mining

industry, which is characterized by a decrease in

production and sales volumes, is caused by a decrease

in export supplies, a high level of taxation, low

innovation activity, a high degree of physically and

morally obsolete equipment used. The presence of

low qualification of employees in the coal mining

industry, lack of motivation reduces the activity of

staff in the process of technology innovation.

4 RESULTS AND DISCUSSION

Based on the results of the assessment, highlighting

the problematic situations in the coal mining industry,

the potential of the coal mining industries is:

 possibility of wider application of coal mining

products, allowing the functioning of all

spheres of economic activity, reducing

unemployment, supporting various industries;

 study and management strategy aimed at the

possibility of the proximity of coal mining

areas to the points of implementation,

availability of transport infrastructure, network

of roads, railways, sea, airports;

 development of the transport sector's

throughput capacity during export operations

of coal mining companies' products. The

likelihood of a decline in demand for coal

mining products from the European continent

is quite high, increasing demand from China

requires the availability of modern sea routes.

The creation of specialized coal terminals using

Sustainability of the Energy Complex of the Regions Development

263

modern technologies will ensure the growth of

export operations, which will help the coal

industry enterprises to get out of the crisis. The

groundwork for modern terminal construction

is being designed and implemented on the

territory bordering the Rostov Region -

Krasnodar Territory. Commissioning of the

bulk terminal will make it possible to export

coal to the Middle East, Africa, Asia, America,

and South Europe, which will predetermine

increasing external supplies and avoid risk

situations caused by a domestic decline in

demand for the products of coal mining

companies. The functioning of the terminals

will not only occupy an additional market

niche, but will also provide revenues to the

budgets and extra-budgetary funds of Russia

and the region, there will be approaches aimed

at reducing logistics costs, through the unity,

the interconnection of industrial policy of the

enterprise and the sphere of coal mining

products sales (Nifontov et al., 2019).

 activation of strategic planning processes and

elaboration of scenarios of development of this

sphere of management. The coal mining

industry's strategic directions should be

implemented with the coordination of actions

of governing bodies, representatives of all

spheres of economic management.

Implementation of coal mining industry

scenarios should be built, positioning the

relationship with the indicators of the value of

domestic and external demand, price

categories.

 development of processing industries, since in

most cases coal mining enterprises act as a

supplier of raw materials to the coal industry,

buying then the products of coal industry

processing. An example of sectoral

development of the sphere of business

interested in purchasing coal industry products

is the sphere of sorbent production. The volume

of foreign purchases of sorbents is evidenced

by their value, which amounts to more than

75%. Extensive use of coal in chemical,

construction, fuel and energy, food industry,

agriculture, construction industry make coal

products in demand. To maintain the potential

of the coal industry, it is necessary to revive the

extensive spheres of economic management,

which will allow to increase and provide the

interesting spheres of activity with products,

reducing the unemployment rate, activating the

impact on raising the economic, social sphere

of the territories of the whole state. The

increase in export operations to African and

Latin American countries, which currently

have no oil, gas processing plants, nuclear

power plants, deserves special attention.

 activation of processes of renewal of the active

part of fixed assets, taking into account such

indicators as: volume of demand for products

of coal mining enterprises, level of use of

equipment of main and auxiliary production,

which will allow rationalizing investments of

funds in reconstruction processes of the coal

mining industry. For flexibility, the optimal

rate of replacement of obsolete and obsolete

equipment at coal mining enterprises, we

propose to use a formula based on economic

and mathematical modeling, the use of

reporting data of business entities in the

industry, reflected in the thesis research of one

of the authors of the article (Kabachevskaya,

2007). The validity of the application of the

derived formula is the possibility to avoid risk

factors due to insufficient demand and take into

account the factors limiting the volume of

production (Parakhina et al., 2019).

𝑆



= 6,80 + 0,04𝐷 − 0,06𝑉



−0,01𝑉



(1)

where

𝑆



– equipment update rate;

𝐷

– value of demand for the

subject's products;

𝑉



– the amount of unused

equipment, machinery of the

main production;

𝑉



– value of unused equipment,

auxiliar

production machines.

Noting the diversity of approaches to support,

development of this sector, it is necessary to note the

presence of interacting factors, which have a

comprehensive nature of development, allowing a

positive impact on the economy and social

transformation.

5 CONCLUSIONS

Singling out the territories of energy resources,

availability of coal mining, we conclude the necessity

of revival and development of this sector of the

economy, which is explained not only by the

availability of qualitative coal reserves but also by the

possibility of development and support of the

economic and social balance of this territorial unit.

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

264

Representation of the negative factors identified

by the uncertainty of the external environment,

instability, loss of markets, the presence of physically

and morally obsolete equipment, facilities, high

logistics costs, low professionalism of employees in

the field of coal mining demonstrate the need to

highlight the potential opportunities, carrying the

positive revival of interest in the industry, its support

and development. The vast potential defined by the

issues of taxation optimization, crediting, reducing

depreciation of fixed assets, intensification of

motivation, reconstruction activities aimed at opening

transport corridors, reduction of logistics costs will

combine the efforts of comprehensive approaches to

optimize the functioning of the coal mining sector.

New prospects for revival, support, development of

the coal mining industry increase the likelihood of

development of numerous spheres of economic

activity, which is a major vector factor in the

environment of the economy and society of the

region, the state as a whole.

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