June 11, 2021

Vorkutaugol announces termination of steam coal production

Vorkutaugol, one of Russia’s largest coal mining companies and part of the PJSC Severstal Group, will stop producing energy coal (coal of the GZhO brand), starting from the first quarter of 2022.

This decision was made in connection with the transfer of Vorkutinskaya CHPP-2 to gas and the withdrawal of CHPP-1 to the reserve. Vorkutaugol plans to complete the process of switching to a new type of fuel within a year. The Vorkuta thermal power plants are the only businesses in Vorkuta that consume the GRW coal produced at the Vorgashorskaya mine. This coal is energy grade and is not used in metallurgy. Once the gasification of the Vorkutinskaya CHPP-2 has been completed, Vorkutaugol will no longer need to extract power coal, as its development is not very profitable and it causes significant harm to the environment. Vorkutaugol will still be able to completely fulfill its obligations under its supply contract with PJSC T Plus, which has been extended until 31 July 2022.

The complete transition of the CHPP to gas will significantly reduce the Company’s emissions and improve the local environment in the Vorkuta Municipal District. Emissions of pollutants such as nitrogen oxides, sulfur dioxide, and suspended solids will be reduced, and the accumulation of ash and slag generated during coal combustion will stop completely.

Vorgashorskaya also develops coking coal at a grade of 1ZH, which will continue. All employees who were producing thermal coal will be transferred within the mine, where the development of coal grade 1ZH will continue with two treatment faces. This will have a positive impact on the economic performance of the enterprise and the company as a whole.

Maxim Panov, General Director of Vorkutaugol, commented:

"Vorkuta enterprises are implementing measures in accordance with Severstal's environmental strategy. As for the production of GRW, this reduction will not affect the duration of our work at Vorkutaugol, since our main goal is coking coals of grades 1J and 2J, which are used in metallurgy. We continue to invest in the production and development of technologies and, as previously planned, production in Vorkuta will continue until at least 2037 inclusive."

For reference:

Natural gas is the cleanest mineral fuel according to the criteria for greenhouse emissions, which were established by the United Nations Framework Convention on Climate Change (UNFCCC). It is complemented by the Kyoto Protocol, which sets out quantitative commitments for various countries and introduces emission control mechanisms. The use of natural gas is just one of the most effective ways to achieve the goals in the policy of reducing greenhouse emissions. For example, anthropogenic greenhouse gas emissions from the combustion of one ton of conventional fuel from natural gas are 1.7 times less than that of coal, and 1.4 times less than that of fuel oil. As a result, power plants converted to natural gas emit about half as much carbon dioxide as coal-fired power plants. Thus, the reduction of greenhouse gas emissions as a result of the replacement of 813 thousand tons of GRW with natural gas will amount to 750 thousand tons of CO2 / year.