Coal Mining in Socioeconomic Aspect
The article investigate the correlation of economic and social factors in the development of coal mining on example of vertically integrated companies with both domestic and foreign assets. The effect of socioeconomic aspects which have led to the American paradox of coal is studied to understand th...
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nasplib_isofts_kiev_ua-123456789-876172025-02-23T17:28:45Z Coal Mining in Socioeconomic Aspect Вуглевидобуток у соціоекономічному аспекті Угледобыча в социоэкономическом аспекте Zaloznova, Yu.S. Management of Labour and Safety The article investigate the correlation of economic and social factors in the development of coal mining on example of vertically integrated companies with both domestic and foreign assets. The effect of socioeconomic aspects which have led to the American paradox of coal is studied to understand the essence of the coal mining industry at the present stage of the global economic management. Розглянуто співвідношення економічних і соціальних факторів у розвитку вуглевидобутку на прикладі вертикально-інтегрованих компаній. Наведено відмінності вітчизняних та зарубіжниїх активів. Розкрито сутність процесів розвитку вугледобувних галузей на сучасному етапі існування світового економічного господарства. Оціненовплив соціоекономічних аспектів, що пояснюють американській вугільний парадокс Рассмотрено соотношение экономических и социальных факторов в развитии угледобычи на примере вертикально-интегрированных компаний. Даются различия отечественных, и зарубежных активов. Раскрыта сущность процессов развития угледобывающих отраслей на современном этапе существования мирового экономического хозяйства. Оценено влияние социоэкономических аспектов объясняющих американский угольный парадокс. 2014 Article Coal Mining in Socioeconomic Aspect / Yu.S. Zaloznova // Економічний вісник Донбасу. — 2014. — № 4(38). — С. 149-152. — Бібліогр.: 19 назв. — англ. 1817-3772 https://nasplib.isofts.kiev.ua/handle/123456789/87617 338.00.36 en Економічний вісник Донбасу application/pdf Інститут економіки промисловості НАН України |
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Management of Labour and Safety Management of Labour and Safety |
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Management of Labour and Safety Management of Labour and Safety Zaloznova, Yu.S. Coal Mining in Socioeconomic Aspect Економічний вісник Донбасу |
| description |
The article investigate the correlation of economic and social factors in the development of coal mining on example of vertically integrated companies with both domestic and foreign assets. The effect of socioeconomic aspects which have led to the American paradox of coal is studied to understand the essence of the coal mining industry at the present stage of the global economic management. |
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Article |
| author |
Zaloznova, Yu.S. |
| author_facet |
Zaloznova, Yu.S. |
| author_sort |
Zaloznova, Yu.S. |
| title |
Coal Mining in Socioeconomic Aspect |
| title_short |
Coal Mining in Socioeconomic Aspect |
| title_full |
Coal Mining in Socioeconomic Aspect |
| title_fullStr |
Coal Mining in Socioeconomic Aspect |
| title_full_unstemmed |
Coal Mining in Socioeconomic Aspect |
| title_sort |
coal mining in socioeconomic aspect |
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Інститут економіки промисловості НАН України |
| publishDate |
2014 |
| topic_facet |
Management of Labour and Safety |
| url |
https://nasplib.isofts.kiev.ua/handle/123456789/87617 |
| citation_txt |
Coal Mining in Socioeconomic Aspect / Yu.S. Zaloznova // Економічний вісник Донбасу. — 2014. — № 4(38). — С. 149-152. — Бібліогр.: 19 назв. — англ. |
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Економічний вісник Донбасу |
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2025-11-24T03:51:20Z |
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2025-11-24T03:51:20Z |
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1849642220301320192 |
| fulltext |
Yu. S. Zaloznova
149
Економічний вісник Донбасу № 4(38), 2014
UDC 338.00.36
Yu. S. Zaloznova,
Dr Hab. (Economics),
Institute of Industrial Economics, NAS of Ukraine, Kyiv
COAL MINING IN SOCIOEKONOMIC ASPECT
Arguments in support of the article. It is un-
doubtedly true that the crisis of the Ukrainian coal
industry has become a permanent phenomenon and
today it is unrealistic to explain it only with technolog-
ical or geological problems. Given the fact that the
economy is not closed on itself the system, it is im-
mersed in the society, its culture, its own system of
relationships. Surely, there is certain autonomy of the
economy, but it is incorrect and counterproductive to
consider the economy as a system that develops freely.
So, amid a significant increase in the level and quality
of life in many countries of the world, coal industry, as
a source of employment, is becoming increasingly
unattractive. Virtually all the economically developed
countries, with the exception of Australia and Taiwan,
have already abandoned coal as the primary fuel. Much
of what happens in economic systems, can be better
explained by "external" phenomena.
Review of the literature. In modern conditions of
globalization, the development of economy of one
particular state can't be carried out separately. The
world system sets vectors of development not only on
policy but also the state economy as a whole, as well as
on various branches. The scientific works devoted to
studying of tendencies of changes in the world system
of environmental management, technological devel-
opment, the analysis of a condition the coal industry of
Ukraine are written by A.Amosha, L.Starichenko,
M.Ilyashov, D.Cherevatskyi, Yu.Yashenko, M.Soldak,
A.Yanovskyi, V.Traud, , V.Lyashenko. Researches are
dedicated to the influence of social aspects of devel-
opment of an industrial economy, the region, state,
formation of the human capital, socioeconomic identi-
fication of conditions of a sustainable development in
the works of number of the other scientist
The purpose of the work is to conduct socioeco-
nomic studies designed to reveal the ratio of the impact
of economic and social factors on the development of
coal mining on the example of the leading Ukrainian
metallurgical Corporation "Metinvest", which has coal
assets in the US and Ukraine.
Presentation of the main material. For a long
time numerous works of domestic scholars with the
aim to understand the causes of the degradation of the
coal industry [1, 2, 3] and attempts to rectify the situa-
tion made at the government level, have not led to any
meaningful results. Experts relate this to the complexi-
ty of the mining and geological conditions, deteriora-
tion of the mining Fund and the unattractiveness of the
industry.
Certain economic relationships in the process of
production and distribution, the nature of which every
time corresponds to a specific socio-historical condi-
tions, it is possible at the same time to say that these
relationships, which are formed in a more or less stable
and long-term trends, have no objective reasons to
exist and cannot be determined as the laws of devel-
opment [4, p.16].
Europe has seen a sequence of closures of the coal
mines of Belgium in 1992, 1994 - Portugal, in 2005 -
France, and the last German mine is expected to termi-
nate its existance in 2018. During Soviet times, such a
fate was awaited for Donbass also [5]. But there is an
American coal paradox, which in marked contrast to
that of the European experience based on the the min-
ing and geological conditions of the national coal pro-
duction, determines the turnout to be untenable. As
expressed by the President and CEO of coal company's
world-class Arch Coal, "some companies will leave the
market, while others, such as Arch, will reduce the
scale of their activities, in hope for improved market
conditions" [6]. Mine is the "Maple" (West Virginia,
United States, Appalachian basin), having a capacity of
720 thousand tons of coal per year 230 people
statewide, is economically inefficient, whereas in
Ukraine, such an enterprise would be served by no less
than 1.5 thousand men. During the crisis in company
Walter Energy the owner of the “Maple” mine was
forced to reduce the time of operation of the mine by
30% [7]. And this takes place in a country with exem-
plary deposits of coal.
Having studied the problems of coal industry of
Ukraine for a long time D. Cherevatskyi [8, p. 42]
gave an interesting thought that "the domestic economy
does not need mines, it needs coal. Coal as a raw mate-
rial for the steel industry; coal as a fuel for energy. It is
in Australia or South Africa, the coal industry is a ma-
jor source of export, of filling the budget, macroeco-
nomic support". This conclusion is based on the judg-
ment of one of the leaders of the domestic steel busi-
Management of Labour and Safety
Yu. S. Zaloznova
150
Економічний вісник Донбасу № 4(38), 2014
ness I.Siroy, made in 2007: “Metinvest, and other
companies with their own coke production, find it
more profitable to purchase high-quality Australian
coal for $ 110/t FOB than to invest hundreds of million
in the Ukrainian coal mining, which ultimately will
cost $ 90/t” [9].
Consistently pursuing the policy, Metinvest ac-
quired West Virginia coal company called United Coal
Company (UCC) which was composed of 4 mines and
quarry for the extraction of thermal and coking coal.
One of the list is the Affinity Mine, a coal mine found-
ed in 1910-ies but in the last quarter-century was con-
servated due to unprofitability. “I couldn’t imagine it, -
said Danny Bar, Mayor of the city of Sofia (where the
mine is located), - that will ever see the Affinity mine
working again. But once there was a talk of reopening,
a burst of activity began. Now there's a housing boom,
and you will not find a vacant land available for
rent” [10].
The capacity of restored mine with a newly con-
structed processing factory is 1.4 million tonnes of
coking coal premium class per year. The acquisition of
the mine at a cost of Metinvest 900 thousand dollars,
whereas investment in the revival of the mine amount-
ed to 115 million dollars. The economic efficiency of a
coal project in UCC immediately turned out to be
negative. It should be mentioned that by wage rates
American miners are a leading category of "Metinvest"
(almost $132 thousand per person per year), which
closely follows the Swiss company Metinvest Interna-
tional SA ($211 thousand/year), but nearly 12 times
exceeding the salary of the staff in Ukrainian Mining
Division "Metinvest" (about $11 thousand/year) [11].
In 2012, due to the market conditions, UCC had to
reduce the volume of coal production by 4 times from
2 million tonnes to 507 thousand and lay off 325 work-
ers - every fifth employee of an American company,
moreover in 2013 halt the production that has already
caused massive layoffs [12].
Metinvest as a vertically integrated structure has
withstood the economic failures of links located at the
base of the pyramid so far. A more difficult situation is
in the Russian Corporation Severstal - sale of North
American coal business, which may return no more
than 40% of its funds invested a few years earlier. It is
a vital measure to take for the sake of the holding. The
world steel market has up to 500 million tonnes of
overcapacity today as the result of the rapid develop-
ment of industry in the first decade of this century. The
serious consequences of the crisis have affected
Mechel, the holding company that owns the controlling
shares of metallurgical, coal energy companies and
ports located in 11 regions of Russia, the United States,
Lithuania and Ukraine. It is also the world leader in
coking coal production, and the second holder of world
coking coal resources. Having said that, purchasing
and active development of Elgin field has not only
brought to the bankruptcy carbon but the metallurgical
business group too [13].
Another turning issue for Metinvest mines is in-
dustrial injuries. Since the ceremonial commissioning
of the Affinity complex 16 miners have been injured or
killed. Since the beginning of 2013, the Office of labor
protection and industrial hygiene in mining USA
(MSHA) has found out that 66 cases of security
breaches at the mine belonged Metinvest. The Affinity
was rendered 68 warnings and imposed a fine of
126 thousand dollars just over one year period.
However, the matter of security at Affinity has
always been an issue. In early January 2006 the major
accident occurred in the same West Virginia, 13 miners
was trapped underground by the explosion of methane.
Only one of them managed to survive [14]; April 6,
2010 as the result of the largest explosion at the mine
since 1984 in 50 km to the South from Charleston USA
25 people were killed [15], etc. Even the undoubted
achievements of American management in the field of
safety in the coal industry are not in the strength to
completely eliminate the effects of natural and human
factors that significantly reduce the attractiveness of
the coal business.
In fact, it seems that social processes inherent in
the present will further complicate the situation in the
coal industry. According to A.Gal’chinskyi “new lay-
ers of untapped human energy are not idling in the
plain of the new cycle of system’s integration and uni-
fication, as this is continuously insisted by some politi-
cians and scientists, but on the opposite flank of the
vast expanses of the individual, in the identification of
freedom as the impersonation of the real personality. In
accordance with this the capacity of large economic
groups who typically were placed in the "symbols" of
industrialism are weakening. The era of dominance of
the "massive" remains in the past” [16, p.8]. This is
more than true for coal mine production method which
is lifethretening and physically strenious, far from
creativity. The thing that people are now willing to
work in underground conditions for the salary they are
given (which is 12 times less than that of the miners’ in
America), is Path Dependence.
According to one of the residents of the village at
the mine in the Central region of Donbass: “Our life is
predetermined here: the guys go to the mine, and the
girls - to "Styrole" (Ukraine's largest plant for the pro-
duction of organic fertilizers). Rarely does anyone
manage to follow another path.” Such a way of living
in the settlements surrounding mines has formed by
generations.
However, in the large cities, the propensity to "so-
cial comfort", in the words of F.Borodkin, famous
Russian socioeconomist, increasingly deters the people
from working at the mine. “Until the mid-late twentieth
Yu. S. Zaloznova
151
Економічний вісник Донбасу № 4(38), 2014
century the society and mutual relationship among
people had always been the tools of economic activity,
from families up to the global industrial corporations
and States. But then, throughout the lifetime of almost
one generation, management became a driver to a com-
fortable lifestyle” [17, p. 122; 18, p. 145].
This is reflected in increased requirements to the
wage rates, working conditions (mechanization), which
is the effect of the mythical Ouroboros -Snake that
bites itself in the tail: the higher the salary, the more
complex and more expensive equipment is, and the
stricter security requirements are set, the more expen-
sive coal mining becomes. The social component sup-
presses the economic one, embosses commercial
ground from under the coal business. The same pattern
is true for Germany where the highest social and envi-
ronmental standards drove a German mine to unrecov-
erable loss. Even the unthinkable high productivity and
safe secure technology, is not a lever of economic effi-
ciency, and if it hadn’t been for the intervention of the
state, the German coal industry would have gone into
oblivion long ago.
The inconsistence of Ukrainian coal mining gov-
ernance has resulted, in society puting "a blind eye" on
the phenomenon of "kopanky". A primitive technolo-
gy, which disregards safety and sanitation, evades tax,
paltry salaries, becomes a regular occurance in de-
pressed regions.
In sientific-academic hearings held in February
2013, Institute of industrial economics of the National
Academy of Sciences of Ukraine [19], a famous Colli-
er, doctor of technical Sciences, professor, MP Yu-
khym Zvyahilskyi emotionally and categorically called
‘kopanky’ a state-level crime on a large scale. “Some-
body carries this coal by the state rail, not on wheelbar-
rows or cart, –Y.Zvyahilskyi expressed his indigna-
tion,- someone sells it by wholesale that someone buys
and uses as an energy source, while legal coal has no
marketing”. The MP expressed the hope that the gov-
ernment is aware of the need to take emergency
measures, because the industry is dying. "Kopanky and
imports are destroying the domestic coal market."
On the other hand, metallurgists, as mentioned
above, do not think and perceive Coal imports only.
There are many similarities to the arrangement of the
mining settlements in the traditional coal mining re-
gions in Ukraine and the USA. The so-called Coal
Camps around American mines is a school, a church, a
shop, a theater, a modest accommodation. The same is
in Ukraine - only until recent times churches were not
apart of it, and the theater was called the culture centre.
With the onset of the crisis in the coal industry
and mine closure villages get deserted in both coun-
tries. The closer the mine is to the large city, the more
houses are abandoned. Some of them turn into ruins.
Whole areas become zones of environmental neglect
and man-made disasters. Such situations are a common
feature of old-industrial region of Ukraine, not only in
the Donbass.
Conclusion. The relevance of these studies is to
expand the American coal paradox, important for un-
derstanding the essence of the development of coal
mining industries at the present stage of the global
economy. The submissions of research carried out on
the example Corporation "Metinvest", which has coal
assets in the Donbas and in the Appalachian (United
States), indicate that the social factor in the progress of
negative processes is greater than the natural condi-
tions of the fields. The economy cannot withstand the
social burden and resolving this contradiction should
be the central objective of socio-economic studies of
the immediate future.
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Залознова Ю. С. Вуглевидобуток у соціое-
кономічному аспекті
Розглянуто співвідношення економічних і со-
ціальних факторів у розвитку вуглевидобутку на
прикладі вертикально-інтегрованих компаній. На-
ведено відмінності вітчизняних та зарубіжниїх
активів. Розкрито сутність процесів розвитку вуг-
ледобувних галузей на сучасному етапі існування
світового економічного господарства. Оцінено
вплив соціоекономічних аспектів, що пояснюють
американській вугільний парадокс.
Ключові слова: вугільний парадокс, соціальні
процеси, криза, вугільна промисловість, вертикаль-
но-інтегрований холдинг, соціоекономіка.
Залознова Ю. С. Угледобыча в социоэконо-
мическом аспекте
Рассмотрено соотношение экономических и
социальных факторов в развитии угледобычи на
примере вертикально-интегрированных компаний.
Даются различия отечественных, и зарубежных
активов. Раскрыта сущность процессов развития
угледобывающих отраслей на современном этапе
существования мирового экономического хозяй-
ства. Оценено влияние социоэкономических аспек-
тов объясняющих американский угольный пара-
докс.
Ключевые слова: угольный парадокс, социаль-
ные процессы, кризис, угольная промышленность,
вертикально-интегрированный холдинг, социоэко-
номика.
Zaloznova Yu. S. Coal Mining in Socioeconom-
ic Aspect
The article investigate the correlation of economic
and social factors in the development of coal mining on
example of vertically integrated companies with both
domestic and foreign assets. The effect of socioeco-
nomic aspects which have led to the American paradox
of coal is studied to understand the essence of the coal
mining industry at the present stage of the global eco-
nomic management.
Keywords: coal paradox, social processes, the cri-
sis, coal industry, vertically integrated holding compa-
ny, socioeconomics.
Received by the editors: 22.10.2014
and final form 23.12.2014
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