Bogatyr Access Komir, the Power of the Land
Dennis C. Price, General Director of Bogatyr Access Komir
Six years have passed since our company mined its first tonne of coal. Then, in 1996, there was little public confidence that, despite the diminishing demand for coal, tough competition from other producers, and a lack of solvent customer base, our business would not only survive but even lead the coal industry in Kazakhstan. Today Bogatyr Access Komir is continuing in the renowned traditions of the Ekibastuz coal-miners, and is eager to achieve new victories.
We see our primary task as perfecting the quality of our product. Therefore, a programme of coal blending has been launched which will allow us to secure the stability of the consumer properties of our coal.
Another critical target for our company is to raise the efficiency of mining operations and coal delivery from opencast mines. We are seeking to make these processes cheaper through the use of state-of-the-art technology.
Pursuing a policy of nature conservation in the Ekibastuz coal basin, we are continually upgrading our technology of coal-waste dumping with isolation in order to prevent spontaneous fires.
As part of our effort to succeed in these tasks, we are launching a number of long-term investment projects, which are seen as critical not only for the success of our company but for the future of Ekibastuz.
Bogatyr Access Komir, the Leader in Kazakhstan’s Coal Industry
The history of Bogatyr Access Komir began in September 1996, when Access Industries won in the government bids for privatisation of the Bogatyr and Stepnoy coal opencast mines (70%).
A highly professional management team at Bogatyr Access Komir, appointed by Access Industries, pursued an anti-recession policy and secured the financial stability of the coal company. The professional skills of the personnel, adoption of Western management standards, efficient financial control and budgeting, and sustained production and supply of coal all contributed to cost-cutting and an increase in revenues.
Three years later, Bogatyr Access Komir made an agreement with EES Rossiyi under which the former accepted the Severny coal opencast mine for trust management. At present, the company comprises the Bogatyr and Severny opencast coal mines, the Bogatyrskoye and Severnoye loading/transportation departments, a plant for overhauling mining and transport equipment and a track machine station.
Today, Bogatyr Access Komir is a successful coal producer. Since its inception, the company has produced 164 million tonnes of coal, and its stripping operations totalled 118 million cubic metres.
In 1996-2002 the company’s costs totalled 23.935 billion tenge under an investment programme undertaken following the purchase of the Bogatyr and Stepnoy opencast mines (including auxiliaries).
10.343 billion tenge was allocated for stripping operations and 937 million for software, scientific research, shareholdings in related businesses, personnel development, a German credit line, etc.
Total capital investments amounted to more than 7.953 billion tenge, spending on social policies to 3.381 billion and taxes to more than 12 billion.
The Main Re-equipment Targets
The basin’s geometric shape and the inclined attitude of the coal-beds necessitate a continual deepening of mining operations and, as a result, ongoing reconstruction and re-equipment.
As the depth of the opencast mines approaches 200-230 metres below the surface, which is a critical level for railway technology, switching to conveyor and auto-conveyor technology becomes an urgent task. Therefore, the company’s long-term investment projects are aimed at three groups of related problems, including:
• maintaining the annual output of Bogatyr and Severny at a level of 48 million tonnes and eliminating the adverse impact of deteriorating mining conditions on the cost of the coal;
• improving the commercial standing and consumer properties of coal by blending (including technology for reducing ash content fluctuations), adopting new quality requirements, and minimising the proportion of quality group II coal;
• reducing the impact on the environment in the region.
Solving these and other problems will allow Bogatyr Access Komir to enhance its competitiveness and to secure a sustained demand for coal.
The Position of Company in the Coal Industry
Kazakhstan has estimated total coal reserves of 150-160 billion tonnes. Due to these immense deposits and the technical capacity of Kazakh coal mining companies, the country is in a position to supply domestic demand and to export coal. The majority of the coal fields are concentrated in Central Kazakhstan, with the Ekibastuz, Karaganda and Maykuben coal basins and the Shubarkol and Borly fields under industrial development.
Bogatyr Access Komir, a venture based on the Ekibastuz coal basin, is the largest coal company in Kazakhstan and the principal supplier of coal to domestic power stations. Twelve power plants in Kazakhstan and nine in Russia rely on the company’s supplies.
The company’s pricing policy is regularly negotiated with the Kazakh Agency for Regulation of Natural Monopolies, Protection of Competition and Support of Small Businesses.
Rail transportation of coal by Bogatyr Access Komir accounts for more than 20% of gross rail traffic in Kazakhstan.
The export of coal from Ekibastuz has declined considerably over recent years. This trend continued into 2002, and during the first nine months, shipments by Bogatyr Access Komir dropped by 5 million tonnes. The main reason is high transport costs which make the final price unaffordable for Russian power plants. The imposition of international transit rates by Russia rendered Ekibastuz coal largely non-competitive in that country.
In addition, the lack of empty wagons, especially in summer, has an adverse impact on the regularity of supplies. This lack was especially pronounced following disputes with the Russian Ministry of Railways over Kazakh loop routes. The financial state of Russian power plants does not allow them to pay in advance for their planned supplies, or for the quantity offered by Bogatyr Access Komir to make up for incomplete deliveries in summer. As a result, the preparation of the power plants for the heating season is threatened every year and exports do not match the actual demand by Russian consumers.
In 2002 the company designed the Ekibastuz Coal programme and had it approved by the Kazakh Government; the programme is intended to support the development of Kazakhstan’s coal industry and strengthen its competitiveness in the Russian fuel market.
Due to its low price and smooth delivery, the domestic market for the company’s coal has expanded to include sales to the general public, boiler plants and various state-owned enterprises throughout Kazakhstan.
The potential of the company’s personnel is viewed as essential to its successful operation. Not surprisingly, the tripartite Commission for Social Partnership in the Coal Industry comprising representatives of the Kazakh Ministry of Energy and Mineral Resources, employers and trade unions, have assessed the personnel policy of Bogatyr Access Komir as the best in Kazakhstan’s coal sector.
Since the company’s inception, its staff numbers have doubled and it now employs 9,132 people. 13% of the employees have university degrees and 26% college degrees.
Bogatyr Access Komir has independently developed a system of staff training. The company regularly informs vocational schools, colleges and universities of its staff requirements. In addition, the company has its own educational capacity, and its training centre is licensed to provide training in 156 specialities. The centre has an annual attendance of up to 3,500 students. There is a policy in place of attracting talented university graduates, who are provided with free tickets, accommodation and living expenses during their traineeship with the company; selected trainees are offered permanent positions and housing.
The remuneration system includes various benefits and guarantees. The average salary exceeds 30,000 tenge; in addition, each employee receives a monthly board allowance and an allowance for paying communal charges. Bogatyr Access Komir allocates about 18 million tenge per month for these policies.
Workplace Safety and Social Insurance
Workplace safety is an area of special concern for Bogatyr Access Komir. The company has achieved a 47% reduction in work-related injuries. There are eight medical centres operating at the company’s sites. Regular medical examinations and vaccination are provided free, and the company pays 75% of the cost of special treatment for employees at resorts and rest homes (including one-way tickets). The Berezka rest home and Karlygash children’s recreational camp, situated in the picturesque surroundings of the Bayan Aul National Park, are financed by Bogatyr Access Komir. Stays at these recreational facilities are free for children of the company’s employees.
Regular financial aid to its employees by Bogatyr Access Komir includes loans for children’s education and buying flats/houses or other expensive items.
The company has spent over 1 billion tenge on charity and sponsorship. These include contributions to the Culture Support Fund in Pavlodar, the Irtysh sports club, Blagoveschensky Cathedral, etc. Allocations have been made for building a mosque and a unique medical diagnosis centre in Pavlodar.
The development of the coal basin is closely associated with the city of Ekibastuz which celebrated its 45th anniversary in June 2002. The presence of companies such as Bogatyr Access Komir is what makes the city truly a modern industrial and power generating centre for North Kazakhstan.
Under a five-year agreement with the Government of the Pavlodar region, which was concluded in autumn 2002, Access Industries and Bogatyr Access Komir undertook to implement a number of large projects in the region aimed at improving social security, attracting investment into the local economy, and developing education, culture, health, public services, etc.
Bogatyr Access Komir adheres strictly to Kazakh environmental laws. Atmospheric emission and external dumping of overburden by the company are subject to a licence issued by the Kazakh Ministry of Natural Resources and Environmental Protection.
The company is implementing nature-conservation measures such as ongoing major repairs of environmental equipment, rehabilitation of water-treatment facilities at the Bogatyr opencast mine, sprinkling during coal excavation (resulting in a 70% reduction in dust formation), measures to reduce dust and gas emission during blasting operations (resulting in a 30-40% reduction), reclamation of dump areas in a stable condition, and preventing and fighting spontaneous fires in waste dumps.
The annual allocations for environmental actions by Bogatyr Access Komir total 120-150 million tenge.
Bogatyr Access Komir is looking to the future with confidence and planning its strategy in the hope that its activities represent a sound contribution to the progress and welfare of independent Kazakhstan.
Table of contents
Bogatyr Access Komir, the Power of the Land Dennis C. Price
Ispat Karmet, a Leader of the Steel Industry of Kazakhstan Nawal Kishore Choudhary
Factors Influencing the Growth in Tax Revenues from the Oil and Gas Sector in 2001 Janat Berdalina, Inna Alkhimova
Distribution of Powers with Respect to Oil Operations Between State Agencies and KazMunaiGas National Company Kanatbek Safinov
Means of Performance Guarantee Anatoly Didenko
The Environmental Aspects of Subsoil Use in Kazakhstan Vasily Skolsky