Ukraine (6th ed.)

Ukraine has considerable reserves of coal which will last for at least one hundred years, being exploitable at a cost that is competitive with imported coal and other energy resources. One third (33.7%) of the country’s total primary energy supply came from coal in 2014, with mainly imported natural gas (31.6%) and nuclear power (21.9%) also being important. Oil and renewable energy sources had rather small shares in total energy supply (10.1% and 2.6%).

General data		2015
Population	million	42.8
GDP	€ billion	81.7

Nuclear power is the most important energy source for electricity generation in Ukraine, at 48.3% of gross generation in 2014. Coal (38.6%), natural gas (7.0%) and hydro power (5.1%) were also important, with other sources accounting for the remaining 1.0%. Coal’s share in the fuel balance for thermal power plants (TPPs) grew to 98% in 2015.

Hard coal

Ukraine has significant proven reserves of coal, being the sixth largest after China, the United States, China, India, Russia and Australia. In-situ coal reserves amount to 56 billion tonnes, of which steam coal accounts for 70% and coking coal 30%.

The main resources can be found in the Donetsk coal basin (101.9 billion tonnes), the Dnipropetrovsk coal basin (4.1 billion tonnes) and the Lviv-Volyn coal basin (2.3 billion tonnes), as well as in the Dniprovsko-Donetska coal depression (8.7 billion tonnes) and the Zakarpattya or Transcarpathian coal depression (0.2 billion tonnes). The deposits are characterised by their great depth – operations take place at 500 to 1 000 metres – and by thin seams of 0.8 to 1.0 metre.

As of 1 January 2016, there were 150 mines of all ownership types in Ukraine, including ninety state-owned mines subordinated to the Ministry of Energy and Coal Industry. Eighty-five mines, accounting for 57% of total production, lie in the area temporarily not controlled by the Ukrainian government (also known as the anti-terrorist operation or ATO zone). The state authorities have received no reports on the operations of the majority of coal mines in the non‑controlled area since July 2014. Only thirty-five of the state-owned mines are outside the ATO zone.

According to the State Statistics Service of Ukraine, the total number of people employed by the Ukrainian coal industry was 122 000 as of 1 January 2016, including 51 000 at state-owned mines.

According to the Ministry of Energy and Coal Industry, coal production in Ukraine dropped by 38.8% in 2015 to 39.7 million tonnes. Steam coal production dropped by 35.7% to 31.4 million tonnes, while coking coal production fell by 48.4% to 8.3 million tonnes. Coal mining companies managed by the ministry reduced total production by 62% to 6.7 million tonnes.

DTEK, the largest private energy company in Ukraine, produced 28.7 million tonnes of coal in 2015. The company owns, leases or has concession rights to operate thirty-one coal mines and thirteen coal preparation plants, including three mines and one coal preparation plant in Russia.

The decline in coal production in Ukraine is explained primarily by the continuing military hostilities in Donbass. Budget financing reductions and lower loads at thermal power plants (TPPs) have also affected demand for coal. In 2015, state support to coal mining companies was stopped. This resulted in a growing arrears of salary payments and debts for the electricity consumed at state-owned mines. After protests by miners, the parliament reallocated budget funds amounting to UAH 900 million to support the coal mining industry. However, this sum was insufficient and the coal industry began 2016 with three-months of unpaid wages.

Given the problems at state-owned mines, private companies have had to bear the burden of satisfying the Ukrainian economy’s demand for coal. For example, DTEK has concentrated on the production of gas coal (G grade) for TPPs, which helped maintain output of this grade of coal at the 2014 level of 22 million tonnes.

Ukraine has been experiencing anthracite shortages since 2014. To cover the demand for electricity generation, 8.5 million tonnes of anthracite were received from the ATO zone in 2015 and 1.6 million tonnes were imported. In 2015, the coal import structure changed significantly as coal supplies from Russia dropped markedly.

Lignite

Ukraine produces only small volumes of lignite – less than 200 thousand tonnes each year – from the Olexandria and Mokra Kalyhirka deposits in the Kirovohrad and Cherkasy regions, near the Dnipro River.

Pricing and policy

Coal in Ukraine is sold through direct contracts between mining companies and consumers or via VUHILLIA UKRAINY, a state company which operates the wholesale market for around one third of the output from state-owned mines. Wholesale coal prices are fixed, so loss-making state-owned mines are cross-subsidised by profitable mines. In 2015, the wholesale price of coal increased by 59.5% to UAH 1 001.5 per tonne, while the cost of production grew by 17.2% to UAH 2 069.3 per tonne. Private companies price coal based on supply and demand, having regard to international coal market price trends.

The Ministry of Energy and Coal Industry is responsible for coal policy, acting in accordance with the goals and tasks set out in the Action Plan of the Cabinet of Ministers of Ukraine, the “European Ukraine” Coalition Agreement between political factions and the national Sustainable Development Strategy to 2020.

In May 2015, the Cabinet of Ministers updated a list of coal mining companies to be privatised, comprising twenty-six facilities (Resolution No. 271 on Transparent and Competitive Privatisation). Preparations were subsequently made for the sale of Velykomostivska, Chervonohradska and Vidrodzhennia mines, as well as Mezhurichanska mine of state enterprise LVIVVUHILLIA and Buzhanska mine of state enterprise VOLYNVUHILLIA. The privatisation preparations for the sale of other companies were suspended due to a lack of funds and in view of the anti-terrorist operation in eastern Ukraine.

In July 2015, the Cabinet of Ministers agreed to liquidate some loss-making coal mining companies (Resolution No. 696-р), namely: Rodynska mine of state enterprise KRASNOARMIISKVUHILLIA, Zarichna mine of state enterprise LVIVVUHILLIA and Mine No. 9 Novovolynska of state enterprise VOLYNVUHILLIA.

To streamline government support to the coal sector and make progress with restructuring through the closure and mothballing of certain mines, a draft law was prepared and published by the Ministry of Energy and Coal. The ministry is also pursuing coal market liberalisation and exchange-based coal trading (e-trading). To create a favourable investment climate for the privatisation of mines by increasing production, improving efficiency and removing subsidies, the Ministry of Energy and Coal Industry has drafted a new programme of coal sector reforms for 2015‑20.

Ukraine

Coal resources and reserves
Total resources hard coal	Mt	117 200
Total resources lignite	Mt	7 717
Reserves hard coal	Mt	56 000
Reserves lignite	Mt	2 336

Primary energy production		2015
Total primary energy production	Mtce	c.100.0
Hard coal (saleable output)	Mt / Mtce	39.7 / 32.3

Saleable coal quality
Hard coal calorific value	kJ/kg	20 000
Hard coal ash content	% a.r.	5.0-35.0
Hard coal moisture content	% a.r.	5.0-14.0
Hard coal sulphur content	% a.r.	0.8-4.0

Coal imports / exports		2015
Hard coal imports	Mt	14.6
Hard coal exports	Mt	0.6

Primary energy consumption		2015
Total primary energy consumption	Mtce	c.150.0
Hard coal consumption	Mtce	38.7

Power supply		2015
Total gross power generation*	TWh	157.7
Net power imports (exports)	TWh	(1.5)
Total power consumption*	TWh	148.3
Power generation from hard coal**	TWh	52.9
Coal power generation capacity**	MW	23 612