On January 10th, 2019, O. Novak, the Minister of Energy of the Russian Federation, unveiled the results of the coal mining industry in 2018. According to the minister, last year the industry reached the highest rates in coal mining and coal export over the past 5 years. Thus, coal exports grew by 4.1%, which is up to 194 million tons (about 100 million tons exported to the European Union countries, 94 million tons exported to the countries of the Asia-Pacific region), while the aggregate volumes of Russian coal amounted to 431.76 million tons, which is 7% more than in 2017. According to the minister, this constitutes 14% of the world’s total coal production. The total revenues from the export of Russian coal mining companies in 2018 exceeded 14 billion USD. At the same time, the price of Russian thermal coal has almost doubled over the past 3 years (from 39 USD per ton in 2015, to 78 USD per ton at the end of 2018).
By 2025, Russia plans to invest about 22.4 billion USD in coal mining and port infrastructure development for its transportation to foreign markets. According to O. Novak, this will allow to increase the volume of coal production in the country to 480 million tons per year by 2030.
According to V. Kulagin, the expert of the Institute of Energy Studies of the Russian Academy of Sciences, the highest dynamics of growth of Russian coal exports in 2019 should be expected in the markets of China, India and South Korea. The expert noted that coal exports to the EU in the medium-term perspective (after 2024) will reduce.
According to Gareth Carpenter, expert at the department of international coal trade at Platts analytics agency, Russia currently ranks sixth in the world (after China, the USA, India, Australia and Indonesia) in terms of volumes of coal production.
Coal reserves in the Russian Federation are estimated at 1.1 trillion tons, which are located in 22 coal basins and 129 separate deposits, meanwhile coal mining is carried out in 25 regions of the Russian Federation and about 150 thousand people are occupied in the coal mining industry.
Carpenter noted that over the past 5 years, Russian coal exports have grown by 25% and are executed in almost 80 countries of the world. Japan, China, South Korea, Turkey, the United Kingdom, the Netherlands, Germany, Poland and Latvia are among the main importers of Russian coal. Russia has made significant efforts to increase its own share in the coal markets of the EU, China and South Korea in 2018. According to the expert, by 2035 the volume of Russian coal exports to the countries of the Asia-Pacific basin could grow by additional 50 million tons per year. Currently Murmansk, Ust-Lug and, partly, the Latvian port of Riga, are the main ports of export of Russian coal to foreign markets.
Carpenter indicated the weak development of port and railway infrastructure, the lack of trucks, the dependence of the industry on the import of European specialized coal mining equipment and components among the main factors limiting the pace of development of the coal mining industry in Russia. In addition, the expert noted that the return on investments in the coal mining industry is relatively long. Thus, the payback period of investment in the infrastructure of large quarries in the amount of more than 1 billion USD is not less than 10 years.
Carpenter identified the increase in the volumes of beneficiation of coal as the main new trend in the development of the Russian coal mining industry. Thus, in 2018 this indicator increased by 3% – up to 197 million tons per year. At present, 65 enrichment plants have been built in Russia. Through the work of these plants and increase in the capacity of Russian coal, the competitiveness of Russian coal in the world market is constantly increasing. The transition of the industry to a deeper level of coal processing is hampered by a significant lack of investment. At the same time, according to the expert, international sanctions against the Russian Federation and the devaluation of the Russian ruble had a positive effect on reduction of the cost price of coal production and the increase of the competitiveness of Russian coal in foreign markets due to low, compared with other proposals, coal prices and its relatively high quality. In addition, countries of the Asia-Pacific region, mostly, do not respect the sanctions regime imposed against Russia by the United States and the EU.
Consequently, due to the competitiveness of Russian coal, further growth of exports of coal from Russia is possible, mainly in view of increased supplies to China, India and South Korea. The Russian coal industry demonstrates resistance to the regime of international sanctions and continues to increase its exports of coal. The total annual revenues of enterprises in the industry are estimated at 14 billion USD. The main deterrent of its intensive development is the technological gap of the industry, lack of capacity of the railway and port infrastructure, and lack of investments in the development of industry.
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