Russia is changing the geography of coal supply

The coal industry is going through hard times, but to talk about the decline of coal power is still too early. Some analysts believe that we are approaching the beginning of a new trend that will make coal one of the most interesting products. In support of this version, Vestifinance.ru enumerates 10 facts:

1) Currently, coal meets about 30% of primary energy requirements, which is the highest level since 1970. Coal is used to generate 41% of electricity production in the world and 70% of steel.

2) According to the Institute of Global Natural Resources, the construction of 1200 coal-fired plants was announced in 2012, the majority of them are expected to be built in China and Pakistan.

3) Japan, devoid of natural energy resources, has invested about 19.7 billion in overseas coal projects  in the past seven years. German state-owned bank Kreditanstalt für Wiederaufbau followed the same path and lent 3.7 billion for 8 year-long coal projects in Greece, India, Serbia, South Africa and Australia.

4) The volume of the international coal trade is unlikely to wane. Coal exports last year constituted 1,300 million tons. The top five importers of coal were China, Japan, India, Korea and Taiwan, while the top five exporters were Indonesia, Australia, Russia, the United States and Colombia.

5) One-fifth of world exports is disadvantageous when prices fall below 72 dollars per ton.

6) More than 2 thousand small mines in China are expected to be closed by 2015, as their further development is considered unprofitable. According to the National Bureau of Statistics, production in China, the world's largest producer, rose to 3.68 billion tons in 2013, compared with 3.65 billion last year.

7) Beijing will ban the use of coal in the six major areas of Beijing in 2020 as part of efforts to combat air pollution. As a result, the use of coal is completely forbidden, and therefore all coal mines will be closed. Currently, coal power plants generate about 25% of the electricity in the city.

8) In the United States, coal consumption is expected to grow by 2.5% to 949 million tons of American coal this year, due to the fact that gas prices have started to rise again.

9) In the United States coal production will grow by 2.5% this year due to an increase in consumption, and also because of the need to replenish stocks.

10) More than 60% of Africa's population has no access to electricity (600 million people). According to the EIA project, coal consumption in Africa will increase by 70% by 2040, while there are about 35 billion tons of recoverable coal reserves in Africa.

The chairman of the Russian Independent Trade Union of Coal Industry Workers, Ivan Mohnachuk, indicates a high level of coal mining at the Elga deposit, where the company "Mechel" for July produced 170 tons of coal, and Elegest. ("Mechel" is considered the largest Russian company producing coking coal, as well as one of the world's largest producers of coal for the steel industry. The group controls 25% of Russia's enrichment capacity of coking coal. Overall coal mining by the company in 2013 amounted to 27.5 million tons).
According to the expert, in both fields there is both energy and coking coal. However, with sufficient power fields and a large amount of coal-based exports to China, the difficulty remains bandwidth railways.

Here, logistics is becoming one of the main issues. As Mohnachuk stated, "there is a problem at the stage of formation and reformation of trains at abutting stations." "In this regard, the railways pose a problem. Still all these technical problems may be solved and I think they will indeed be resolved in the very near future " the expert said.

Mohnachuk also noted the key role of the Baikal-Amur Mainline (BAM) for successfully exporting Russian coal to the East: "When in the 1970s the Soviet Union began to build BAM, everyone mockingly said that it was a road to nowhere, but, as is now clear, our fathers and great-grandparents were visionaries. Today the BAM is already overloaded, it simply is not enough. And given the fact that in the Far East, a lot of things - and iron ore and rare earth ores and building materials, and gravel, and other minerals - of course, the load on the BAM increased very much, and it requires today another reconstruction. "

The coal industry is interested in successful operation of the BAM, he said. "We produced 352 million tons of coal last year, we excavated 383 million tons of coal, and quite fast, in fact one can increase the amount of production to 400 million tons of coal rather quickly, we have both the technical and geological capabilities, transport remains the only problem. If we solve the transportation problem, then we can really produce a considerable amount of coal," Mohnachuk said.

"Meanwhile, changing the geography of deliveries of Russian coal is already incorporated in the program of development of the Russian coal industry until 2030 and it is not related to the current events in Ukraine," the deputy director of the non-profit partnership "Russian Mining" Sergei Onischuk said.