The Russian Ministry of Energy is considering the possibility of allocating a quota of up to 20 mio t of coal to Kuzbass mining enterprises for exports in the Western direction. This measure is aimed at increasing coal supplies through ports of Russian North-West and the Azov-Black Sea basin. As part of this initiative, it is planned to apply reduced coal transportation tariffs by the Russian Railways (RZD).
Currently, coal exports along the above directions are performed without quota allocation. This proposal was voiced during the visit of Russian Deputy Prime Minister Alexander Novak to the Kemerovo Region.
Implementation of this concept is under consideration by the Russian Ministry of Energy.
However, the project raised concerns among market participants. Despite the decrease in rail shipments for export in 2024, the total volume of deliveries from Kuzbass to ports in the Western direction amounted to 46.6 mio t of coal (-13.0 mio t or -21.8% vs. 2023), of which:
· 34.5 mio t (-4.4 mio t or -11.3% y-o-y) was supplied to terminals in the North-West;
· 12.1 mio t (-8.6 mio t or -41.5% y-o-y) shipped to the Azov-Black Sea ports.
Thus, with the introduction of a quota for shipments of 20 mio t from Kuzbass, about 27 mio t of high-quality Russian coal will be lost for the export market.
Moreover, the stated project capacity of just one terminal, OTEKO, in Taman enables to handle about 60 mio t of coal per year.
RZD and the Kemerovo Region signed an agreement on exporting coal to the East for 2025 in the amount of 54.1 mio t of coal, which corresponds to the parameters of 2024.
In 2024, export rail shipments in the Eastern direction totaled 50.2 mio t (+0.1 mio t or +0.2% y-o-y).
In 2024, coal production in Kuzbass dropped to 198.4 mio t (-15.8 mio t or -7.3% y-o-y), while exports from the region shrank to 102.0 mio t (-11.8 mio t or -10.4% y-o-y).
The Governor of Kuzbass, in turn, claimed that coal mining companies in the region are ready to export 202.5 mio t in 2025: 99.2 mio t in the Eastern direction, 66.7 mio t in the North-Western direction, and 36.6 mio t to the South.
Because of the systemic issues with transportation through the RZD’s network, high shipping costs, as well as international sanctions and depressed international prices, the decline in total Russian coal exports intensified in 2024, bringing supplies down to 195.0 mio t (-17.1 mio t or -8.1% y-o-y).
Most producers have to export coal with zero or negative profitability. Russian suppliers are forced to cut exports in all directions. Deliveries through ports in the South, as well as in the North-West are loss-making, while access to railroad capacity remains limited amid rising rail tariffs, higher production costs, strengthening of the ruble exchange rate coupled with falling global indices.
The Kemerovo Region is a key coal mining region in Russia, accounting for more than 50% of the country’s coal production. The industry involves more than 96,000 employees. Over 150 coal mining enterprises operate within the region.
The coal industry plays a crucial role in the region’s economy, being the backbone of most local settlements and forming a significant part of the regional budget revenues. In 2024, two underground mines and six open-pit mines ceased operations in Kuzbass, while the share of loss-making companies exceeded 50%.
Source: CCA Analysis
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