Thursday, November 24, 2005

Coal Mining in Ukraine [BlackDiamond]

SNEZHNOYE, Ukraine -- Yury still gets shivers down his spine when he remembers how the wooden supports of the mine caved in and he was trapped in the dark, 50 meters below ground.

He could hear his friends desperately digging to get him out, and breathed slowly to save the little oxygen he had left.

"But that was last year, at a different kopanka," Yury said, using the local name for an illegal mine, as he smiled and wiped the sweat from his coal-blackened forehead.

Looking older than his 35 years, Yury said he saw little alternative to joining one of the many groups of miners who illegally dig the dangerous makeshift pits around Snezhnoye, a beat-up town in eastern Ukraine 80 kilometers east of Donetsk.

In the year since President Viktor Yushchenko came to power, the Orange Revolution has not just passed Snezhnoye by. Locals say things here, as in many towns in the Donbass coal field that covers the Donetsk and Luhansk regions, have gotten worse.

Local bureaucrats in the area -- which overwhelmingly supported Yushchenko's opponent in last year's presidential elections, former Prime Minister Viktor Yanukovych -- closed thousands of illegal mines in an effort to avoid a crackdown by the new government in Kiev. While the closures deprived corrupt officials of an extra source of income, for the miners and their families the effect was far worse.

But now, with local bureaucrats regaining confidence, the mines are being reopened.

Despite the dangers associated with illegal mining, thousands of men, women and children, armed only with picks and shovels, are digging for coal again in the woods around Snezhnoye.

The miners say there are about 600 illegal pits around the town where coal can be found as close as 10 meters below the surface. Illegal mines can even be found in vegetable gardens, where whole families are employed. Sometimes, desperate residents dig under the basements of residential buildings, or unseal old mine shafts to extract the coal.

Children as young as 11 work in these pits -- in winter they join their parents after school, while in the summer they work full time.

"I know that what we're doing is against the law, but we're not criminals," Yury said. "We do this dirty work because it's the only way to feed our families. I have a wife, two children and my parents to support. I don't have much choice."

Snezhnoye, which under Stalin was billed as a model coal-mining town, after the Soviet collapse turned into a wasteland of crumbling buildings, rusted industrial equipment and slag heaps. Cars zigzag their way along the streets to avoid the potholes.

Since 1991, about half of the town's population of 100,000 has moved away. Among those who have stayed, the average age is rising and the official unemployment rate is close to 50 percent.

In the painful transition to capitalism, Ukraine got two loans from the World Bank to reform its inefficient mining industry. The loans were intended to help the country cope with the closure of loss-making mines and create new jobs for former miners.

The reform, however, was stillborn. All but one of Snezhnoye's 11 coal mines were shut down, but the government failed to come up with the new jobs.

"The money allocated for creating jobs ended up in the pockets of the bureaucrats in charge of the restructuring and the directors of the state-owned mines," said Svetlana Samoilyuk, an expert with the Association of the Donbass Mining Cities, a nonprofit lobby group. "As a result, today we see that many mines are closed, but people were not given any alternative.

"To survive, miners are forced to mine illegally. This is what we got after the restructuring of the coal sector in Ukraine. It's simply outrageous," Samoilyuk said.

In Soviet times, the miners of the Donetsk region were acclaimed as heroes and seen as epitomizing the backbone of the country's industrial might. Miners received better-than-average salaries, and families could afford summer vacations in Crimea.

The mines financed local schools, and children from Snezhnoye would often win national musical or ballet competitions. But with the mines shut and no money in the town's budget, the schools are struggling to survive, while restaurants and shops have closed due to lack of business.

"I have little hope that life can get better for my children," said Yury, himself the son of a miner.

Like other miners interviewed for this article, Yury refused to give his last name for fear of reprisals. After an article was published in the press a few years ago, some local miners had problems with the police, the miners said.

While those working the illegal mines can earn between $300 and $400 per month, the lion's share of the profits ends up in the pockets of the police and local mafia groups through protection rackets, said Mykhailo Volynets, the head of the country's Confederation of Trade Unions and a member of the parliament's energy committee.

According to Volynets, there are about 6,000 illegal mines in the Donbass coal field, producing 3 million tons of coal per year, worth $18 million.

The coal sells for between $50 and $60 per ton, Volynets said, of which the miners see only $10 to $20.

The coal is usually bought by state-owned mines and sold abroad at market prices, with the difference being pocketed by the local business clans who control the mines, Volynets said.

Officially, the country's state-owned mines produce 75 million of tons of coal per year.

In the woods outside Snezhnoye, Yury was working on a 100-meter-deep pit with two friends, Sergei and Oleg.

The only light in the pit came from the lamps on their rusty helmets, and the roof supports, which covered only about 30 meters, looked rotten.

The supports are often reused for a new pit when an old one has been exhausted, they said.

A heap of black earth 40 meters from the surface was the result of a recent collapse. Beyond 50 meters down, the air becomes stale and the only source of oxygen the miners have is that produced by the pneumatic drill they use to extract the coal.

"I know that safety is not the best in our pit, but the official mines are not much better," Sergei said. "People die like flies there."

After China, Ukraine has the most dangerous mines in the world. Since 1991, about 4,300 miners have been killed in accidents, according to official statistics. Accidents are also commonplace in the illegal mines, for which no official figures are kept.

"If someone dies in the kopanki, the police just say it's from natural causes," Volynets said.

Earlier this month, the miners said, a local woman died when the roof of an illegal mine she was working on caved in.

Not far from Yury's mine, Svetlana; her husband, Igor; and her father-in-law, Vladimir, have just finished digging a pit 40 meters deep. It is the first they have dug since Yushchenko's election last December, they said.

"With the new authorities, all the illegal pits were bulldozed -- it's been a rough year," said Svetlana, 45, as she fixed wooden supports. "We could only afford to eat potatoes."

But now, she said, the authorities have eased up on illegal mining and everyone in Snezhnoye is working their old pits again.

Oleg Grishin, an analyst with the Donetsk-based Ukrainian Center for Independent Political Research, said that when Yushchenko was elected, local bureaucrats were afraid Kiev would start investigating shady businesses in the area and decided to shut all the illegal pits.

"Now, everyone realizes the new authorities aren't much different from the old ones. Our bureaucrats are back in the saddle again, and they know no one in Kiev will punish them for protecting this illegal business," he said.

Many Snezhnoye residents hope that with the pits in business again, there will be more money in town.

"When the pits are open, people buy more computers," said Lyudmila, the owner of a small store that sells electronic goods.

"I'm happy they've started digging again.

Tuesday, November 22, 2005

Coal Producers Offer Perks to Draw Workers [BlackDiamond]

CHARLESTON, W.Va. (AP) -- Caught between strong demand and an ongoing labor shortage, some coal producers are offering pay hikes, improved benefits and bonuses in an effort to attract new miners -- and to keep existing employees from being raided by competitors.

"Companies are almost bidding for the experienced miner right now," said Bill Raney, president of the West Virginia Coal Association. "There's a lot of innovations that are being developed in the industry."

At Richmond, Va.-based Massey Energy Co., Central Appalachia's largest coal operator, electricians who sign a noncompete clause earn $25,000 in bonuses over three years.

Massey, which has increased its work force by 1,100 to about 5,600 since the beginning of 2003, has also developed several other measures to attract and keep its workers, such as zero-premium health insurance; a heath center closer to where most of its miners work; and discounted auto and home insurance policies.

Still, more than half of Massey's new employees are leaving before their first year on the job. And half of them are taking jobs with competitors.

Speaking at a recent investors' conference, Massey Chief Operating Officer Chris Adkins likened the movement of miners between producers to a "round robin play." When a competitor hires away an experienced worker, like an operator of mining machinery, "we immediately and go and hire a miner operator back from another guy," he said.

The prolonged surge in coal demand -- spot prices for some types of Appalachian coal have doubled since 2002 -- has led companies to reopen shuttered mines and add new ones. Sixty-nine mines opened in the region last year, according to the U.S. Energy Information Administration.

Coal fuels more than half of all electricity generated in the United States, and Appalachia's 390 million tons of coal represented about 35 percent of total U.S. production last year, according to the EIA.

Eastern coal executives openly acknowledge that the labor shortage is affecting their ability to hit production targets, said Luke Popovich, a spokesman for the National Mining Association. The most recent trough in coal demand left the cupboard bare when demand for labor started ramping up again.

"We sort of had a generation of mining people who simply weren't being recruited and that same phenomenon was being observed in mining schools," said Popovich. "Now that you need them, you've got fewer eligible miners and engineers."

It isn't always the promise of better compensation that lures away miners, said Mike Quillen, president and CEO of Abingdon, Va.-based Alpha Natural Resources.

"A lot of us in the coal industry were driving an hour, hour-and-a-half one way to the mines and some mines have reopened closer back to where these people were located," he said. "They were able to put two to three hours back into their personal life.

"You really can't do anything with wages and benefits" to change that, he said.

Northern Appalachian coal mines, like those operated in northern West Virginia and Pennsylvania by Pittsburgh-based Consol Energy Inc., have thicker coal seams that are better suited for longwall mining -- an automated technique that extracts more coal using fewer workers. So the labor shortage in that region has been less acute, said Consol CEO Brett Harvey.

"In the '70s, we mined 65 million tons of coal with 23,000 people," Harvey said in a conference call with analysts. "This year we will mine (around) 70 million tons of coal ... with about 7,800 people."

"So the need to replace these people is not as great," he said. "But ... we need more technical people."

While there is also a high demand for technical workers in the Western coal fields, the shortage there hasn't reached a level where it is affecting production, said Marion Loomis, the executive director of the Wyoming Mining Association. Wyoming is the country's top coal producer, mostly from surface mines.

Holding on to new underground coal miners is a particular challenge, because of the difficult working conditions and the more specific skills that need to be developed, officials said.

"(With) surface mining employees, you do have other industries and locations that those skills can come from," said Alpha's Quillen. "The real difficulty that I'm talking about is in our undergrounding, which there is really just not a lot of other industries that train people."

Training new workers at Massey surface mines, where some skills overlap with construction jobs, takes about two months, but it can take underground miners between six to 18 months to come up to speed.

"What's driving the turnover underground is the number of apprentice miners, and really there's not a practice coal mine to go and try to see if you like coal mining," said Jeff Gillenwater of Massey's human resources department. "And some of the workers in the industry just don't care for that type of mining."

Alpha has seen some success in getting new employees to join the company, said Quillen, but has struggled to advance miners into senior slots.

"We now need to concentrate on supervisory development to encourage some of our 30 and younger (and) 40-year-old people to move into the supervisory ranks, because it does take an experienced person to do that," he said. "And I don't see that issue in the industry getting any easier."

Monday, November 14, 2005

World shipbuilding growth to continue

Asia Pulse today reports that world shipbuilding growth is set to continue, with world demand growth for shipbuilding steel plate averaging about 6 per cent per annum through to 2008.

With demand driven by shipbuilding orders centred on South Korea, 2004 shipbuilding plate demand of approx. 4.6 million tonnes increased to ~5.1 mt in 2005. The 2006 demand forecast is 5.4mt, with Korean 2008 shipbuilding plate consumption estimated at 6.0mt. assess total world demand for shipbuilding plate at ~15-16 million tonnes/year in 2005.

Daily shipbuilding industry news from around the world can be found at

Thursday, November 10, 2005

2006 iron ore price forecasts

More and more forecasters seems to be predicting small but significant increases in 2006 iron ore prices, when negotiations commence next month.

According to recent industry reports, analyst expectations are for price rises of some 10-20 per cent. This is because at present, demand continues to outstrip supply. In the short term, with the economic boom in China accompanied by a strong recovery in Japan, this supply / demand imbalance is moreover expected to continue

These price rise forecasts are in line with the assessments reported by us in October.

Monday, November 07, 2005

Release of steel industry RSS newsfeeds

Steel portal is pleased to inform site
visitors that is has today released a selection of steel industry RSS
feeds for syndication or access via RSS/XML-based newsreaders.

The free RSS feeds cover several different news topics:

- steel industry raw materials (including the latest news on
ferroalloys, ferrous scrap, pig iron, metallurgical coal and coke,
and iron ore);

- special steel qualities (news on alloy steels, electrical steels,
engineering steels, HSS, stainless and tool steels)

- steel markets (the latest news stories covering the appliance,
automotive, construction, fabrication, oil and gas, packaging and
shipbuilding sectors)

- a selection of 'hot' topics, chosen by our editor. These topics
currently cover the steel industry in China, the steelmaking sector
in India, steel and the Environment and steel pricing levels/price

All the feeds may be accessed at Users unfamiliar
with RSS should look at the foot of this page, where instructions for
obtaining free newsreaders are also enclosed.

In addition to making all these feeds freely available in readers
inboxes' through the latest RSS technology, all the newsfeeds may
also be accessed on our website, by clicking on:

- for raw materials news;
- for news by steel
- for the latest news by
steel end-use industry;
- for accessing the
latest 'hot topic' news, including steel in China, steel in India and

We trust that site visitors will find our new newsfeeds of use. If
you have any comments, please send us your feedback to:

Thank you.

Yours sincerely.

Dr Andrzej M Kotas
Chief Executive
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