On August 20, 2021 Elgacoal, owned by A-Property and Rostec, provided Russian Ministry of Transport with an assessment of the construction costs of a new railway line between Elga coking coal deposit and the Sea of Okhotsk at 97 billion RUR (1.3 billion USD). The railway line with a length of about 500 km assumes the carrying capacity of 30 mio t/year. In July 2021, Elgacoal offered to realize this project at its own expense.
The company plans to spend 37.3 billion RUR (504 mio USD) out of 97 billion RUR (1.3 billion USD) on the construction of the railway line itself, 28.4 billion RUR (383.6 mio USD) – on the purchase of rolling stock and 31.3 billion RUR (412 mio USD) – on the construction of a port at the Sea of Okhotsk.
However, under the experts, the construction of the railway line may cost significantly more, given the complexity of project. The estimated period of the project is 5 years. The Elga–Chumikan railway line is thought to be private and might be used for the purposes of Elgacoal only.
Nevertheless, the company is ready to kick off the project if Russian Railways (RZD) concludes an agreement with Elgacoal on guaranteed volumes of 30 mio t to be transported to the ports of the Far East via Baikal-Amur Mainline (BAM) over the entire construction period. This will allow Elgacoal to generate the cash flow, sufficient for the construction of the railway line.
Under RZD’s CEO Oleg Belozerov, the decision on the priority in the transportation of a particular cargo is not within the competence of RZD, since the conditions of Elgacoal may be fulfilled through amendments to the federal laws and the rules for non-discriminatory access of carriers to the public infrastructure. Moreover, the implementation of Elgacoal’s requirements may result in additional strain over limited cargo transportation via BAM.
Source: CAA Analytics
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