Gold dust: Oligarch Konstantin Strukov expands business at the expense of miners and budget 

Gold dust: Oligarch Konstantin Strukov expands business at the expense of miners and budget
Miners go on strike – Strukov feasts Photo: The CrimeRussia

Konstantin Strukov resists grimly the requests to remediate Korkinsky pit belonging to him; instead the oligarch has switched his attention to the Zabaykalsky krai. UGC Gold Mining Company (Uzhuralzoloto) owned by Strukov runs business in a ‘coyoting’ way leaving the workers with no choice but to go on strike.

The prince and the paupers

For most people, gold is a symbol of wealth, but for the miners of UGC Gold Mining Company working in Darasun mine located in the Zabaykalsky krai, it is a symbol of extreme poverty. For many months, the workers mining one of the most expensive metals in the world had not been receiving not only salaries, but even working clothes and gloves. The situation hit the headlines after a strike of 80 miners who had descended to the mine on the evening of May 17 and refused to ascent. As early as on May 18, Sergey Menyaylo, Presidential Envoy in the Siberian Federal District, and Natalia Zhdanova, Governor of the Zabaykalsky Krai, have visited the strikers in the mine. However, Konstantin Strukov, Founder and President of UGC Gold Mining Company and concurrently a Deputy of the Legislative Assembly of the Zabaykalsky Krai, has ignored the strike. Furthermore, before the arrival of the high-ranked governmental functionaries to Darasun mine, the company management had tried to drive the workers out of it by turning off the hydro and air supply. The strike had its effect, and on the evening of May 18, UGC Gold Mining Company has transferred 14 million rubles ($237.2 thousand) to pay the salary arrears. It would seem that the issue has been settled. However, the number of incidents on UGC enterprises is growing like a rolling snowball.

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Company management tried to drive the workers out of the mine

For several years, the Plast City Court of the Chelyabinsk District has been overloaded with lawsuits for recovery of salaries filed against Uzhuralzoloto. Partners of the gold mining company can not recover debts from it as well. But these are not the worst offences committed by UGC. Violations of safety regulations became the everyday reality in all the mines belonging to the holding. It did not take long to see the result: thee people died in Tshentralnaya (Central) mine in 2015; two more people died in April 2017. People living in settlements adjacent to the mines also face a very real risk of death.

In 2014, the Magnitogorsk Environmental Prosecutor’s Office has identified numerous breaches of the law committed by Uzhuralzoloto, including the creation of a dumping site for waste of the 4th hazard category and diversion of the Chernaya River. A year earlier, the same Environmental Prosecutor’s Office had found out that the enterprises of the holding were discharging toxic wastes to the Kurasan River causing mass fish mortality. The watchdog agency did not specify how hazardous were the discharged cyanides and mercury for the local people. For all the inflicted damages, the company was fined 35 thousand rubles ($593).

Video: Mass fish mortality

It is necessary to note that UGC Gold Mining Company is a thriving industrial giant. The net profit of Uzhuralzoloto in the year of 2015 was over 1.2 billion rubles ($20.3 million); in 2016, it has reached 6.9 billion rubles ($116.9 million). While the salary arrears were growing, the billion-ruble profits had been siphoned off to Cyprus-based UGOLD Limited offshore company owning 99% of UGC shares. Later Strukov has reduced the portfolio of UGOLD Limited to 5%. The creditor indebtedness of Uzhuralzoloto is of interest as well: its major part pertains to foreign currency loans provided likely by UGOLD Limited.

A penny saved is a billion gained 

The Uzhuralzoloto management are crazy about the economy. Konstantin Strukov prefers to save on ordinary employees – but not on himself. In 2014, the holding had sustained losses in the amount of 3.6 billion rubles ($61 million) – but it has still paid dividends to the shareholders – i.e. Strukov – for the three years at once. After the strike on Darasun mine, the oligarch has shown miracles of economy again: even before the end of the strike, he has announced that the troubled mine is to be closed. The point is that the closure of Darasun mine would cause much more trouble to the Zabaykalsky krai rather than to Strukov. The mine suspension would leave without jobs not only non-resident rotation workers, but also the entire Vershino-Darasunsky township. The sole purpose of this statement was to intimidate the regional authorities. And the goal has been achieved: the asset is currently being prepared for sale and chances are high that it would be purchased by a company partially owned by the state. 

Using same methods, Strukov ‘raises’ budget funds for the remediation of Korkinsky pit and resettlement of Roza township. Chelyabinsk Coal Company Open Joint Stock Company belonging to Strukov had been mining coal on Korkinsky pit since the late 1990s. Taking that the pit had been actively mined during the Soviet period, the production of coal has drastically dropped by 2010. In addition, a major explosion had occurred on Korkinskaya mine in 2009. The coal pit started collapsing: the rim surrounding the giant quarry crumbles on a regular basis and spots of spontaneous combustion appear in it. Roza township is adjacent to the pit. Its residents are under the permanent threat of death: their homes standing on unstable grounds may collapse any moment. Obviously, the coal mining company must cover the costs pertaining to the resettlement of the residents and remediation of Korkinsky pit. But Deputy Strukov has decided otherwise. 

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Korkinsky coal pit

The complaints of the Roza residents had been ignored for a long time, and in 2012, they have addressed Vladimir Putin. After the visit of the President, 4 billion rubles ($67.8 million) have been allocated from the budget for the resettlement of Roza. Strukov, as the owner of Chelyabinsk Coal Company, had promised to provide additional 1 billion rubles ($16.9 million) for that purpose. But in reality, Chelyabinsk Coal Company still does not participate financially in the resettlement, while some residents continue living in dangerous vicinity to the pit. People living in other settlements located close to the quarry demand to remediate Korkinsky pit.    

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Roza township

Being well aware that the remediation is inevitable, Konstantin Strukov has promptly become the Chairman of the Committee for Environment and Nature Use of the Legislative Assembly of the Chelyabinsk Region. In this new capacity, the owner of Chelyabinsk Coal Company, managed to incorporate the reinstatement of the “Liquidation of Sites of Accumulated Environmental Damage” program into the Agenda of the Days of the Chelyabinsk Region in the Council of Federation of the Federal Assembly of the Russian Federation. And voila – the “Liquidation of Sites of Accumulated Environmental Damage” program has become a component of the federal “Environmental Conservation” program, and the Ministry of Natural Resources and Environment of the Russian Federation is currently developing subsidy assistance rules for it. The cost to remediate Korkinsky pit is estimated at some 20−35 billion rubles ($339−593 million). There is no doubt that Konstantin Strukov finds a way to avoid spending a penny on it.

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