On June 02, 2021 the head of Rostec state corporation Sergey Chemezov pointed out that Elgacoal, owned by Albert Avdolyan’s A-Property and Rostec, plans to expand its presence in the Chinese market. Amid political tensions between China and Australia, Russian exporters are willing to ramp up supplies and take advantage of the ban, imposed on Australian coal imports by the Chinese government in May 2020.
In Jan-Apr 2021, overall Chinese coal imports decreased to 90.2 mio t (-36.6 mio t or -29% to Jan-Apr 2020). During the same period Russia exported to China 14.6 mio t (+3 mio t or +26% to Jan-Apr 2020). The share of overall Russian coal shipments to China increased from 9.1% in Jan-Apr 2020 to 16.2% in Jan-Apr 2021.
Under the statement of Sergey Chemezov, Elgacoal is capable of replacing 60-70% of Australian supplies. The company intends to lift the volume of coal production to 18 mio t in 2021 with a gradual increase up to 45 mio t in 2023. The growth will also be achieved by increasing the capacity of the Elga-Ulak railway to 24 mio t per year.
In December 2020, A-Property and Chinese company GH-Shipping created a joint venture to ensure supplies of material from Elga coking coal deposit to the Chinese market. Under the representatives of A-Property, the volume of coal supplies to China is expected to reach 15.0-18.0 mio t in 2021, 20.0-24.0 mio t in 2022 and 30.0 mio t in 2023, with a subsequent increase to 50.0 mio t of coal per year.
However, the main obstacles to increasing the volume of transshipments for Russian exporters are limited capacities of Baikal-Amur Mainline (BAM) and Trans-Siberian Railway (TSR) as well as rail congestion on the Russia-China border. Despite the forecasted expansion of BAM and TSR capacities up to 180 mio t of all types of cargo until 2024, experts doubt if it is enough to meet the demand for coal transportation eastwards.
Since December 2020, China has been restricting imports of Russian coal via overland border crossings amid Covid-19 restrictions, imposed by the Chinese government. In Jan-Apr 2021, Russian overland coal exports to China decreased to 2.8 mio t (-0.1 mio t or -3.4% to Jan-Apr 2020).
Source: CAA Analytics