In 2011, Russia produced 336.3 million t of coal. This represents 4% growth over the 2010 total (323.3 million t) and thus 2011 became the year of a record level in coal production in post-Soviet Russia. Some 90% of the output was provided by just the 18 largest players in the industry, demonstrating the concentrated nature of the Russian coal mining business.
Since the early 2000s Russia benefits the status of coal net-exporter. Russia became the world’s # 3 coal exporter (after Australia and Indonesia) – with approximately 11% in global coal trade. Prior to 2009 Russia’s coal export was oriented mainly EU – with 73.4% share. But following market drop in Europe the western route of Russian coal export became less and less attractive. Meanwhile the demand in APAC continued to grow – even in crisis period; 2009 became the time when several Russian coal tycoons began to shift export interests from EU to Asia-Pacific...
Total investments in Russian coal mining totalled US$ 2 billion in 2010. Of these, foreign direct investment (FDI) accounted for less than US$ 40 million, or just 2% of the total. Therefore in general terms, foreign investors are weakly represented in the Russian coal mining industry, Noca is well positioned with several Russian and Ukrainian Coal suppliers, to meet the global demand for Russian coal.
Compared to other Russian fuel sources, the coal industry has the best raw material base. Resources are concentrated in 22 coal basins and 118 individual deposits, spread unevenly across the country. Total resources are approximately 200 billion tons (bt); reserves under development, about 105.2bt, with open pit mineable reserves at 74.9bt.
Production: Since 2001, production has risen steadily, except for 2002, when Siberian hydroelectric power abruptly increased and demand for coal decreased. Abnormally warm climate conditions affected consumption. However, for the last five years, coal production increased by 12.7%.
Companies: Noca is a leading exporter of thermal coals with surface and underground mines from the west of Siberia to the Far East; annual production approaches 90Mt; another, Kuzbassrezrezugol, produces about 45Mtpa of coal.
Several big producers, Raspadskaya, Yuzhkuzbassugol, Yuzhny Kuzbass, Kuzbassugol, Vorkutaugol, Yakutugol and Sibuglemet, share the coking coal – Coal market. Two large new deposits planned in Yakutia and the Republic of Tyva require several billion USD to develop infrastructure before implementation.
Transport: Russia’s coal travels vast distances by rail to the nearest seaport. Growing railway tariffs and the strengthening ruble may make it uneconomical to export steam coal by 2010. One possible solution is to adopt flexible market-based railroad tariffs. During the first half of 2007 coal exported from ports in Russia, Ukraine and Eastland (Baltic states) increased by 5.1% over 2006 levels.
The move from Gas to Coal: Russia’s main energy source is gas at 43%; coal 23%; hydroelectric power stations 18%; and nuclear power 16%. However, this balance will change. The Government has approved new allocations for power stations through 2020. Gas will drop from 68% to 50-57% and coal will increase from 25% to 38-39%.
According to the RAO Unified Energy System of Russia, coal consumption will increase 2.5 times. To achieve this, RAO will build many new coal power stations, with half of them located in Siberia. Price weighting determines the increase in coal’s power generation, because coal generation costs will fall compared with gas.
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