A REUTERS SPECIAL REPORT
A grandiose dream to carve out a giant coal mine in frozen eastern Siberia
Reaching Elga in Russia's Far East requires leaving the Russian railway network and taking a train down a private railway more than 300 kilometers.
A Russian telecoms magnate plans to spend billions on the Siberian coal project, despite terrain that is covered by snow up to eight months a year and the doomed efforts of the previous owner. As many Western countries move away from the fossil fuel, Moscow doubles down on production and turns east, to Asia.
Filed April 29, 2021, 11 a.m. GMT
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 neighbour, 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.
“We survived where even the mammoths died out.”
Coal company driver from the Yakutia region
Elga’s new managers have been tasked with lifting output from 4 million tonnes of coal in 2019 to a staggering 45 million tonnes by 2023.
Workers arrive at the Elga coal mine in Russia’s Far East region of Yakutia after a more than week-long journey from their homes in western Siberia, which included multiple train trips and a stint in quarantine.
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 tonnes 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, or minus-76 degrees Fahrenheit. 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 start-up 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 tonnes of coal in 2019 to a staggering 45 million tonnes 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.
“If we don’t sell it in the next 10-20 years, there won’t be any point in mining it.”
Analyst Maxim Khudalov on coal production
Elga’s excavated area covers six square kilometers so far. The territory under license, however, covers 100 square kilometers.
A 321-kilometer private railroad takes coal from Elga to the Russian railway network. There is no other way to transport the coal out of the mine.
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 tonnes.
Last summer, the Russian government approved an energy strategy that would see coal output rise from 441 million tonnes per year in 2019 to 485 million tonnes to 668 million tonnes 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.
“We are moving the horizon.”
Inna Losyuk, Elga’s managing director
An explosion rocks the Elga coal mine. Blasts are set off almost every day to dislodge the surface of the earth and remove a 10- to 20-meter-thick layer, revealing the coal underneath.
Inna Losyuk spoke with pride about the progress the workers had made expanding the mine.
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.”
A huge blast to remove the top layers of earth lights up the darkened sky. REUTERS/Polina Ivanova
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 six 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 other work as possible will soon be run this way.
By October, the team had raised output from around 300,000 tonnes to 1 million tonnes 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 [Avdolyan] said so.”
“It’s a bit like jail here.… I don’t know what day of the week it is anymore.”
Evgeny Baranov, Elga’s construction director
When the town housing workers at Elga is finished, it will be a permanent home for more than 20,000 people, according to the owner’s plan.
Buildings at Elga are placed on stilts about 1.5 meters off the ground, because anything touching the earth will freeze from the floor up.
“There are no conditions for living here yet,” said Inna Losyuk, Elga’s managing director. “But there will be.”
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 earth 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.
Vitaliy, an engine mechanic, gets a haircut at the first hair salon to open in Elga.
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 counselling 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 healthcare works, she said, but there was a particularly bad snowstorm that week.
“You don’t end up here by accident. It’s a place for the strong.”
Ludmila Ashotova, the site’s superintendent
Coal dust rises in the frigid air as coal is loaded onto the train before being transported on a 321-kilometer private railroad to the nearest branch of the Russian national railway network.
Truck-bus drivers take a break toward the end of a long drive from the remote coal mine in far eastern Siberia. The journey by road to the nearest settlement takes eight hours in winter, and even longer in summer, when the rocky road isn’t packed with smooth ice and snow.
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 tonnes 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.
Editor’s note: An earlier version of the map identified the Crimean peninsula as part of Russia, which annexed the region from Ukraine in 2014. Crimea is internationally recognised as part of Ukraine.
From the window of a truck-bus carrying workers over a mountain pass away from Elga, the landscape is pristine.
By Polina Ivanova
Photos by Emile Ducke
Graphics: Maryanne Murray
Photo editing: Simon Newman
Video: Polina Ivanova
Design: Catherine Tai
Edited by Kari Howard
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