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Relative Break-Even as a Determinant of the Dynamic Balance of the Russian Coal Industry

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  • O.A. Chernova

Abstract

The stability of the development of the coal industry is largely determined by factor proportions linking its resource potential with production and market opportunities. Therefore, when developing projects for strategic modernization transformations of the coal industry, it is important to identify how their implementation will affect the parameters of sustainable development of the industry. The purpose of the article is to study the prospects for using the relative break-even indicator to ensure sustainable development of the coal industry in Russia in the face of significant external challenges. The hypothesis of the study lies in the assumption that the use of the relative break-even indicator in the development of strategic directions for the development of the coal industry will ensure a dynamic balance of economic and technological aspects under the conditions of significant exogenous shocks. In this work, a parametric model was used that allows one to investigate internal relationships between the economic and technological components of coal mining. The values of the parameters of the parametric model were determined in accordance with the target indicators of the Program for the Development of the Coal Industry of Russia through to 2035. The peculiarity of the proposed methodology for assessing the parameters of the dynamic equilibrium is that it integrates the methods of system dynamics and sustainability, allowing for deep understanding of the relationship between the economic and technological activities of coal mining production. As a result of the study, the conditions for maintaining the relative break-even point of coal-mining industries were determined, taking into account the current trends of changing factor components and the tasks set for the modernization of the coal industry: achieving an increase in coal prices of at least 3%; reduction of the cost of coal mining by at least 14%; an increase in coal production and sales by at least 45%. The conditions for maintaining the parameters of the dynamic equilibrium of the coal industry under various scenarios of changes in world prices for coal have been determined. The conclusion is made about the possibility of using a parametric model of the relative breakeven of production for modeling the parameters of sustainable development of the coal industry. The practical results of this study can be used in the formation of the theoretical and methodological foundations of the strategic development of the coal industry and in the development of appropriate planning and management decisions.

Suggested Citation

  • O.A. Chernova, 2021. "Relative Break-Even as a Determinant of the Dynamic Balance of the Russian Coal Industry," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 20(2), pages 194-216.
    • Handle: RePEc:aiy:jnjaer:v:20:y:2021:i:2:p:194-216
    DOI: http://dx.doi.org/10.15826/vestnik.2021.20.2.009
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    More about this item

    Keywords

    coal industry; dynamic equilibrium; parametric model; relative break-even; Program for the development of the coal industry in Russia – 2035.;
    All these keywords.

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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