A grandiose dream to carve out a giant coal mine in frozen eastern Siberia
ELGA, RUSSIA – No one on the train knew what time it would arrive at its destination. For hour after hour it snaked through the snow-covered forests of far eastern Siberia without passing a single settlement.
In the corridors between carriages, where some of the 100 or
so men and three women on board gathered to shiver and smoke, even the door
handles had grown a thick coating of ice.
Some said they’d heard the train would arrive by nightfall.
Others caught the last dregs of phone signal and tried to check the map.
“Are you in shock yet, about where you’re going?”
39-year-old Evgeniy Shiraev asked his neighbor, although Shiraev, like most of
the people onboard, had never been before.
Uneasy, they watched the train turn off the normal route and
leave the Russian railway network behind. From there it would make its way
north, by a 321-kilometer private railroad. There would be no more stops.
The passengers were heading to the Elga coal deposit, where
they would work to realize the grandiose dream of an investor who’d bought the
site a few months before: To turn the far-flung quarry into one of the world’s
biggest coal mines and, out of the permanently frozen earth, to build a new
town from scratch.
It may seem perilous to pour billions into coal as many
countries begin to turn away from the polluting fossil fuel — never mind taking
on a project that helped plunge the previous owner so deep into debt, Forbes
magazine once nicknamed him Russia’s “poorest oligarch.”
But the vision of Elga as a new coal behemoth epitomizes Moscow’s
contrarian view of the global energy transition underway. Far from backing away
from coal, Moscow is doubling down: Last summer, the Russian government
approved an energy strategy that could see its coal output increase by up to
50% by 2035.
And despite its forbidding terrain, Elga is geographically
lucky in one respect. The Kuzbass, Russia’s traditional coal-mining heartland
in western Siberia, faces a European market that is rapidly ditching coal on
climate concerns. Elga is in Russia’s Far East, close to ports that face Asia,
where coal use is expected to continue to grow for some time — particularly for
the high-quality coking coal, used in the metals industry, that Elga produces.
That, at least, is the bet on Elga. Soon, its operators
could enlist tens of thousands of men and women to work in one of Siberia’s
most isolated corners, shock troops in a mighty battle against nature.
On the train to Elga, the miners killed time over card games
and sips of chifir, a drink brewed using eight tea bags per cup, its heady,
nauseating kick a common replacement for alcohol in Russian prisons. And they
waited to reach Elga at last.
A mine’s troubled past
Over a 38-year career, Vladimir Khripkov has helped build
some of Russia’s most challenging mines. He has dug new mines from scratch and
managed a project in frigid Magadan, a region first mined in the 1930s by
prisoners of the gulag camps. His speech is peppered with grisly stories from
the past.
Nevertheless, his new post as Elga’s quarry director seemed
a step beyond. Several people advised him not to take the job.
“I can still turn around,” Khripkov said while en route to
Elga for the first time. “I’ll take a look at what’s there, and I may decide
not to stay.”
With an estimated 2.2 billion metric tons of coal, Elga
could be one of the biggest mines in the world. But the harsh climate,
unforgiving terrain and sheer isolation of the area have conspired against its
large-scale development so far. Winter temperatures can slip below minus 60
degrees Celsius. Snow cover holds for eight to nine months of the year.
Attempting to turn it into a large-scale mine helped bring
Elga’s previous owner to the brink of bankruptcy.
Mechel, a mining firm controlled by Igor Zyuzin, bought the
license to develop Elga in 2007, spending $2.3 billion to acquire it as part of
a regional coal complex. It invested a further $1 billion developing Elga.
Founded in 2003, Mechel spent its early years aggressively
buying up metals plants and the coking coal mines that could supply them. By
the time the 2008 financial crisis hit, Mechel had taken on $5 billion in debt.
Global coal prices began to slump in 2011. By 2013, Mechel’s
debt level had almost doubled.
In 2020, Zyuzin decided to sell. Enter Elga’s unlikely new
owner, Albert Avdolyan, who made his money in telecommunications. His
investment firm, A-Property, bought Elga for $1.9 billion.
Avdolyan, an early investor in mobile broadband in Russia,
co-founded the Yota startup in 2007. Five years later, the firm struck a
profitable deal for its sale to Megafon, the country’s second-biggest mobile
phone operator.
Since then, Avdolyan, 50, has targeted companies in crisis —
including an indebted fertilizer producer and a natural-gas company in the
Yakutia region whose previous owner was arrested on embezzlement charges, which
he denies.
A-Property plans to invest a further $1.7 billion on Elga’s
development and sees it as part of a far eastern industrial cluster, together
with the gas producer, another coal mine and a coal-loading port on the Sea of
Japan.
The scale of Avdolyan’s vision is huge: Elga’s new managers
have been tasked with lifting output from 4 million tons of coal in 2019 to a
staggering 45 million tons by 2023.
That goal is overly ambitious, said Maxim Khudalov, an
analyst and former director at the ACRA ratings agency. “There are so many
restricting factors … that will get in the way of Elga’s plans,” he said.
From the need to expand the railroad connecting Elga to the
world to the limits on what federal railways are able to transport and ports
able to load, Khudalov said, many factors were beyond A-Property’s control. He
predicted that around half the company’s coal production goal is a realistic
forecast.
Although it described its plans as ambitious, the company
says it is completely on track. Its output last year was record-breaking for
Elga, a spokeswoman said. It produced 230% more coal in the first three months
of this year than the same time last year, another record.
Khripkov, Elga’s new mining director, said he’d left
retirement to take on this new job. Perhaps if his hobby of cultivating 40
types of roses had kept his attention, he’d have stayed away. As he was driven
to the Siberian town of Tynda, where he would meet and board the train to Elga
for the first time, he wasn’t sure when he’d be returning home.
Talking with his driver as the road to Tynda gradually
turned from asphalt to a mixture of gravel and ice, Khripkov asked about the
winters that awaited him in this part of the world.
“We survived where even the mammoths died out,” the driver
replied.
Russia goes big on coal
Though grand, Elga’s ambitions are in line with Russia’s
declared strategy to ramp up output and exports of coal. The eight years
preceding the coronavirus pandemic saw its coal output grow by 30%, or about
100 million tons.
Last summer, the Russian government approved an energy
strategy that would see coal output rise from 441 million tons per year in 2019
to between 485 million tons and 668 million tons by 2035.
Private and state firms are working to expand coal ports and
rail transport capacity. Last year, Russia saw the launch of its biggest
underground coal mine, Inaglinskiy. “There hasn’t been a construction project
like this since Soviet times,” its backers said.
As the world’s largest exporter of energy resources,
Russia’s stance on the global energy transition matters.
Despite its plans to increase its coal output, Russia isn’t
in denial about a global shift away from the fossil fuel, analyst Khudalov said.
Instead, it’s trying to maximize extraction while it still can.
“Now we understand that we have a lot of coal that, very
soon, no one is going to need,” he said. “If we don’t sell it in the next 10-20
years, there won’t be any point in mining it.”
Russia’s government is confident that coal use in Asia will
continue to grow for some time. “Growth prospects are primarily related to the
growing market of the Asia-Pacific region,” Deputy Prime Minister Alexander
Novak said in a coal report last year.
Moreover, the coking coal that Elga produces is used
primarily in the production of steel. It has no ready replacement, and so
demand remains strong. According to the International Energy Agency,
“substitution of steel production from iron ore at scale without coal is not
expected in the near term.”
Since last year, China has also placed an effective ban on
coal imports from Australia — Russia’s main competitor in coking coal.
Diplomatic relations between the two soured after Australia called for an
inquiry into the origins of the coronavirus, prompting trade reprisals from
Beijing.
“Now they’re working with our coal,” the A-Property
spokeswoman noted. The company recently announced a joint venture with a
Chinese shipping firm to facilitate imports of Elga coal to China. Cited in the
same statement, China’s ambassador to Moscow congratulated the two companies,
describing the deal as a new model of energy cooperation between Russia and
China.
Humans vs. nature
Just after 4:30 p.m., with the winter sky long dark, an
explosion rocked Elga, a ball of fire rising slowly into the night.
For several seconds, the landscape — the rolling,
snow-covered hills, the open-pit mine that lay across them like an open wound —
turned orange.
A few workers paused to watch the blast from a lookout
point. Inna Losyuk, Elga’s managing director, leaned against her car.
Almost every day, Losyuk said, drill-and-blast teams move
along the outer edges of the Elga pit, boring holes and filling them with
explosive emulsion. The blasts dislodge the surface of the earth, removing a
10- to 20-meter-thick layer to reveal the coal underneath.
Losyuk is from the Kuzbass coal basin in western Siberia. So
is Khripkov. The two had worked together in the early days of their careers, in
the region’s Lenin mine.
“We hadn’t seen each other for 20 years, until yesterday,”
Losyuk said, standing in her bungalow office, desks swathed in enormous
geological maps.
Losyuk’s whole family worked in coal in the Kuzbass; only
her mother was a teacher rather than a miner, she said. Almost all the men on
the train to Elga were also from the Kuzbass.
Historically, the region has exported coal primarily to
Europe. But European demand for coal is falling fast.
On Dec. 1, Germany announced the closure of 11 coal-powered
electricity plants, another blow for the Kuzbass. En route to Elga, Khripkov
had joked to the German photographer accompanying us: “Maybe we should kidnap
you, and tell Germany that we will only give you back if it starts buying our
coal again.”
As Elga’s on-site director, Losyuk bears a hefty chunk of
the responsibility for realizing the targets set for the mine.
She arrived in spring last year, when Elga first changed
hands, and soon settled into her unusual new home.
Many at Elga spoke with wonder of the nature around them.
Losyuk showed photos on her phone of the bear that liked to loiter by her
bungalow when the forest was still green, and of the mountains of mushrooms she
picked once autumn set in. She also spoke with pride about the progress the
miners had made, blowing up the landscape to expand the mine. Elga’s excavated
area covers 6 square kilometers so far. The territory under license, however,
covers 100 square kilometers.
“We are moving the horizon,” Losyuk said of the disruptive
work.
A-Property said it takes great care of the environment,
including in the building of the new town. Any deforestation is carefully replaced.
Protecting the integrity of local ecosystems is listed by A-Property as a key
principle of its approach.
Moreover, new excavators used at the mine run on electricity
produced using hydropower, the company said, and as much of the other work as
possible will soon be run this way.
By October, the team had raised output from around 300,000
tons to 1 million tons of coal per month. But the megaproject’s ambitions
extend well beyond coal.
On a hill above the mine stand a cluster of grey huts,
dormitories, and unhooked train wagons. They’re set around an open space known
at Elga as Red Square.
“There are no conditions for living here yet,” Losyuk said.
“But there will be,” she added, citing the mine’s new owner.
“We will have a city here. Albert said so.”
Build it and they will come
On one of the hills at Elga, two young engineers from Moscow
had placed a total station, a device used to measure and map the surface of the
Earth.
The instrument’s glass eye pointed out, away from the mine.
The engineers stood by, gesturing with animation at the empty, frozen
wilderness below.
They were searching for the perfect spot to build an
airport.
The airport will come complete with runways fit for Boeing
737s, they said. It will service the town that Elga’s new owners plan to build.
The town will be a permanent home for more than 20,000
people, according to the plan.
Work has already begun on the first new housing blocks for
the growing number of workers at Elga. Set at some distance from the mine, far
enough away that no debris from its regular explosions can reach, are two new
blocks for 300 workers each.
The town-to-be will be no small feat to build, said Evgeny
Baranov, Elga’s construction director.
He pointed to one block where workers had already moved in.
Plastic bags with food hung out of some of the windows, using the freezing air
for a fridge.
The large building stood awkwardly on stilts, аt least a
meter off the ground. Nothing at Elga, Baranov explained, can be built on the
ground itself. Anything touching the ground will freeze from the floor up.
Building materials are also absent. “You can’t make cement
out of coal,” Baranov said. “Everything has to be transported from the
mainland.” Elga is so isolated that many of its residents describe the rest of
Russia as “the mainland” or “the continent,” as if they were living on an
island off its shores.
But Elga is expanding, and workers’ housing is springing up
fast. Baranov’s team had almost finished the construction of warm, clean
housing for a further 1,350 people.
Around Elga’s Red Square stand a small grocery store, the
dining hall, laundry and a Russian banya steam bath. A hairdresser had opened
the previous week. A psychological counseling service was due to open soon.
Around 2,000 people currently work at the site. Shifts tend
to be 12 hours on, 12 hours off, without weekends, for 45 to 60 days. After a
stint at home, workers have the option of returning.
Life at Elga is mentally tough, several people said. “It’s a
bit like jail here. … I don’t know what day of the week it is anymore,” Baranov
said. He had been at Elga for six months straight.
For some, the remoteness, the wild nature, is a pull to
return. Ludmila Ashotova, the site’s superintendent, who is also from the
Kuzbass region, said her stint was up but she felt drawn to the place and
planned to come back. “You don’t end up here by accident,” she said. “It’s a
place for the strong.”
Recently, when someone at Elga suffered a stroke, it took
three days for a medical evacuation helicopter to arrive, the site’s nurse,
Gulfia Agisheva, said.
Normally, emergency health care works, she said, but there
was a particularly bad snowstorm that week.
A private railroad
Elga’s success hangs on a single steel thread. There is no
other way for the coal mined at the site to be transported out other than by
the private railroad, and the project’s success depends on the line’s
expansion.
Construction of the track first began as a government
project in 2000 but was soon abandoned. Mechel, Elga’s previous owner,
restarted work, a titanic project that involved building 76 rail bridges across
difficult, mountainous terrain. More than 80% of its spending on developing
Elga went on the track.
Elga’s new owners have introduced the first heavy-freight
train and made other changes to the line, so far increasing the amount of coal
it can transport to 18 million tons per year. More changes will raise those
volumes to meet the mine’s output targets, A-Property said.
But the journey remains fraught. En route to Elga by train,
the incoming workers exchanged stories about the accidents they’d heard about
on the track.
A freight train taking the same route the next day would
fall off the tracks on a turn, its empty cargo cars rolling down the hillside
and burying at odd angles into the snow. Nine days later, another crash; this
time, one person died. A-Property said the incident related to the work of a
contractor company and that it is bringing on an independent firm that will
provide occupational safety training.
Workers can also make the journey by truck-bus on a very
rocky road. The toughness of the route has an almost mythical status at Elga.
Losyuk suggested that Ashotova, her superintendent, wear a medical corset on
the journey, to protect her spine.
But in winter, if the weather has been clear and the road is
a well-packed avenue of snow, the trip can take as little as eight hours.
Truck-buses with workers leaving Elga weave across mountains
and rivers, the low, winter sun at times surrounded by a glowing halo —
sunlight refracted in millions of ice crystals suspended in the sky.
The region surrounding Elga is a fragile and special
wilderness, some parts newly protected as national parks and reserves.
Deep valleys hollowed out by ancient glaciers spill into
untouched spruce and conifer forests. Small taiga lakes play home, every autumn
and spring, to flocks of migrating Siberian cranes, one of dozens of at-risk
species that reside in the area.
Another park could soon be created to Elga’s east. It will
protect a lake that has existed since the Ice Age, a rare window into our
geological past.
As the truck-bus made its way out of Elga, the ramparts of
snow on either side of the road bore a blanket of coal dust. But by the time it
reached a nearby mountain pass, the snowy world had turned a perfect white once
more.
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