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Pulse of Charcoal - March 20

Coal industry - actual figures and facts. Partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Mining, logistics, prices, export - all that the coal industry in Russia and in the world lives on is concise and to the point - in a new partner project of the Modern Analytical Agency (CAA) and the EastRussia portal

Pulse of Charcoal - March 20
Special project Coal of the East of Russia

A brief overview of the global coal market

Over the past week, the European market saw a strengthening of steam coal quotes above $ 71 / t. Remaining low temperatures in some EU countries and the upward trend in natural gas prices, which strengthened to 18.5 EUR / MWh (+0.4 EUR / MWh or + 2% by 10.03.2021), had a positive effect on coal prices. Due to the cold snap in early March, some European energy companies ran out of coal in their warehouses and were forced to buy material on the spot market. Stocks at ARA terminals fell to 3.7 million tons (-0.1 million tons or -2% by 10.03.2021). However, the rise in the price of quotas for carbon dioxide emissions to 42.86 euros / ton. (+1.39 EUR / t. By 10.03.2021) limits further strengthening of coal quotes.

Increased demand from Chinese generating companies offset the decline in shipments of material to India, strengthening the price of South African coal to $ 99-100 / t. Material stocks at Richards Bay terminals decreased to 3.0 million tons (-0.3 million tons to 10.03.2021).

The growth in electricity consumption caused by a cold snap in a number of countries in the Asia-Pacific region stimulated the demand for Australian thermal coal and contributed to an increase in the indices to $ 91-92 / t.

Despite the action of the decree of the Ministry of Trade, Industry and Energy of South Korea on the temporary limitation of the operation of half of the coal-fired CHPPs in the country to reduce emissions, coal imports to South Korea in January-February 2021 amounted to 6.1 million tons (+0.3 million tons or + 5% to January-February 2021).

Low business interest in Indonesian material from India due to the onset of the monsoon season and a decrease in Chinese imports of low-calorie coal due to an increase in hydroelectricity have reduced the quotes for material of Indonesian origin to $ 71-72 / t.

The decline in prices for Australian-sourced coking coal was driven by the availability of metallurgical material in the domestic Asia-Pacific markets and weak demand for imported coal. Quotes are expected to go up in April due to seasonal growth in steel output.

Igor Sechin raised the issue of the limited capacity of the Transsib and BAM

Igor Sechin, head of the Russian oil company Rosneft and executive secretary of the Commission on the Strategy for the Development of the Fuel and Energy Complex and Environmental Safety, criticized local authorities and infrastructure companies for inaction in expanding the limited capacity of the Trans-Siberian Mainline (Transsib) and the Baikal-Amur Mainline (BAM). On March 16, 2021, Igor Sechin appealed to the President of Russia with a request to ensure the implementation of the decisions made during the meeting of the Commission on the Strategy for the Development of the Fuel and Energy Complex and Environmental Safety in 2018.The document adopted during the meeting provides for the expansion of the railway capacities of the Trans-Siberian and BAM to increase the supply of Russian coal to the east to 195 million tons by 2025, of which at least 100 million tons - to the ports of the Primorsky Territory, 85 million tons - to the Vanino-Sovgavansky hub and about 10 million tons - for export through border crossings. However, these plans contradict the figures provided by the strategy for the development of the coal industry in Russia until 2035, according to which by 2024, not only coal, but the total volume of freight traffic to the east should grow to 180 million tons.

According to experts, the current point of view that the Severomuisky tunnel-2 needs to be built to expand the BAM's capacity may turn out to be erroneous. Currently, coal supplies from Kuzbass are carried out through the Transsib, which is considered to have greater potential for further expansion and great importance for Russian exporters, whose mines are located in Kuzbass, Khakassia and the Novosibirsk region. To increase the supply of coal from Yakutia to the coal terminals of the port of Vanino, other measures are needed, such as the development of the eastern part of the BAM and the expansion of the Kuznetsovsky tunnel.

In addition, Igor Sechin reproached the infrastructure companies for hindering the development of the Russian Far East, since their activities contribute to the growth of coal supplies to the south through the port of Taman to the detriment of the eastern direction. In 2020, railway transportation of coal for export in the direction of southern ports increased to 20.04 million tons (+5.06 million tons or + 34% by 2019). It is noteworthy that the increase in export supplies of coal to the south of the country limits the volume of Rosneft's cargo transportation in this direction.

New mines and a processing plant will be launched in Kuzbass

In 2021, it is planned to launch 3 new mines and a processing plant in Kuzbass.

SUEK-Kuzbass plans to commission the November 7-Novaya coal mine in 2021. Investments in the construction of the mine amount to 15 billion rubles. ($ 203.5 million). The design capacity of the enterprise is 4.8 million tons of coal per year (see CAA Russian Coal Weekly, March 12, 2021).

The UglePromInvest group of companies will launch the Sibirskaya mine with a design capacity of 5 million tons. The Group's investments in the construction of the enterprise amounted to 15.3 billion rubles. ($ 204.2 million).

The Chernokaltansky open-pit mine by the Siberian Coal Industry Company (SIPK) has a design capacity of 2 million tons of coal per year. The total investment in the project is estimated at 1 billion rubles. ($ 13.7 million).

Concentrating plant "Mine No. 12", owned by Stroyservice, will begin its work in 2021. With a total investment in the construction of the plant of 10 billion rubles. (136.8 million dollars), the design capacity of the enterprise will be 4 million tons.

According to the Deputy Governor of the Kemerovo Region Andrey Panov, it is assumed that the construction of new mining and processing enterprises will contribute to an increase in the total coal production in Kuzbass to 235 million tons (+13.01 million tons or + 6% by 2020). In addition, on March 02, 2021, during a meeting on the development of the coal industry in Russia, Vladimir Putin called for an increase in coal exports from Kuzbass to the east to 68 million tons by 2024 (+ 15 million tons or + 28% to the current export quota) ...

Rostekhnadzor suspends the operation of the mine of the Vorkutaugol company

The Federal Service for Environmental, Technological and Nuclear Supervision of Russia (Rostekhnadzor) has imposed a temporary ban on the operation of the Zapolyarnaya-2 coal mine, owned by the Vorkutaugol company. In 2020, the company's production volume reached 2.0 million tons.

(+0.05 mln tons or + 2.5% by 2019). The inspection revealed violations of industrial safety standards.

Vorkutaugol, owned by Alexey Mordashov's Severstal, is one of the largest producers of coking coal in Russia. In 2020, the total volume of coal production by Vorkutaugol amounted to 10.26 million tons (+0.11 million tons or + 1% by 2019). The company extracts metallurgical coal of grades Zh and K, the main volume of supplies falls on the enterprises of Severstal.

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