Russia plans to continue the development of domestic coal production and processing, despite the pandemic and the ever growing environmental concerns, according to recent statements, made by some senior officials of the Russian Ministry of Energy and some local media reports.
The pandemic and associated with this economic recession has led to a significant decline of both production and exports of coal from Russia.
According to official state statistics, In January - October 2020, the volume coal production in Russia fell by 9.7% compared to the same period in 2019 and reached 328.439 million tons. Of these, supplies to the domestic market amounted to 133.44 million tons, while exports to 161.75 million tons.
The list of the largest coal producers in Russia consists of SUEK, Kuzbassrazrezugol and HC SDS-Ugol.
According to recent forecasts, made by the Russian Minister of Energy Alexander Novak, this year the decline of coal exports from Russia will be in the range of 10% to 22%. In 2019 the volume of coal exports from Russia amounted to 205.39 million tons and there is a possibility these figures will significantly decline this year.
Still, according to expectations of Russia’s Deputy Energy Minister Anatoly Yanovsky, the volume of supplies will return to 220 million tonnes in 2022.
Despite the fact that coal industry became one the few segments of the Russian fuel and energy complex, which has become a subject of successful reforms, which led to privatization of some major industry players, the current situation in it remains complex.
According to recent statistics, published by the Russian Federal State Statistics Service (Rosstat), the share of unprofitable enterprises in the domestic coal sector is estimated at about 40% and there is a possibility may further grow by the end of the current year.
In general, the last 10 years became successful for the Russian coal sector, which was reflected by the increase of domestic production by more than 1.3 times, up to 440 million tons in 2019.
In addition, the volume of investments in fixed assets of the industry grew by 2.5 times, which led to the commissioning of more than 297 million tons of new coal mining capacities.
At the same time exports have become the major driver of the industry’s growth in recent years while resulted in the entering Russia the world’s three top coal exporters.
Still, in recent months the industry has faced with serious difficulties, that may prevent it more active growth, while in addition to pandemic, an additional pressure on it is put by the ever growing demand for clean energy among the major customers of Russian coal.
That may lead to the decline of exports of Russian coal already in the middle-term and losses of local producers.
At the same time, one of the ways to avoid this and to ensure stable revenue flows from the coal sector may be related with the beginning of more active development of coal processing and coal chemistry in Russia.
At present Russia significantly lags behind other global coal producers in terms of coal processing. If during the Soviet times, the range of coal –based product in the country exceeded 2,000 items, at present these figures do not exceed 200-300 items.
In the meantime, the Russian federal government and the national Parliament are aware of the existing problems, considering ways for their solution.
According to Pavel Zavalny, Chairman of the Committee of Energy of the State Duma, the production of coal-based products with high-added value in Russia will be significantly increased already within the next several years.
For this purpose, special centers of coal chemistry will be established close to some major coal-producing centers of the country. As part of state plans, that will allow to reduce transport costs and minimize a negative impact on environment.
Gennady Alekseev, general director of SDS-Ugol, one of Russia’s largest coal producers, said that there are significant external risks for coal both in Russia and in the global scale, among which are the currently negative image of coal, the existing Paris Agreement, as well as the ever toughening of environmental requirements.
According to analysts and producers, in order to better withstand these threats the industry should become more consolidated.
For this purpose, the Kuzbass region, a region in southwestern Siberia, (which accounts for about 60% of the overall coal production in Russia) into a center for deep coal processing in the country, including the production of liquefied gas and hydrogen from coal.
So far, producers have already called on the Russian government to design legislative framework, that could stimulate the development of coal processing industry in Russia, which has already been supported by representatives of the state.
From their side, producers have confirmed their intention for the development of domestic coal production and processing.
That will be achieved by the planned implementation of some major investment projects, which is scheduled already within the next several months.
Perhaps, the biggest of them has been recently launched by the Russian investment holding AEON Corporation and involves building a large-scale coal mining and processing cluster in the north of the Krasnoyarsk Territory, that will be operate in extreme arctic conditions
It is planned, most of the future output of the factory, that will be operated under the Severnaya Zvezda brand and supplied to the countries of Southeast Asia via the Northern Sea Route.
The factory will have an annual capacity of 5 million tonnes per year and will be located 105 kilometers from one of the northernmost settlements of Russia – Dikson.
In addition to production itself, the projects involves building of coal-preparation plant and other infrastructure.
According to Roman Trotsenko, Chairman of AEON Corporation, as part of the project, the world’s longest protected from the wind conveyor (with a length of 61 kilometers) will be built, which will prevent coal from scattering windward during its transportation to the port.
In the meantime, that will probably be not a single major project in the Russian coal sector, scheduled for implementation within the next several months, as Evraz a British multinational vertically integrated steel making and mining company, (which primarily operates in Russia and Ukraine) has recently announced its plans to consolidate its coal mining business on the basis of PJSC Raspadskaya, with the aim to establish one of the world’s largest coal productions on its basis already in the short-term.
As part of these plans, the production complex of expanded Raspadskaya will include 7 mines, 2 open-pit mines and 3 concentrating plants in the Kemerovo region and 1 mine in the Tyva Republic. The reserves of the combined company will amount to 1.9 billion tons of coal.
As a result of the deal, Raspadskaya will become the largest player in the Russian coking coal market in terms of production and will be one of the world’s largest coal producers in terms of revenue.
Text: Eugen Gerden