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Pulse of Coal - February 27

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 Coal - February 27
Photo Shoot: Juan encalada on Unsplash
Special project Coal of the East of Russia

A brief overview of the global coal market

 Last week, coal quotes on the European market strengthened to $ 65-66 / t. due to the projected low temperatures in March in a number of EU countries and limited supplies of coal in the Baltic Sea due to icing of a part of the water area. According to the Speedwell Weather portal, average daily temperatures in several European countries will be significantly lower than average values ​​in the first half of March, which implies an increase in coal combustion. Extremely low temperatures have created a layer of ice slowing down the movement of ships in the vicinity of major Baltic ports. Exporters of the material require ice-class vessels, which increases the cost of freight. However, declining gas prices and the high cost of European CO2 quotas will put pressure on coal prices in the medium term. The natural gas price index on the European trading platform TTF decreased to 16.4 euros / MWh (-4.1 euros / MWh or -20.3% as of 01.02.2021). The value of the European CO2 quotas reached 39.0 € / t. (+6.3 EUR / t. Or + 19% by 01.02.2021).

Lower demand from Indian cement companies and Transnet's gradual recovery in coal shipments to Richards Bay after heavy rains have weakened South African coal indices to below
USD 85 / t Material stocks at Richards Bay terminals increased to 3.5 million tons (+0.2 million tons to 17.02.2021).
The Indian government plans to amend the federal mining law, which will increase the permitted volume of sales (over 50%) of coal to the domestic market by local mining companies. This measure is intended to reduce the dependence of the Indian industry on imported coal.

In January 2021, steam coal imports by Indian power plants fell 31% to 3.9 million tonnes on an annualized basis. Nonetheless, coal-fired generation increased in January to 91.7 TWh (+6.2 TWh or + 7% versus December 2020).

The ongoing New Year holidays in a number of APR countries (February 12-27.02.2021, 2021) restrict the trading activity of market participants, which weakens the Australian coal indices. Slight warming and an increase in material production by Chinese enterprises since mid-January XNUMX weakened domestic coal prices in the PRC and reduced demand for imported material.

Declining demand from Chinese generators for imported coal of Indonesian origin due to low material prices in the PRC's domestic market weakened quotes for coal from Indonesia this week.

Despite the suspension of the operation of a large coal mine Moranbah (Queensland, Australia), the low trading activity of metallurgical plants in a number of APR countries had a negative impact on the indices of coking material from Australia.

Rostec received a pledge of controlling stakes in Ogoji and the port of Vera

Dmitry Novikov (president of Rosengineering) and Yekaterina Lapshina (asset manager of Albert Avdolyan) pledged their stakes in the Ogodzhinsky coal deposit and the Port Vera coal terminal to Rostec State Corporation. In January 2021, the state corporation Rostec, Dmitry Novikov and Yekaterina Lapshina obtained full control over the specified assets of Dmitry Bosov's heirs. Now Rostec is the key owner of these enterprises. Presumably, the collateral is due to the fact that Rostec had previously provided financing to its partners for the purchase of shares in assets from Dmitry Bosov's structures.
Consolidation of the Port Vera coal terminal and the Ogodzhinskoye coal deposit may cost Rostec more than 10 billion rubles. 

The Ogodzhinskoye coal deposit is located in the Amur Region, not far from the northern border with China and 2 thousand km from the ports of the Far East. Proved coal reserves amount to 82.7 million tons, probable reserves amount to 662 million tons. The design capacity of production at the field is 30 million tons of coal per year.

Port Vera is a new coal terminal located in the Russian Far East. Last year, the terminal handled 2.6 million tons of coal. The design capacity of the terminal of 20 million tons will be implemented in 2022.

Rostec is a Russian state-owned corporation created to facilitate the development, production and export of high-tech products and controls assets in various industrial sectors.

North Star will receive a government subsidy for the Syradasay coal deposit

Severnaya Zvezda, owned by Roman Trotsenko's AEON corporation, may receive a non-repayable government subsidy of up to 20% of its investment in the Syradasay coal field project in Taimyr.

The project is included in the list of strategic investment projects in the Arctic zone, approved by the government of the Russian Federation on February 1, 2021.
Earlier, Severnaya Zvezda adjusted the parameters of the first stage of the project for the development of the Syradasay coal deposit. Now the company intends to invest 2025 billion rubles in the project until 45. instead of 35.6 billion rubles., announced earlier.

In December 2020, the Russian State Agency for the Expertise of Design Documentation and Engineering Survey Results (Glavgosexpertiza) issued Severnaya Zvezda a permit for the construction of the first stage of a coal mine at the South-Western section of the Syradasai coal deposit in Taimyr. The design capacity of the first stage of the mine is 5 million tons per year, with a potential increase to 10 million tons. Coal mining is scheduled to start in 2021. The estimated reserves of the Syradasay coal deposit are 5.7 billion tons of coal. Glavgosexpertiza also allowed the construction of the Taimyr enrichment plant with a total capacity of 5 million tons per year. In addition, Severnaya Zvezda plans to build a coal terminal located 87 km from the port of Dikson in Taimyr.

Severnaya Zvezda plans to announce a tender for the construction of 28 ice-class ships for coal export along the Northern Sea Route (NSR) by 2032. The total cost of these ships could reach $ 1.4 billion.
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