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The Coal Industry in Russia

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4. Coal Industry of Russia

According to one of the top managers of the Siberia Coal Energy Company, coal as a source of energy makes up for 15% in the total consumption of energy in Russia. However, the country has the second largest deposits of coal in the world and its production and consumption can be increased many fold.

The three largest coal producing companies of Russia are: 1) "The Siberia Coal Energy Company", 2) "Kuzbassrazrezugol", 3) "Yuzhkuzbassugol".

"The Siberia Coal Energy Company" is the largest coal producing company in Russia. It is responsible for 30% of coal production. The company is privately owned and belongs to Andrey Melnichenko, an oligarch. In 2007 there was supposed to be a merger of "Gazprom" and the "Siberia Coal Energy Company"; however, supposedly because of the fears of monopoly, this deal didn't go through.

The merger of the two companies was opposed by some of the highest Russian officials from the Putin circle.

Melnichenko Andrey yahta A

Mel'nichenko's yacht "A"

Andrey Melnichenko owns one of the most unusual yachts in the world, costing more than 300 million dollars. A video about the luxurious interior of the yacht can be seen here.

In 2011 a criminal case has been started against A. Melnicheniko. He is accused of monopolistic collusion. Most probably, it is the Putin clan which is trying to extort some money from Melnichenko.

The second largest coal company in Russia is "Kuzbassrazrexugol". This (for now) is a private company owned by Iskander Makhmudov and Andrey Bokarev.

Makhmudov used to be a part of the "Yeltsin's family" (i.e. a clan of thieves politically protected by the first President of Russia) and continues to exercise a strong influence in the highest circles of the Russian state. According to one article, I. Makhmudov, along with another Russian oligarch, Oleg Deripaska, is accused of corruption, extortion and murder.

The third largest coal company is "Yuzhkuzbassugol". It is controlled by "Evraz Group". Evraz is controlled by a number of Russian and Ukrainian oligarchs.

Thus, the coal industry is privately owned in Russia, but there are tendencies towards its nationalization.

 5. Other Forms of Energy

1. Geothermal energy: in the Western Siberia there is an underground sea with the temperature of water of 70-90 degrees Celsius. This heat is starting to be used for producing electricity.

Wind turbine in Omni Hotel Murmansk

Wind turbine in Omni Hotel Murmansk, 2010

Solar-Yakutia

An experimental electrical station in a village in Yakutia, Russia, installed in 2011

2. Wind energy is barely used in Russia, although there are many places where there is a high potential wind energy.

3. The solar energy use is in its infancy too.

Conclusions

  1. A society is defined by the type of production which determines the living standards for the majority of its population.
  2. In modern Russia, it is the industrial production which determines the real wages of the population.
  3. A decline in industrial production spells a decline in living standards for the majority in the country. And visa versa. 
  4. Fuel and energy production form a major part of the modern Russian economy. 
  5. The state continues to control the production and prices in the electrical energy sector, in spite of a significant inroad of a "free market".
  6. Some sort of a general plan, reminiscent of the Soviet era "Five-Year Plan", continues to be followed in the Russian electrical energy sector.
  7. The state is a virtual monopolist in the gas extraction sector.
  8. The state dominates the oil production sector through major state companies and control of the judiciary.
  9. Most oil refineries and almost all of oil transportation is controlled by the state in Russia.
  10. Some very large "private" companies (for example, in the oil industry) are really controlled by the state.
  11. Coal industry is privately controlled by the oligarchs, but there are tendencies to nationalize the industry.
  12. Alteration of privatization and nationalization campaigns is typical for states at the stage of Restoration of capitalism.
  13. This means that there is an on-going struggle for the re-division of the state property.
  14. Further re-division of state property implies a civil war among the clans.
  15. The existing power structure in Russia implies a continuation of corruption, raising a possibility of another nuclear accident similar to Chernobyl.
  16. Investigations of corruption pose a threat to the persons who conduct such investigations.
  17. All large-scale industry must be nationalized, and the existing management system completely replaced.
  18. The troubles of Russian private companies such as "Yukos", as well as foreign multinationals, such as "BP", show that capital - both national and international - is not respected in Russia.
  19. The power structure that ruled the Soviet Union since the times of Stalin is still intact. 
  20. The very people who used to rule the Soviet Union in its last years are now still power. Hence, there is a continuity between the USSR and the regimes in the republics of the former Soviet Union.
  21. The Russian state companies do not operate as "capitalist" companies, but rather as "corrupt socialist monopolies". Theft of state resources on the part of the top management is one of their key features.

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