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By Pavel Polityuk
KIEV, March 9 (Reuters) - Ukrainian coal producer DTEK Energy said on Thursday it had idled its largest mines in territory controlled by pro-Russian separatists due to a blockade on rail traffic on the Ukrainian side of the eastern front line.
The blockade by a group of Ukrainian lawmakers and military veterans has held up industrial shipments from rebel-held areas since early 2017, prompting the Ukrainian authorities to warn of potential monthly economic losses of up to 4 billion hryvnias ($150 million) as long as it is in place.
In response to a question from Reuters on the status of its Komsomolets Donbassa mine in the separatist-held part of Donetsk region, DTEK Energy’s press service said: “It’s in idle mode.”
Two of DTEK Energy’s other mining operations in rebel-controlled territory, Rovenkyanthracite and Sverdlovanthracite, had also been idled, it said.
The three mining groups produced about 9 million tonnes of coal in 2016, accounting for over 30 percent of DTEK Energy’s total output.
Asked why DTEK Energy had stopped mining coal at these sites, the spokeswoman said: “Well, where can it be transported to?” She did not give further details.
The trade squeeze has highlighted the complicated economic relationship between the two sides and represents a new phase in a periodically violent stand-off that has killed more than 10,000 people in the last three years.
The Ukrainian government has warned that the country could suffer rolling blackouts if anthracite supplies from mines such as those idled by DTEK do not resume to thermal power plants. On Thursday, Ukraine’s largest steel mill, owned by ArcelorMittal, said its output had not yet been hit by the blockade, but expressed concern about limited power and raw material supplies.
“Possible consequence of (the) blockade can result in decrease of production since even now the company experiences the lack of coals grades ... which are the crucial raw materials for sintering and steelmaking,” ArcelorMittal’s Kryvyi Rih said in a statement.
Kryvyi Rih, Ukraine’s biggest exporter, said it had a crisis plan in case the government announced a state of emergency in the energy sector linked to the coal shortage.
The government in Kiev opposes the blockade, but has sought to negotiate with pro-Ukrainian activists rather than forcibly break up the encampments on eastern rail lines.
In response to the blockade, separatist officials have seized control of some Ukraine-registered businesses in rebel-held territory and vowed to sever all trade ties.
DTEK Energy, which along with steelmaker Metinvest is part of the business empire of Ukraine’s richest man, Rinat Akhmetov, said it was still in control of its assets in separatist territory.
Previously, Metinvest, Ukraine’s largest producer of steel, said if separatists took control of mills or mines it would be forced to halt production in the affected operations.
Metinvest and DTEK are the main employers in Ukraine’s eastern Donbass region.
$1 = 26.8600 hryvnias Writing by Alessandra Prentice, editing by David Evans