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Undermined: how the state is selling out Ukraine’s coal workers

Ukraine’s miners were once heroes of socialist labour. Today, after years of sector-wide neglect and corruption, there are new plans for further mine closures, leaving thousands of people without work. Русский

September 2016: miners from Novovolysnk No.10 in west Ukraine protest the government's plans to close their mine. (c) RIA Novosti. All rights reserved.Since 2014, war has redrawn the map of Ukraine, removing many of its mining operations. Half of Ukraine’s 150 mines operational before 2014 are now in the territories of the so-called “Peoples’ Republics” in Donetsk and Luhansk, and some have been destroyed or flooded as a result of military action.

Despite considerable losses, the Ukrainian government still runs 35 mines, 24 of which are in government-controlled areas of Donetsk and Luhansk. Another 12 operate outside the Donbas, including some in the Lviv and Volyn regions in the west of the country.

These state-owned mines provide work for around 50,000 people, many of whom may however soon lose their jobs — Ukraine’s ministry of energy and coal mining plans to close 11 mines and privatise 14 more. And those that can’t be sold, it seems, will also be closed.

In the east

The town of Lysychansk lies a few dozen kilometres from the demarcation line that separates Ukraine from the “Luhansk Peoples’ Republic” (LNR). Two years ago, this area was mired in the conflict. Traces of it are still visible: along the Kyiv-Luhansk railway line, on the approach to the final station, you can see construction machinery by the bridge across the Seversky donets river. This bridge was blown up by pro-Russian forces in 2014, and is now being rebuilt using EU funding.   

Lysychansk is one of the few towns in the Luhansk region where Ukraine’s state mines are still operating. “They form the economic basis of our town,” Sergey Shilin, mayor of Lysychansk, tells me. “They provide the lion’s share of income for our municipal budget, with our oil refinery coming second.”

View of Lysychansk train station. Courtesy of the author.In 1991, the Lysychanskugol mine corporation owned 11 mines, but since the closure of loss-making enterprieses in the late 1990s only four remain. These facilities provide work for 5,000 people, and the fact that the town still exists is to a large extent thanks to these mines.

In the current climate, Lysychansk can’t really count on new investment. Many of the factories that struggled on before the war broke out have since shut down. Local people have to travel elsewhere to find work — the town’s streets are lined with posters advertising direct transport to Russian cities and annexed Crimea, where they may be better prospects.

For the miners, the underpayment of wages still isn’t the worst thing — what depresses them most is their lack of prospects

And in the future there may be even fewer jobs in the town. The government has included two local mines in its list of facilities due for closure, and another one to be put up for sale to a private investor, which will leave just one in the hands of the state. “If the mines shut down,” Shilin tells me, “the town will be left practically without any means of survival.”  

The present situation is already far from ideal — residents of Lysychansk are owed months of wages. I talked to three Lysychanskugol corporation employees, who told me (on an anonymous basis) what was going on at the state mines. According to them, the miners haven’t been paid for months and often go to work hungry.

A Soviet building mosaic depicts a heroic image of miners. Photograph courtesy of the author. “At the supermarket, miners’ families buy their groceries on credit,” says Yelena, who worked in the mines for 30 years before retiring recently. There’ s a trace of bitterness and hurt in her voice: “The bossed promised me three months salary as redundancy compensation, so I agreed to be made redundant — but I didn’t get a penny.” According to Yelena, the mines owe their workers an average 10,000-15,000 hryvnia (£300-450) each. In Lysychansk that is no small sum — the average monthly income in Ukraine in September 2016 was 5,358 hryvnia (£160).

But for the miners, the underpayment of wages still isn’t the worst thing — what depresses them most is their lack of prospects. They suspect that the mine managers of sabotaging their work. “It looks like sabotage,” one of them told me. “We’ve had two fires in the mines recently, and they didn’t look accidental. We’ve also heard that when the coal comes out of the mine it’s driven off who knows where, without any records being kept. Everything is being deliberately destroyed.”

The miner also tells me that people were quitting en masse because they “don’t see any future” in Lysychansk. They go off to work in Russia or in private mines, where they still get paid properly: “If you stay here, you may as well sit at home as go down the mine — you’ll still be hungry.”

“If they close the mines, we’ll all be out of work. Lysychansk, Novodruzhevsk, Privolye – these towns will just die out, everybody will leave”

Mayor Shilin admits that miners are leaving in droves. “The exodus from the “Melnikova” and “Kapustina” mines is very serious,” he tells me. “People go where they’ll get paid their wages: they have families to keep.” But Shilin doesn’t think everyone will leave — some will stay. And he assures me that there is no danger of the mines closing.

The miners don’t believe him. “They’ve promised us they’ll go on working, but it’s out of the question. There are no cables or tools — all the equipment was handed over to other mines. There’s no way we can work there. It might close down in a year or a week,” says an angry young miner, who’s planning to leave the mine and Lysychansk and find work elsewhere.

In September, Lysychansk’s miners held a series of protests to demand their wages, but those I spoke to were disillusioned with protest. “Our representatives went off to Kyiv in the summer, to protest. They stood outside the Verkhovna Rada and the Cabinet Office, but no one even came out to speak to them,” he complains.

Lenin's legs: Lysychank's central square hosts the remains of a Soviet-era Lenin statue. Photograph courtesy of the author. When I asked my respondents if they knew about occupational retraining programmes that are supposed to in place if mines are closed, they shrugged their shoulders: no one had ever mentioned such a thing. And they are even less confident about finding new work.

“There’s a feeling that Ukraine doesn’t need its coal industry,” one of the women tells me. “If they close the mines, we’ll all be out of work. Lysychansk, Novodruzhevsk, Privolye – these towns will just die out, everybody will leave.”

After talking to Vera Yastrebova, a local rights campaigner, I begin to understand why the miners are wary of talking to journalists. Yastrebova also worked at Lysychanskugol until recently, while at the same time heading an organisation called Civic Labour Monitor, which helped workers get their back pay. But after the publication of an interview where she mentioned the possibility of mine closures, she had to resign over conflict with company management. “And now,” Yastrebova admits, “I’m worried about my safety.”

Pit closures

Many mining towns have museums of “miners’ glory”, dedicated to their local coal industry. In Lysychansk, the museum is housed in the historic building of a former Steiger school, which a century ago educated young boys to be pit overseers. (Steiger is German for overseer.)

The museum guide, a jovial middle-aged woman, takes me around the various galleries, proudly demonstrating artefacts of value — a miner’s official uniform, photos of the leading team at a local mine, which set the “final record”, models of gigantic drilling rigs and a rich collection of minerals found underground. All of these are now just echoes of the past.

Museum of Coal Industry Development, Lysychansk. Photograph courtesy of the author. Several times, my guide repeats distractedly that everything she tells visitors was now “in the past tense”. “It’s so difficult to get used to it,” she tells me as I leave, “but I hope the mines will survive.” I don’t tell her that I’ve come to Lysychansk to write about the threat of closure of the local pits.   

Every year, on the last Sunday in August, Ukraine celebrate “Miners’ Day”, an event instituted in Soviet times to honour the record in coal production set in 1935 by Aleksey Stakhanov. During the late 1930s, the heroic Stakhanov myth played a major part in the “Stakhanovite movement” that mobilised Soviet citizens to constantly increase their productivity in the name of “building socialism”.

This year, Ukraine’s miners have had little reason to celebrate

It was actually in the Donbas, in the Luhansk region, that Stakhanov set his record — whether it was real or exaggerated by official propaganda. Only natural, since Donbas was the USSR’s industrial centre, with 70% of all Soviet miners working here.

Miners’ Day is still celebrated in Ukraine, and not just in the Donbas, but also in the west of the country, in the Lviv-Volyn coal basin. In 1975, at the height of the coal industry, there were 20 mines here, although that number has almost halved since independence. In Novovolynsk, a regional mining centre, the day is particularly special as here, as in many mining towns, it coincides with its local annual festival.

After the festival

This year, however, Ukraine’s miners have had little reason to celebrate: they have been holding protests, organised by their trade unions, since the very start of 2016. Here again, as in Lysychansk, the main issue is wage arrears.

The miners of west Ukraine staged their first protests on 2 January. Hundreds of pitmen blocked the traffic on busy motorways and at crossing points on the Ukrainian-Polish border, demanding they be paid their back wages. And in November, 50 miners from the Novovolynsk mine went on hunger strike to protest the same issue — they’d gone three months without pay.

After a few days, this protest was successful, and the government cleared the coal companies’ debt. However, according to Pavel Lazarenko, the deputy head of the Novovolynsk branch of Ukraine’s independent mineworkers’ union, this is just a temporary victory — the government wants to close the mines here down.        

November 2016: Novovolynsk miners protest. Source: Independent union of miners of Ukraine.“The minister [of energy and coal mining, Igor Nasalik] doesn’t try to hide the fact that 10-12 state mines will be left in Ukraine,” Lazarenko tells me. “People are outraged that they want to close the unfinished ‘Novovolynsk’ mine down, which they’ve been building and haven’t yet finished. People just destroy everything here.” According to Lazarenko, the miners are scared that they’ll be left on the street without any compensation.

The union activist is sure that the source of these problems is the corruption schemes, which, in his opinion, are being “pushed through by the ministry [of energy and coal mining]”. “They’re not interested in the mines actually working. The equipment has been renewed in 20 years, the equipment is old, the metal breaks. We need to renew the equipment,” Lazarenko tells me, describing the situation at the mine. The mine’s management is so helpless, the union itself is now searching for investors to buy the mine.

Closure programme will, naturally, mean job losses. One of the directors of Lvovugol claimed that the closure of three local mines will lead to the loss of “5,000 jobs, a budget and social crisis in several parts of Lviv region.”

That figure might be high, but apart from Lviv region, there’s mines due for closure in Volyn, Donetsk and Luhansk regions. This means that thousands of people could be left without work.

Andrei Gerus, a former member of Ukraine’s national commission on regulating energy and utilities, is sure that some of the state mines have to be closed. “But only those that really are loss-making, and which have few chances of becoming profitable. If there’s small reserves of coal left, thin seams of low quality coal, and the cost of mining per tonne is higher than 2,500 hryvnya. These mines are uncompetitive and probably won’t ever be in demand.” The state mines that can produce a tonne of coal for 2,000 hryvnya are still worth operating, Gerus believes.

As to the issue of rising unemployment if mines are closed, Gerus says that “first, some of these people will be able to transfer to mines with futures. Second, there should be a government programme, a programme to attract investors to these regions to build new facilities.”

That said, Gerus recognises that, although there’s money in Ukraine’s state budget for this, those funds aren’t being spent as ordered. For instance, in 2016, the budget of the ministry of energy and coal mining allocated 350m hryvnya to “restructure the coal industry”, but the government has spent this money over the past year to support the work of the mines.

Yesterday’s heroes of labour

Daniel Walkowitz, a researcher on labour history, notes that miners’ identity is based on tough work conditions and high wage compensation. The Soviet Union’s wasteful heavy industry was born, literally, on the backs of miners. Even at the end of the 1980s, the Soviet coal industry employed 18 times more miners than the US, yet still produced less coal than its superpower rival.

Miners died under mine collapses and gas explosions. And to attract a work force into these dangerous conditions, the Soviet state made its miners a labour elite — not only did it pay them two-three times more than teachers, doctors, engineers and other industrial workers, but it celebrated their work as heroic.

Snapshot from Perestroika from below, 1989. The miners’ confidence in the importance of their role eventually backfired on them. At the end of the 1980s, the Soviet Union was stagnating economically, and the material situation of miners was deteriorating under the pressure of the goods deficit. Dissatisfaction grew among the Donbas’ miners, and this eventually took the form of mass strikes.

In July 1989, hundreds of thousands of miners, including the Donbas, went on strike in the Soviet coalfields. Their initial demands concerned — among other things, the list was long — an increase in holiday time, additional pay for night shifts, guarantee of food deliveries, the recognition of professional health conditions as a workplace trauma.

The striking miners were mostly focused on economic demands, but they also made political demands around democratisation and market reforms. In particular, they demanded the decentralisation of economic and organisational control of their mines. The authorities in Moscow, whom the strikes caught off guard, satisfied these demands partially. But the real winners were the directors and local officials, who received more independence over decision-making.

April 1991: Donbas miners demand the resignation of Mikhail Gorbachev. (c) Efrem Lookatsky AP/Press Association Images. All rights reserved.As a result, the miners’ position in society changed radically. The authorities began to speak about how the mines were losing money, and yesterday’s “heroes of labour” turned into subjugated workers without self-determination.

Restructuring

In the first years of independence after 1991, Ukraine’s economic situation was catastrophic. The mines stopped receiving payments for the coal they produced, and the miners stopped receiving their wages. Mine directors started to barter, exchanging coal for consumer goods. This system allowed the mine management to get rich, and the miners got soap, food and other products as wages.

In 1996, after president Leonid Kuchma gave an order on the “structural re-building of the coal industry”, the process of “restructuring” Ukraine’s coal industry began. The consequences were dire, as, in practice, this process led to the liquidation of many mines. Different justifications for closure were found — the authorities claimed that the coal seams at one mine were exhausted, and at another, they’d say that the country was producing too much coal as it is. Dozens of mines were closed and asset-stripped, while millions of tonnes of coal was left under the ground. Many public welfare institutions turned into ruins. In an ironic twist, one of the first mines to close was Irmino-Tsentralnaya, where Alexey Stakhanov broke the record in 1935.

Without much of an alternative, residents of the mining towns, including former miners, were moved to work in kopanki — illegal mines 

Public officials and experts assuaged people’s fears by claiming new facilities would be opened to replace the old in mining settlements, and that there would be help for miners trying to acquire new qualifications. But nothing was done. And those settlements where mines dominated economic life were doomed to dying out.

This is how the familiar images of depressing towns of Donetsk and Luhansk regions came about. One of the towns to suffer from this restructuring process was, in fact, Stakhanov in Luhansk. In 1990, 18,000 people worked at this mine, a fifth of the town’s population. After the town lost all its mines, half of the municipal budget came from state subsidies.

Tough work, if you can get it

Without much of an alternative, residents of the mining towns, including former miners, were moved to work in kopanki — illegal mines that use extremely basic methods to work coal seams near the surface. (You can watch a film of a kopanka in Snezhnoye, Donetsk region here.) A motorcycle or car engine to power a wagon-system, and you’re away. Some of the kopanki use pneumatic drills, useful sources of oxygen in these makeshift mines — there’s usual no ventilation system, and this leads to regular explosions of natural gas.

Viktor Marushchenko, the author of a series of photographs on illegal mines in the Donbas, remembers working in the town of Torez in 2005 — out of 13 mines, only one was operational. The others were closed. According to Marushchenko, people first began to take apart metal constructions for scrap to make money for food, the kopanki came after. “There was a lot of them [kopanki] back then, and they often appeared spontaneously, because people wanted to. Only later did a protection racket come in to control it.”

lead March 2016: miners at Ilovaysk at work. (c) Igor Maslov / RIA Novosti. All rights reserved.Hundreds of illegal mines have emerged since independence. All of them, in the end, came under the control of local mafia connected to the authorities and law-enforcement. Naturally, the kopanki paid no taxes. And under Viktor Yanukovych, illegal coal was often ascribed to state mines — after all, the state mines received subsidies based on the amount of coal they produced.

As a result of the war breaking out in 2014, many of the kopanki have remained on the territory of the “People’s Republics”. They’ve been allowed to work as long as they pay taxes to the leaders of the separatists. A rough calculation gives something like 80 kopanki in separatist territory — the monthly pay ($200) is comparable to what you get for working in the separatist army.

History as farce

Ukraine’s authorities did little to prevent the consequences of the mass closure of mines during the 1990s. What’s worse, the officials that made money off the industry’s destruction in the Donbas via the “restructuring” became the local political elite, and the circle around Ukraine’s former president Viktor Yanukovych.

“The catastrophe of the Donbas is connected to the fact that the political forces who ruled it managed to turn the region’s identity into political capital,” says philosopher Mikhail Minakov. “The local population has consistently supported those political forces that use their anger, that profit on their slave-like situation, but still do nothing to change the situation, and even getting into power.”

The start of the 21st century brought a certain stabilisation to the region — the remaining mines continued to work, paying their workers more or less regularly. The most profitable mines were sold to private owners.

The current authorities are repeating the irresponsible moves of their predecessors, undermining whole regions of Ukraine

Those mines that remained in the hands of the state received huge subsidies, becoming sources of graft for groups of influence close to the authorities. In 2010, when Yanukovych became president, financial resources allocated to mines were syphoned off into structures under the control of the president’s son, Alexander. Hundreds of millions of dollars, which were supposed to be spent on mining equipment and refining services, were transferred to offshore companies assigned to relatives and associates of the ex-president.

After protests swept Yanukovych out of power in 2014, the Ukrainian government promised to fight corruption and deal with the graft schemes that sucked money out of state mines. But in practice, something else happened. State subsidies to the coal sector were cut significantly. If in the past the state spent around 1.25 billion dollars a year on supporting Ukraine’s coal sector, then in 2015, the state spent 50m dollars. Initially, public officials explained this reduction by referring to the money saved by firing corrupt middlemen, and then started to talk about the lack of money in a state budget beleaguered by the costs of war.

Chelyuskintsev mine in Donetsk region. (с) Alexey Kudenko / RIA Novosti. Some rights reserved.But the coal mines are still caught in a net of financial obligations that make them unprofitable. The enrichment factories are a good example — they’re an important link in the chain between mines and the market, and under Yanukovych, these factories were largely controlled by offshore companies. This system hasn’t gone anywhere

How coal gets from mines in separatist territory into Ukraine is a separate issue. The rhetoric of the government and official economic blockade isn’t a barrier to coal imports from the “People’s Republics”. Moreover, opponents of president Poroshenko accuse the president’s team of receiving kickbacks on every tonne of fuel that Ukraine buys from the separatists. Inside separatist territory, mines are also being shut down and closed, although accurate information on this is hard to find.

After the significant tariff hikes on heating and coal-generated electricity in the past three years, there were hopes that the situation of Ukraine’s miners would improve. But people working at state mines haven’t seen any improvements. Andrei Gerus notes that, for miners, real wages have even fallen.

As a result, Ukraine’s miners go for months without being paid, and there’s no funds for buying new equipment or electricity — development is a long way off. The mines can’t dig new trenches, and the amount of state-mined coal is dropping. And this situation, of course, only fuels the arguments of those who want the state mines closed.

More than 70% of all the coal mined in Ukraine is produced by DTEK, a private company owned by the oligarch Rinat Akhmetov. All of this coal is used at power stations and metallurgical factories owned by Akhmetov. From the point of view of Ukraine’s technocrats, then, the state’s move away from this “problematic” sector could be justified.

The side effects of such a move, just as before, aren’t being taken into account. In the 1990s, the mine closures led to catastrophic social consequences, which made themselves felt all too violently in the ongoing conflict. The current authorities are repeating the irresponsible moves of their predecessors, in effect, setting a time bomb under whole regions of Ukraine.  

 

About the author

Vitalii Atanasov is a freelance journalist and filmmaker based in Kiev, Ukraine. He writes about social and economic problems, culture and the situation of vulnerable groups. He edits the Solidarity Committee's website in support of Oleg Sentsov and Alexander Kolchenko, and is the author of Kherson Machine-building Plant.


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