Coal eye – Newspaper Kommersant No. 212 (7413) dated 11/16/2022

The government plans to export coal by rail eastward in 2023 at 111 million tons. The quota for Kuzbass is set at a lower level than the instruction of the President of the Russian Federation (63 million tons) suggests, and may amount to 52.5 million tons in the guaranteed scenario and 54.5 million tons in the indicative one. Export from Buryatia is planned in the amount of quotas for 2022 – 9.1 million tons, from Khakassia – 8.6 million tons (less than the quota). According to experts, it is realistic to sell 111 million tons of coal in the Asia-Pacific markets, but the reduction in exports from key coal regions can hit them hard.

In 2023, 111 million tons of coal are planned to be exported to the east by rail. This follows from the corresponding schedule (Kommersant has it) – according to Kommersant’s interlocutor in the industry, it was approved following a meeting on October 24 with First Deputy Prime Minister Andrei Belousov. According to forecasts for this year, which Kommersant saw, coal exports to the east should decrease by 3.2% – from 100.5 million tons in 2021 to 97.3 million tons. Thus, in 2023 this indicator will grow by 10.4%, but in many cases it will lag behind previous plans by region.

Thus, for the main coal exporting region – Kuzbass – the export volume is set at 54.5 million tons. This is more than expected at the end of this year (48.5 million tons), but significantly less than what was planned for 2023 as part of the presidential instructions – 63 million tons (see Kommersant dated March 2, 2021). This is even less than the 56 million tons offered by Russian Railways itself (see Kommersant of October 17). At the same time, the region itself, which complained about the drop in shipments, proposed to transfer the 9.5 million tons that were not exported relative to the quota to 2023, increasing the volumes to 73 million tons (see Kommersant on October 10).

In addition to the indicative indicator of 54.5 million tons, a guaranteed volume of 52.5 million tons is also prescribed for Kuzbass. Taking into account the experience of 2022, which showed the possibility of fundamental changes in the situation, the parameters for 2023 are now determined both by the base (indicative, this is the maximum possible figure) and by the risk (guaranteed) option, a Kommersant source familiar with the situation explained. This model allows, on the one hand, to plan investment and production plans for shippers, and on the other hand, it creates a kind of operating reserve (in the amount of the difference between the guaranteed and indicative indicator) in case of another force majeure.

The same difference in volumes is shown for the other two regions, whose coal exports to the east are regulated by presidential orders – Khakassia and Buryatia. For Khakassia, the indicative volume of exports will be 8.6 million tons, guaranteed – 6 million tons, for Buryatia – 9.1 million tons and 8 million tons, respectively. Quotas for 2022 on behalf of the President for Kuzbass were 58 million tons, for Khakassia – 9 million tons, for Buryatia – 9.1 million tons. Another 400,000 tons have been allocated under the quota for Tuva, but this figure has been retained without additional conditions for 2023. These regions, like Kuzbass, complained about the non-export of coal. At the end of October, the parliament of Khakassia turned to Mikhail Mishustin with a request to increase exports, noting the fall in both production and shipments to the east. According to the region, exports fell from 868 thousand tons in March to 57.4 thousand tons in September. For nine months, 4.2 million tons of coal were exported from Khakassia.

Large volumes for export to the East are planned in 2023 from Yakutia (8 million tons) and the Amur Region, where the volumes of the Elginskoye field are consolidated – 18 million tons. In 2021, 14.6 million tons were loaded from the Elginskoye field.

Problems with the sale of 111 million tons of coal are not expected, even taking into account the increased effect of secondary sanctions, Mikhail Burmistrov, head of Infoline-Analytics, believes: the main growth is expected on the Elga, where high-quality coal and stable sales prospects. But Khakassia will be under a serious blow, from which it is economically efficient to transport coal only in the direction of the Far East. In Kuzbass, the planned reduction is a powerful blow to the region’s economy. According to the expert, immediately after the outbreak of hostilities, the government should have given the most clear signal to the coal industry to reduce production or reorient low-margin coal to the domestic market, as well as increase the volume of enrichment.

Natalya Skorlygina