• 2018 October 9

    Maxim Oreshkin, RF Minister of Economic Development

    On investments in coal exports infrastructure

    - Coal exports is actually one of the key issues of our country development in the coming years. Strange as it may sound, coal segment is something that will probably obtain considerable infrastructure investments.

    … If we look at the coal industry situation, global coal prices have increased considerably, they are above RUB 6,000 per tonne. It is a level ensuring high profitability of production. Therefore, we are looking into the increase of production, loading and export of coal. And of course, that will face infrastructure bottlenecks of BAM and Transsib, seaports and other infrastructure facilities, as well as electrification of BAM and Transsib, etc.

    …If we consider the project of main infrastructure development till 2024, it mostly covers coal-related projects with over RUB 2 trillion of investments including coal companies’ investments of some RUB 900 billion, investments of Russian Railways – RUB 600-700 billion for BAM and Transsib electrification, investments of FGC UES – up to RUB 300 billion, investments in ports, etc. With such an ambitious project it is important to take into consideration certain risks.

    … What is the risk? The state will invest considerable amounts through Russian Railways and FGC UES, coal companies will undertake investments and generate jobs in certain regions. But we know that despite of growing prices the global coal market situation is facing challenges. The demand of large consumers like China is about to decrease which can cause an excess of supply. If coal prices fall down in the global market we can face the loss of jobs and absence of demand for infrastructure.

    …. It is important to understand that no other cargo will replace coal. We do not have any other heavy cargo of that volume. Grain is similar but its volumes are much lower, not tens of millions of tonnes being discussed by coal producing companies. That is why we are discussing it now with Russian Railways and coal companies.

    Transcript of the speech at the Federation Council, 3 October 2018.

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