Russian coal exports in decline

RUSSIA / FSU POLITICS - In Brief 06 Jul 2019 by Alex Teddy

---

Coal is one of Russia's many mineral resources. Exporting coal matters to the Russian economy though not as much as oil and gas. Coal exports to the EU are down sharply. To make it worse the world price is falling. A mild winter, green taxes and better fuel efficiency have all contributed to this. The EU is getting savvy on insulation as well as switching to renewables. In the meantime tar sands and shale oil mean that energy prices are not going to return to the heady days of ten years ago. Coal in January 2018 was USD 86 per ton in Europe. By December 2018 it was USD 43 per ton.South-East Asian markets are buying more Russian coal but not enough to offset the decline in EU purchases of Russian coal. This is even though Asians tend to pay up to 20% more than Europeans per ton of coal. However, in the long run South-East Asia is growing more prosperous and will want clean air. Coal is the dirtiest fuel of all. Siberia and some of the northern regions of European Russia are where the coalmines are. Kemerovo Oblast in south-west Siberia produces almost 70% of Russia's coal. These are some of the most underdeveloped regions in Russia. They had two bumper years. Coal is exported by train which led good revenues for Russian Railroads. The coal industry is lobbying for reduced freight charges from Russian Railroads to cushion the industry from lower EU demand for coal. Kemorovo's governor has asked for a 12.8% cut in the price charged by the railroads and he will guarantee to ship over 51 million tons. But this will cut into the railroads profits. It all goes to underscore that reliance on hydrocarbons is not viable in the long run. The government talks about developing othe...