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Abstract - Economic rationale for the effectiveness of investments to increase the production capacity of a coal-mining enterprise

Content

Introduction

In the period from 1993 to 2000, the coal industry experienced a deep crisis, which affected a decrease in the volume and quality of coal mined, accelerated depreciation of fixed assets, and a sharp deterioration in the technical and economic indicators of coal-mining enterprises. This process was accompanied by a decrease in production capacity and a deterioration in their use.             

By 2000, the restructuring of the industry did not lead to significant positive changes in the structure of the mine fund for many reasons, the main of which are: a fall in the competitive demand for coal products, mainly due to the deregulated state’s financial and economic system; lack of financial resources, including state support funds, for the effective reproduction of coal mining capacities and technical re-equipment of enterprises; non-payment for the supplied coal products and, as a result, the loss of working capital intended to ensure the stable operation of enterprises; low technical level of the equipment used, a high degree of accidents due to significant wear and extremely slow rates of renewal of the fleet of main and auxiliary machines; unpromising sectoral policy on the liquidation of enterprises practically only in fact of their current loss-making without taking into account the possibility of improving the work of a number of them when carrying out reconstruction works.

1. Relevance of the topic

The objective need to increase coal production in the context of a shortage of investment funds requires their targeted distribution in priority areas.

For the development of the industry in the current economic conditions, one of the priorities is the technical re-equipment of existing coal-mining enterprises based on the elimination of the “narrow” places of the technological links of the production process and the renewal of fixed assets. The first direction is characterized by the use of available financial resources only for rebuilding “narrow” places, while all other links increase their productivity by unlocking reserve capacities, i.e. the effect is to ensure a significant increase in coal production with fixed capital investments. The second direction of investment in technical re-equipment has an advantage in the complex mining and geological conditions of mining coal deposits for a given product quality. Therefore, the task related to the economic substantiation of the most efficient capital investment options for the technical re-equipment of coal mines in order to maximize the annual coal production is extremely important.

2. The purpose and objectives of the study, the planned results

The purpose of the work is to provide a business case for the efficient allocation of limited investment resources in existing mines of the coal industry, taking into account the priority directions for the development of the production process.

The main objectives of the study:

  1. Develop forecast demand for the main types of mining and transport equipment in the coal-mining region, which quantitatively depends on the degree of wear and tear, on the required total annual capital and operating costs for repairs and on preventing risk situations, on the untimely renewal of the active part of fixed assets;
  2. Calculate the cost of coal mining enterprises to prevent risk situations associated with the untimely replacement of the active part of fixed assets should be determined by the economic and mathematical models developed in the thesis, taking into account possible options for the adopted strategy of development of coal mining;
  3. Analyze and evaluate the regional TRP market situation should be carried out in accordance with the proposed mechanism, including the calculation of competitiveness ratios, reflecting the total economic efficiency of using equipment of various brands, and the business logic algorithm of the influence of regional equipment suppliers on the formation of the marginal purchasing power of competing coal mining enterprises;

Object of study : OP Mine named after M.I. Kalinina GP DUEK

Subject of research : production activities of existing mines in order to maximize annual production based on the effective distribution of investment.

As part of the master’s work, it is planned to obtain relevant scientific results in the following areas:

  1. Development of methods for quantitative substantiation of the potential demand for the main TRP, distinguished by a joint review of the planned equipment needs of enterprises according to the selected development strategies with the necessary capital and current costs                     repair, depending on the degree of wear, expressed in the form of correlation and regression models, as well as the cost of preventing risk situations in case of late replacement of the TRP, which has exhausted its resource.
  2. To propose a mechanism for analyzing and evaluating the situation of the regional TRP market, based on the calculation of competitiveness ratios and business logic of the influence of equipment suppliers on the formation of the marginal purchasing power of coal mining enterprises.

3. Theoretical and practical significance of the work

Determined by creating theoretical and methodological foundations for the effectiveness of investments to increase the production capacity of a coal mining company by refining and expanding the conceptual apparatus, forming the structure and methods of exerting managerial influences, increasing the efficiency of methodological techniques for analyzing the sustainable development processes of industrial enterprises. Theoretical generalizations and results, practical recommendations and suggestions can be used when planning and developing programs for sustainable development in enterprises. The results can be the basis for further research in the management of sustainable development of socio-economic systems.

3.1 Overview of international sources

Making investments is an important condition for the implementation of the strategic and tactical objectives of the development and effective operation of any enterprise, including coal mining. The role of investment in ensuring the effective operation of the enterprise can be identified as follows:

            
                    
  1. the main source of formation of the production potential of the enterprise;                 
  2. the main mechanism for implementing the strategic goals of economic development;                 
  3. the main mechanism for optimizing the structure of assets;                 
  4. the main factor in the formation of a long-term capital structure;                 
  5. the most important condition for ensuring the growth of the market value of the enterprise;                 
  6. the main mechanism for ensuring simple and extended reproduction of fixed assets and intangible assets;                 
  7. the main tool for the implementation of innovation policy;                 
  8. one of the mechanisms for solving problems of social development of staff [ 1 ]

Practical investment is provided by the investment activity of the enterprise, which is one of its business activities and the most important form of realization of its economic interests. The investment activity of an enterprise is a purposefully carried out process of finding the necessary investment resources, choosing effective investment objects, forming a balanced investment program (investment portfolio) and ensuring its implementation. Investment activity can be defined as the unity of the processes of investing resources and generating income in the future. When investing investment resources in any production, the investment movement at the stage of cost recovery takes place in the form of individual circulation of production assets. In the course of this circuit, a finished product is created that embodies the increase in capital value, as a result of the realization of which income is generated. Investment activity is a prerequisite for the circulation of funds of an economic entity. In turn, production activity creates prerequisites for new investments. Therefore, any type of business activity includes investment and core business processes that constitute a single economic process [ 2 ].

The main features of the investment activity of the enterprise include:

            
  1. Investment activity of an enterprise is the main form of ensuring the growth of its production (operating) activity and is subordinate in relation to its goals and objectives. Investment activity contributes to the growth of its operating profit in two directions: the growth of operating income due to an increase in the volume of production and sales activities (construction of new branches, organization of new industries, etc.); reduction of specific operating costs (timely replacement of worn-out equipment, updating obsolete fixed assets, etc.).
  2. The forms and methods of investment activity are less dependent on the industry-specific features of the enterprise than production activities. This is determined by the fact that the investment activity of the enterprise is carried out in close connection with the financial market, the industry segmentation of which is practically absent, while the production activity is carried out within the industry segments of the commodity market and has clearly defined industry characteristics.
  3. The volume of investment activity of the enterprise is characterized by unevenness in individual periods. This is determined by a number of conditions, in particular, the need for preliminary accumulation of financial resources to start implementing projects, using favorable external conditions for carrying out investment activities, etc.
  4. Investment activity forms an independent type of enterprise cash flows, which differ in certain periods in their focus.
  5. Investment activities of an enterprise have specific types of risks, combined by the concept of [ 3 ]

Coal enterprises, as objects of investment activity, have their own specific features:

  1. significant differentiation of economic indicators of enterprises, reflecting various mining and geological conditions and natural qualities of coal reserves;
  2. the length of the process of creating and reproducing the capacity of any coal enterprise for the entire period of its service associated with the continuous movement of the work front as reserves are developed;
  3. periodic reconstructions and technical re-equipment of coal enterprises;
  4. a high degree of risk of investments in the coal industry due to its role as the "closing" industry of the fuel and energy complex. [ 4 ].

4. The main problems of improving the efficiency of coal mining enterprises

Under the concept of effective activity of the enterprise understand - a category expressing the compliance of the results and costs of the enterprise with the goals and activities of the owners. That is, the concept of "efficiency" implies a comparison of the results obtained with the amount of resources expended.

A sign of effective activity may be the need to achieve the goal of production and economic activities of the enterprise with the lowest expenditure of social labor or time. Ultimately, a meaningful interpretation of efficiency, as an economic category, is determined by an objectively valid law of saving working time, which is the fundamental substance of wealth and a measure of the costs necessary for its accumulation and use by society. That is why improving the efficiency of the enterprise should be considered a specific form of manifestation of this law. The process of generating results and production efficiency is shown in Fig. [ 5 ].

In terms of the restructuring of the coal industry and the increasing role of coal in the country's fuel and energy balance, attracting investment is the most urgent and very painfully solvable problem, since there is a budget constraint and the reluctance of the absolute majority of commercial banks to finance projects of coal enterprises. Therefore, due to excessive wear and tear of production assets and insufficient front of sewage works, the central place in the development of coal enterprises today is occupied by the problems of investment activity [ 6 ]

Currently, it is possible to identify a number of major problems that impede the increase in the efficient operation of coal-mining enterprises, namely:

  1. an outdated and worn-out mine fund, which determines its low investment attractiveness for the implementation of an innovative model of modernization and development of the coal industry;
  2. lack of sources of financing (own and state funds, subsidies, loan, non-state investments) both for the maintenance of the current operation and for the development of coal enterprises;
  3. low competitiveness of domestic coal, due to its high cost and low quality;
  4. the inefficiency of the coal industry management system, as there is a constant complication due to significant unreasonable reorganizations;
  5. low level of management at the state level, which reduces the efficiency of using state property in the coal industry and hinders the creation of legal frameworks and organizational and economic mechanisms for mutually beneficial business involvement in the development of coal mining production;
  6. not the prestige of work in coal-mining enterprises (first of all, the danger of work and the low level of remuneration compared with workers in other professions), unresolved social problems.

3.2 Local Source Overview

In the Donetsk National Technical University (Department of Economics and Marketing), methods for improving the stabilization mechanism of an industrial enterprise are widely developed.

Since the solution of all the above problems requires significant costs, and the possible investment volumes, especially in our time, are extremely insufficient, their solutions are based on the most rational directions for the use of investments, which are determined and justified by special economic calculations.             Solving the problems of efficient operation of coal enterprises can be solved: by directing the reorientation of financial flows to a significant increase in the volume of capital investments to support the production capacities of existing coal mining enterprises, accelerating their technical re-equipment; elimination of the acute shortage of working capital by providing one-time targeted state support or through preferential state loans, as well as reducing the diversion of coal companies' own funds to capital investments; an increase in the concentration of capital investments in the reconstruction of existing coal-mining enterprises [ 7 ].

Findings

Currently, the technical and technological level of the coal mining industry is one of the constraints for the development of the coal industry: a large percentage of the depreciation of fixed assets, the availability of cleaning equipment in the parks of mines that require full replacement, a significant amount of processing plants are in operation for many years - all this hinders the process of increasing the efficient operation of coal-mining enterprises. In recent years there has been a significant reduction in the industrial potential of the industry.             Further development of the economy of our state is possible under the condition of a large-scale increase in investment activity in the fuel and energy complex, growth in capital investments in the coal industry, reconstruction and technical re-equipment of existing fixed assets, with the advanced development of the production potential of the fuel and energy complex and its material and technical base.

References

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