The authorities of Kuzbass, the largest coal region in Russia, are considering a possibility of introducing discounts on export railway transportation westward as a measure to stimulate the export of coal to the Asia-Pacific region due to the expected decline in coal shipments to Europe caused by the EU embargo coming into force on August 10, 2022.
These measures should enable to create additional routes for the export of coal to the Asia-Pacific countries through ports located in the western part of the country.
It is also proposed to partially cover transportation costs by restoring the lowering coefficients to Russian Railways (RZD) tariffs for the delivery of thermal coal at 0.895 and for the long-distance shipments at 0.4.
The capabilities of the Eastern range are still limited and do not allow Russian suppliers to significantly boost the volume of coal railings to ports and border crossings in the Far East.
On June 01, 2022, the Russian government increased tariffs for rail transportation of coal by 11% putting more pressure on Russian suppliers, especially thermal coal producers, amid Western sanctions, higher freight costs, rising handling rates in ports and the strengthening of the Russian ruble. In addition, in the current global market environment, Russian exporters are forced to provide significant discounts to international prices, often exceeding 50%.
In H1 2022, coal exports from Kuzbass through the eastern ports and border crossings edged lower to 50.3 mio t (-3.4 mio t or -6.3% y-o-y), while shipments through the western routes plunged to 53.6 mio t (-6.0 mio t or -10% y-o-y).