Russia's Putin unleashes coal mine safety shakeup
By: Reuters
Published: 24th June 2010
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NOVOKUZNETSK – Russian Prime Minister Vladimir Putin called for systemic changes on Thursday to promote safety in the country's coal industry, signalling more mine closures and tighter supply in global markets.

Putin spoke in the Kuzbass region in southwestern Siberia, where two blasts at a Raspadskaya mine claimed at least 67 lives in May.

"An analysis we have carried out has shown a need for systemic changes in the coal industry," Putin told a government meeting he chaired after a conversation with widows and colleagues of the dead.

The accident was Russia's worst mining disaster in three years and put coal mine safety in the spotlight.

Putin said Russia's safety watchdog Rostekhnadzor will now report directly to the government and have the right to shut coal mines for safety violations, as well as remove managers from their posts ahead of court rulings on possible malfeasance.

The nation's biggest coal exporters said earlier this week recent safety inspections at all mines were the main reason output and exports have dropped.

Russia is one of the world's top five coal exporters and ships 65-67-million tons a year of thermal coal plus coking coal, most of which is mined in Kuzbass.

Putin said coal mine owners, such as Raspadskaya stakeholder, Evraz, controlled by billionaire Chelsea football club owner Roman Abramovich, had the potential to increase their spending on safety.

"The industry's efficiency is such that owners are able to increase their spending on safety," Putin said, adding that the state would consider tax breaks for imported safety equipment.

He also said the industry's wage payment system, which provides financial incentives for miners to raise output while ignoring safety rules, will be reviewed.

A new new civil liability insurance law will force owners to invest in safety, he added.

"It will make it beneficial for owners to invest in real, not paper, safety," Putin said.

The prime minister said new technologies could further the cause, as gas export monopoly Gazprom has developed technology to extract methane from coal beds in working mines.



REPAIR BILL

Putin estimated the costs for repairs at Raspadskaya at 10-billion roubles ($322,8-million), but said a thorough estimate would be completed once the fire at the mine was extinguished.

He also said the state was prepared to lend funds to the company, though he did not provide any details.

"We are prepared to provide credits and other support to the owners," Putin said.

Raspadksaya is also in talks with a consortium of banks to arrange financing to rehabilitate the mine, though its needs are not urgent, the company's strategy director told the Russia & CIS Mining Symposium in London.

"The company does not need to run immediately to the capital markets," Alexander Andreyev said by telephone through an interpreter.

Raspadskaya's board will review a new investment plan in July, he added.