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Global competition is the reason why at the end of the 20th century many mining enterprises in Russia became unprofitable and were closed. Workers lost their jobs and started leaving small urban-type settlements, in which such enterprises were the only employers. According to our previous researches, a fate of the settlements varies greatly depending on natural and climatic conditions they are situated in. Settlements in severe and cold climate hardly have any potential for functional transformations. The paper considers a situation in one of such settlements – Koashva located in the central part of Murmansk oblast in Kirovsk urban municipality, 30 km away from the city itself. Koashva was constructed in 1978 for settling employees of nearby apatite mine and their families. Though this township was small, there were ten five-story residential houses, four schools, entire necessary infrastructure, and attractive built environment. However, in the 1990s, when ore output was sharply reduced, physical and social degradation of the settlement began. Many houses were deserted due to out-migration of most residents; instead of them, socially unsuccessful people arrived. Population decreased from 2000 people to less than 600. At present Koashva has rural status. In 2010, new apatite mining company started operating in the area. Though mine administration is situated in Koashva, the company failed in complete revival of the settlement. Our study held in 2007 and 2017 showed that it was very complicated to recover existing, but unused facilities. Besides, the most difficult task is to improve social environment. Various ways of the development of the area are discussed in the paper.