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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Privately owned mines do better business than state-run ones

3 July, 1999 - 00:00

Miners of the Donbas (Donets Coal Basin), voting for the Left, never hesitate to apply for jobs at the “capitalist” mines. In fact, there are long waiting lists. So perhaps the Donbas is not as Red as it is painted, and perhaps the miners are not as dedicated to the ideals of “great Lenin” and “Red October.” Maybe they just want to get paid adequately and on time for their hard and often deadly toil. Maybe their voting for the Left is another attempt to bring back what they regard as their safe and comparatively well- to-do past. Maybe a way out of the mining industry crisis is not an overall restructuring adjustment (read closing down mines) of this sector. Maybe the best remedy would be to allow Donbas residents to take private ownership initiative into their hands. Even now, with the whole industry being in the red, the surviving private mines remain profit- making oases. Below is The Day's Donetsk correspondent Oleksandr PODOLIAN's story about one such mine.

Less than a month ago, the limited liability company Karbon signed a long-term lease agreement on a second mine with the state holding company Shakhtarsk-Antratsyt. From what I remember, this mine was subject to heated bureaucratic debate lasting for several years: should it be made privatizable or not. While verbal attacks raged on, the mine's output had lowered almost tenfold, so that several days before the lease the 24-hour yield registered no more than 17 tons, an amount that could be carried by buckets.

Pit #20 is half-flooded and the adjoining territory looks like one huge garbage heap, the ground structures are dilapidated and robbed clean. To make the pit operational at least UAH 7 million must be invested in terms of repair. An underground water drainage pump costs $50,000. Besides, it is necessary to clear away choked longwall, adjust ventilation, you name it.

“And you expect this mine to start yielding revenues?” I addressed this question to Vsevolod Honcharov, head of Karbon.

“I am sure it will. If I weren't, I wouldn't fight for it in the first place. And I had to fight Serhiy Tulub, the current Mining Industry Minister. Well, we have the mine. Visit us again four or five months later. You won't recognize Pit #20. The firm has everything we need, most importantly qualified manpower. Our people will turn this dump into a showcase. I am not going to borrow a cent from the state. I need no credits or budget subsidies. We will make the mine operational and profitable relying on our own resources.”

To date, Karbon has provided 1,200 job placements for the residents of Shakhtarsk and neighboring miners' settlements.

“A professional miner who respects his trade will never quit after working at a good mine with high yields,” says Mr. Honcharov. “Of course, there are seasonal workers and outright lazybones, but they do not stay on the payroll for long. Real pros do and earn twice as much as they would at any given state-run mine, and Karbon provides considerably better working conditions.”

Indeed, every work shift at Pit #222 passes without accident and all- out team effort. The miners have a canteen and everybody can take a packed meal underground. Meals are served on credit, too. The equipment is kept ticking, there are overalls and personal safety gear. The average collier's and shaft sinker's pay ranges between 700 and 1,000 hryvnias a month.

Karbon also helps the city on a regular basis. To date, it has paid for replacing old water pipes and the local water tower's electric motor. The company supplies hot meals to local grade schools.

90% of the coal provided by Karbon is consumed by domestic power plants. Starting in February

1995, they have not paid a single kopek in cash, so that arrears on Karbon coal supplies amount to some UAH 2 million. Accordingly, the firm owes the city budget, although a considerably smaller amount. And then we found ourselves faced with another problem: the director of Donetsk Oblenergo (oblast State Energy Company) ordered electricity supplies to Pits #220 and 20 cut off at the start of July. It was a humorous situation: five Ukrainian plants not paying to Karbon for 52 months and electricity being cut off for nonpayment.

“Now who can benefit by this bureaucratic voluntarism?” Vsevolod Honcharov sounds and looks outraged. “Do they want our 1,200 miners to lose their jobs and join all those miners' strikes and marches? The impression is that the bureaucrats want neither to see us or hear anything about us. I have been through all the high offices and never found practical support anywhere. Just words and empty promises. I am sure that Ukraine won't live long under this regime. And all this fooling around with barter and offset deals! It reduces to nil the efforts of people who really want to work and earn a decent living. When will we finally establish normal commodity-money relations in this long-suffering country? The economy rejects violence in the form of artificial “improving/reorganizing measures” whatever form these measures take”.

It is hard to disagree with this battle-hardened economic planner and it would be a shame if Mr. Honcharov's company ceased to exist.

Miners of the Donbas (Donets Coal Basin), voting for the Left, never hesitate to apply for jobs at the “capitalist” mines. In fact, there are long waiting lists. So perhaps the Donbas is not as Red as it is painted, and perhaps the miners are not as dedicated to the ideals of “great Lenin” and “Red October.” Maybe they just want to get paid adequately and on time for their hard and often deadly toil. Maybe their voting for the Left is another attempt to bring back what they regard as their safe and comparatively well- to-do past. Maybe a way out of the mining industry crisis is not an overall restructuring adjustment (read closing down mines) of this sector. Maybe the best remedy would be to allow Donbas residents to take private ownership initiative into their hands. Even now, with the whole industry being in the red, the surviving private mines remain profit- making oases. Below is The Day's Donetsk correspondent Oleksandr PODOLIAN's story about one such mine.

Less than a month ago, the limited liability company Karbon signed a long-term lease agreement on a second mine with the state holding company Shakhtarsk-Antratsyt. From what I remember, this mine was subject to heated bureaucratic debate lasting for several years: should it be made privatizable or not. While verbal attacks raged on, the mine's output had lowered almost tenfold, so that several days before the lease the 24-hour yield registered no more than 17 tons, an amount that could be carried by buckets.

Pit #20 is half-flooded and the adjoining territory looks like one huge garbage heap, the ground structures are dilapidated and robbed clean. To make the pit operational at least UAH 7 million must be invested in terms of repair. An underground water drainage pump costs $50,000. Besides, it is necessary to clear away choked longwall, adjust ventilation, you name it.

“And you expect this mine to start yielding revenues?” I addressed this question to Vsevolod Honcharov, head of Karbon.

“I am sure it will. If I weren't, I wouldn't fight for it in the first place. And I had to fight Serhiy Tulub, the current Mining Industry Minister. Well, we have the mine. Visit us again four or five months later. You won't recognize Pit #20. The firm has everything we need, most importantly qualified manpower. Our people will turn this dump into a showcase. I am not going to borrow a cent from the state. I need no credits or budget subsidies. We will make the mine operational and profitable relying on our own resources.”

To date, Karbon has provided 1,200 job placements for the residents of Shakhtarsk and neighboring miners' settlements.

“A professional miner who respects his trade will never quit after working at a good mine with high yields,” says Mr. Honcharov. “Of course, there are seasonal workers and outright lazybones, but they do not stay on the payroll for long. Real pros do and earn twice as much as they would at any given state-run mine, and Karbon provides considerably better working conditions.”

Indeed, every work shift at Pit #222 passes without accident and all- out team effort. The miners have a canteen and everybody can take a packed meal underground. Meals are served on credit, too. The equipment is kept ticking, there are overalls and personal safety gear. The average collier's and shaft sinker's pay ranges between 700 and 1,000 hryvnias a month.

Karbon also helps the city on a regular basis. To date, it has paid for replacing old water pipes and the local water tower's electric motor. The company supplies hot meals to local grade schools.

90% of the coal provided by Karbon is consumed by domestic power plants. Starting in February

1995, they have not paid a single kopek in cash, so that arrears on Karbon coal supplies amount to some UAH 2 million. Accordingly, the firm owes the city budget, although a considerably smaller amount. And then we found ourselves faced with another problem: the director of Donetsk Oblenergo (oblast State Energy Company) ordered electricity supplies to Pits #220 and 20 cut off at the start of July. It was a humorous situation: five Ukrainian plants not paying to Karbon for 52 months and electricity being cut off for nonpayment.

“Now who can benefit by this bureaucratic voluntarism?” Vsevolod Honcharov sounds and looks outraged. “Do they want our 1,200 miners to lose their jobs and join all those miners' strikes and marches? The impression is that the bureaucrats want neither to see us or hear anything about us. I have been through all the high offices and never found practical support anywhere. Just words and empty promises. I am sure that Ukraine won't live long under this regime. And all this fooling around with barter and offset deals! It reduces to nil the efforts of people who really want to work and earn a decent living. When will we finally establish normal commodity-money relations in this long-suffering country? The economy rejects violence in the form of artificial “improving/reorganizing measures” whatever form these measures take”.

It is hard to disagree with this battle-hardened economic planner and it would be a shame if Mr. Honcharov's company ceased to exist.

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