Irkutsk
Ulan-Ude

Blagoveshchensk
Chita
Yakutsk

Birobidzhan
Vladivostok
Khabarovsk

Magadan
Yuzhno-Sakhalinsk

Anadyr
Petropavlovsk-
Kamchatsky
Moscow

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Pulse of Coal - November 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 - November 27
Photo: pixabay.com
Special project Coal of the East of Russia



A brief overview of the global coal market

A decrease in average daily temperatures in a number of European countries, as well as uncertainty over the launch of Nord Stream 2, have strengthened steam coal quotes in Europe above $ 165 / t.


The production of coal-fired power plants in Germany was 10.8 GW, which corresponds to a utilization factor of over 80%. Strong demand for coal has pushed CO2 emissions quotas in the EU to new all-time highs of 72.9 € / t, the highest since the instrument was listed on the stock exchange in 2005. At the same time, the German authorities announced plans to abandon from coal by 2030

Growth of South African coal indices above 160 USD / t. was driven by a number of factors, including extremely low coal reserves at Richards Bay terminals (2.2 million tonnes), continuing problems with the railway line connecting South African coal provinces and the Richards Bay port, and growing demand from Indian consumers who returned to market after almost 3 month break.

In China, spot prices for coal of 5500 kcal / kg NAR increased slightly and were in the range of USD 175-180 / t. FOB Qinhuangdao due to lower average daily temperatures in several Chinese provinces. Any significant gains in Chinese quotations for the foreseeable future are unlikely given the strong increase in mining in China and the government's ongoing efforts to tackle higher coal prices.

As a result of floods and unfavorable weather in the Hunter Valley coal mining region of Australia, coal supplies were delayed, which led to an increase in quotations of the Australian material above $ 170 / t.

Reduced trading activity of Chinese consumers, as well as torrential rains in the Kalimantan coal mining region of Indonesia, weakened the prices of the Indonesian material 5900 kcal / kg GAR to $ 140 / t.

Low demand for metallurgical coal in the APR market negatively affected the coking material indices, which fell below $ 320 / t. 

Explosion at SDS mine killed 52 people

On November 25, 2021, at the Listvyazhnaya mine (Kemerovo region), owned by the SDS, the largest disaster in the Russian coal industry over the past ten years occurred.


An explosion of the methane-air mixture is considered a probable cause of the accident. The accident at the mine killed 52 people (46 miners and 6 rescuers). Also, after the accident, 38 miners and 11 mine rescuers were hospitalized.

The production capacity of the mine is 5.2 million tons of coal per year. Listvyazhnaya mine accounts for about 18% of coal production and revenue of the SDS holding, owned by Mikhail Fedyaev, who last year needed government assistance to refinance the company's debts. A mine accident could affect the operations of other coal companies. So, the Governor of Kuzbass Sergei Tsivilev has already instructed to check all mines in the region for explosion safety. The incident is expected to reduce the availability of high-calorific thermal coal and spur prices. Predictions of a recovery in production at Listvyazhnaya are premature, but the accident can be expected to affect production at the mine in the coming year. It took four years for production to recover from the Raspadskaya mine after the accident in 2010, which killed 91 people.

SDS enterprises in 2020 produced 20.2 million tons of coal (-4.4 million tons or -18% by 2019). The company includes open-pit mines Chernigovets, Vostochny, Pervomaisky, Yuzhnaya and Listvyazhnaya mines, processing plants and service enterprises. 

Russian Railways introduces conventions for the shipment of coal to the Far Eastern and North-Western ports

Due to the congestion of the railways of the Eastern range, a large number of abandoned trains amid unfavorable weather conditions in ports that cannot cope with unloading wagons, Russian Railways introduced a number of restrictive measures on coal shipment to the terminals of the port of Vanino, where a state of emergency was introduced due to heavy snowfalls. ...


In particular, a railway convention was imposed on coal shipments to the Daltransugol terminal (SUEK) from November 25 to November 29, 2021. Also, a railway convention was announced for shipments to the VaninoTransUgol terminal (Kolmar) from November 24 to 26, 2021, which is likely will be extended until December 29, due to the large number of abandoned trains (35 trains or 2016 wagons) and the low unloading of wagons (345 wagons / day with a processing capacity of 560 wagons / day). Failure to ensure unloading of wagons due to frozen coal also led to a convention for shipments to the Vanino Commercial Sea Port from 25 to 29 November 2021. If the situation does not normalize, Russian Railways may extend the terms of the conventions.

In addition, due to the low unloading of wagons, Russian Railways announced a 50% convention for the shipment of coal to the ports of Vera and Vladivostok.

In the North-West direction, Russian Railways imposed restrictions on loading to the NKT terminal in Ust-Luga due to the failure to provide unloading and excess of the standard availability of wagons on the Oktyabrskaya railway. The term of the ban on the clearance of goods for tubing has not been determined, and Russian Railways will proceed from the development of the situation with unloading at the terminal. 

The government will increase the MET for coking coal

In November 2021, the State Duma approved an increase in the mineral extraction tax (MET) from 2022 on coal, ore and potash salts, as well as the introduction of a new excise tax on liquid steel. According to the Ministry of Finance, these measures will attract about 160 billion rubles to the budget.

($ 2.2 billion) per year. It is proposed to tie the MET for coking coal and iron ore to world quotations. According to the head of the Ministry of Finance Anton Siluanov, the aim of the initiative is a fairer approach to the taxation of rental income, as well as surplus profits from rising prices for raw materials.

The MET rate for coking coal is proposed to be set at 1.5% of the average price for the tax period in accordance with the SGX TSI FOB Australia Premium Coking Coal OTC Futures / Options index. Now, when mining coking coal, a tax rate of 57 rubles per ton is applied. ($ 1.3 / ton), which, taking into account the quarterly deflator coefficients in 2021, is about 134 rubles / ton. ($ 1.8 / t), i.e. about 0.47% of the October average price of the index 384 USD / t.

In fact, the government and business have agreed on a compromise option for increasing the tax burden on the mining sector. If initially the Ministry of Finance offered to take 6% of the export price of coking coal, then in the agreed version the tax was reduced to 1.5%, while prices fall below $ 100 / t. the tax is reduced to $ 1 / t. In general, the Ministry of Finance decided to soften the initial conditions for the increase in taxes, but the rates were still higher than those offered by the coal companies.

The biggest concern for business was the introduction of an increased income tax, which would depend on investment activity and the amount of dividends paid over the previous five years. As a result, it was decided not to introduce a tax on dividends from 2022, although the government is going to continue discussing it.

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