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Pulse of Charcoal - September 4

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 - September 4
Special project Coal of the East of Russia

A brief overview of the global coal market

Last week, EU coal prices exceeded $ 165 / t. The continued growth in gas prices of TTF to 51.5 € / MWh (+ 6.5 € / MWh by 25.08.2021) remains the key factor behind the increase in coal prices. Insufficient gas supplies to Europe as a result of a series of unexpected disruptions at Gazprom's facilities and an increase in US LNG supplies to Asia compared to the EU have reduced the occupancy of European gas storage facilities to 8-year lows below 60%. Speculation about the delay in the launch of the Nord Stream 2 gas pipeline is fueling market concerns, driving up prices for both gas and coal. High volumes of coal generation in Germany at 37 TWh (+ 27% YoY) provide additional support to coal prices. The decrease in the volume of wind generation in the EU to 752 kWh (-306 kWh by 25.08.2021) also had a positive impact on the dynamics of the coal indices. However, rising CO2 prices are at € 60.1 / t. (+3.6 EUR / t. To 25.08.2021), restrain further strengthening of quotations. Coal reserves at ARA terminals amounted to 4.7 million tons (+0.3 million tons to 25.08.2021).

High trading activity of consumers from the Asia-Pacific countries and problems with the supply of material on the railway line connecting the coal-mining provinces of South Africa with the port of Richards Bay continue to keep the prices of South African coal above $ 150 / t.

The rise in domestic prices in China is above $ 165 / t. due to a decrease in stocks of material in the ports of the PRC to 3.9 million tons (-0.8 million tons by 24.08.2021) due to the recent 4-day quarantine. Coal consumption in the PRC is expected to rise on the back of a decrease in average daily temperatures.

Australian material indices are in an uptrend above
USD 170 / t The key factor behind the rise in prices is the increased demand from Indian consumers, who are restocking stocks amid the end of the monsoon season in the country. Due to the worsening epidemiological situation in the key coal mining regions of Australia, the ban on coal mining was once again extended until September 10.09.2021, XNUMX.

Growth of quotations of Indonesian coal above 130 USD / t. due to the increased trading activity of Indian buyers. An additional factor in the rise in prices is government restrictions on coal exports, under which exporters are obliged to fulfill their obligations to supply coal to the domestic market.

The limited supply of Australian coking coal on the export market and the demand of Chinese steel mills for imported material contribute to the growth of Australian metallurgical coal indices above $ 260 / t. From 05.08.2021/10.09.2021/19 to 2020/XNUMX/XNUMX, coal mining in Australia is severely restricted due to the Covid-XNUMX outbreak last month. Reduced supplies from Mongolia to the PRC amid quarantine, as well as high prices in the PRC's domestic market, are forcing Chinese steel enterprises to buy Australian material from Asian traders. In XNUMX, the Chinese government imposed a ban on coal imports from Australia.

Elgaugol can get priority access to BAM

On August 24, 2021, during the preliminary consideration of Elgaugol's request for guaranteed transportation of 30 million tons of coal along the Baikal-Amur Mainline (BAM), the Ministry of Transport, the Ministry of Energy and the Russian Railways (RZD) agreed to grant permission, but only for 20 million t. Earlier, Elgaugol, a subsidiary of A-Property and the state corporation Rostec, offered to build a new private railway line between the Elga coking coal deposit and the Sea of ​​Okhotsk for 97 billion rubles. ($ 1.3 billion), provided that the company receives priority access to BAM. The railway line with a length of about 500 km assumes a throughput capacity of 30 million tons per year. The project is expected to be completed in 5 years.

Given the limited capacity of BAM, supplies from Elgaugol may displace coal shipments from Buryatia and Khakassia, where the enterprises of SUEK Andrei Melnichenko, CoalStar Eduard Khudainatov and Russian Coal Mikhail Gutseriev operate. In total, these companies will have to annually reduce exports from the region by 20 million tons. However, the decision of the government authorities will not apply to the coal companies of Kuzbass, which, on the contrary, should increase the supply of coal to the east by 30%. On March 02, 2021, Vladimir Putin called for an increase in the export of Kuzbass coal to 68 million tons per year by 2024.

Nevertheless, according to Oleg Belozerov, Director General of Russian Railways, meeting the requirements of Elgaugol may lead to additional load on BAM due to its limited capacity. Moreover, experts criticized Elga's request, since the successful operation of coal enterprises in Buryatia and Khakassia is important for social stability and regional budget revenues. In addition, the construction of the railway line may be delayed or not completed at all, while the company will benefit from priority access to BAM.

In January-July 2021, coal imports to Ukraine increased by 14%

In January-July 2021, the volume of Ukrainian coal imports increased to 11.7 million tons (+1.4 million tons, or + 14% compared to the same period last year).

8.3 million tons or 71% of all imports of material fell on Russian exporters, 2.1 million tons or 18% were shipments of coal from Kazakhstan and 1.3 million tons or 11% were supplied by the United States.

On June 15, 2021, the Ministry of Energy of Ukraine urged local coal-fired power plants to increase coal imports in order to increase material stocks at terminals to 3.0 million tons of coal ahead of the start of the heating season. Currently, coal reserves in Ukraine are 0.89 million tons (-0.10 million tons by 01.08.2021). As a result of the heat wave in Ukraine this summer, local generators have increased their coal combustion, which has led to a reduction in material reserves in the country.

On December 16, 2020, Ukraine extended a 65% duty on coal imports from Russia until the end of 2021. Import anthracite and coking coal are not subject to duty, as there is a shortage of these types of material in Ukraine. In 2020, Ukraine imported 17 million tons (-20% by 2019).

AEON begins construction of a seaport in Taimyr

On August 30, 2021, Severnaya Zvezda, owned by Roman Trotsenko's AEON corporation, began construction of the Yenisei seaport located in Taimyr. The new coal terminal with a capacity of 7 million tons is part of a project for the development of the Syradasay coal deposit with an investment volume of 45 billion rubles. (612.9 million dollars). The Yenisei seaport will allow Severnaya Zvezda to handle coal delivered from the deposit by trucks.

Photo: press service of the government of the Krasnoyarsk Territory

In December 2020, Glavgosexpertiza issued a permit to Severnaya Zvezda to build the first stage of a coal mine at the South-West Syradasay coal deposit. 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 2Zh grade coal, one of the most valuable grades for coking and use in the metallurgical industry. The company also intends to build a Taimyr enrichment plant with a capacity of 5 million tons per year.

Since the project was included in the list of strategic investment projects in the Arctic zone, approved by the Russian government, it can receive a non-refundable state subsidy in the amount of up to 20% of the total investment.

AEON is an international investment fund that manages a portfolio of large transport projects.

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