Russia eyes Asian coal market

A drop in European consumption is heating up the competition among coal producers worldwide

As coal consumption in Europe continues to fall due to environmental concerns, Russian coal exporters are switching to Asian countries, where demand for the cheap form of energy is expected to increase and new coal-fired power plants are under construction. By 2025, Moscow aims to double its coal exports to Asia.

Competition is likely to heat up in the Asian coal market, as Russia seeks new buyers, challenging traditional suppliers Australia and Indonesia, says Nikkei Asian Review. At the end of August, Russian Minister of Energy Aleksandr Novak announced that the country intended to double its coal exports to Asia by 2025 from around 100 million tonnes in 2018. According to President Vladimir Putin, the existing business environment allows Russia to strengthen its position in the global coal market and raise its market share.

The president has urged Russian resource companies to develop export infrastructure, such as railways and ports. Russia's largest coal miner SUEK is expanding the Port of Vanino, the largest port of Khabarovsk Krai. The facility, which began commercial operation in 2009, is expected to ship around 20 million tonnes of coal this year, while after the expansion, the port's annual capacity may reach 40 million tonnes. SUEK aims to increase its supplies to Thailand, Vietnam and other Southeast Asian countries, where the demand is expected to be strong. The company is also interested in raising exports to Asia's main buyers China, Japan and South Korea. Russia accounted for 9% of Japan's coal imports in 2017, which was by 3% higher than in 2012.

Port of Vanino, which began commercial operation in 2009, is expected to ship around 20 million tonnes of coal in 2018. Photo: Glucke

Russian producers have to search new buyers because coal consumption in Europe is falling due to environmental concerns. At the same time, Asian countries are stuck to coal thanks to its relative cheapness. Last year, coal consumption rose by 0,4% in China and by 4,4% in India, while the member countries of the Organisation for Economic Co-operation and Development decreased their consumption. Global coal production rose by 3% to 7,55 billion tonnes in 2017, according to the International Energy Agency. Coal prices are currently near a six-year high.

The world's biggest coal exporters Australia and Indonesia are also increasing their production levels. The latter has raised the national coal production target for 2018 by 100 million tonnes. Australian coal exports hit a new high of 19,87 million tonnes in July. ''Those who keep saying coal is dead get proven wrong time and time again,'' said Australian Minister for Resources Matt Canavan.

By Anna Litvina

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