Coal

The key issues in the coal subsector are as follows:

• Despite good progress in some countries in closing down loss-making mines and reducing subsidies to the sector, a large part of the industry throughout the region remains uneconomic (up to almost 100%, depending on the country) and places a substantial burden on the budget or, when prices are kept above import costs, on coal consumers.
• The geographic concentration of the negative social impact of mine closures, the lack of alternative employment opportunities, and the inevitable limitations of the social safety net complicate efforts to downsize the industry.
• Even the best efforts cannot mitigate all the negative social consequences of the mine closures, as governments cannot mass-produce alternative jobs (offering each redundant miner a new job would be inefficient and unaffordable) and coal regions have not succeeded in attracting new, non-coal-related investments.
• Government interference in the import, export and domestic marketing of coal, which entails excessive reliance on regulatory authority and state ownership, distorts the markets for coal (although Russia has seen considerable deregulation in this regard).
• Occupational safety is dismally low, and the environmental impact of coal mining and coal use is highly negative (and where mines are being privatized, the liability for past environmental damage from mining has not been clearly delineated).
• The provision of social services (kindergartens, hospitals, housing, district heating, and cultural and sport facilities) for which the mines traditionally were responsible has generally suffered with the transfer of these assets to municipal governments.
• Miners are unionized and politically influential, and overstaffing is widespread, even at the mines that break even financially.
• Although considerable improvements have been made in recent years through targeted social protection and the reduction of barter, the build-up of wage arrears in countries of the former Soviet Union still negatively affects miners and their families.
• The scope for private ownership in the coal industry ranges from close to zero in Ukraine to around 50% in Russia and in Poland.
• The major challenges remain addressing the long-term social impacts of sector restructuring (job creation, relocation, and social protection), and completing the withdrawal of the State from the management and financing of the sector.