Russia, Japan sign memorandum on cooperation in development of Elga coal field
MOSCOW. Dec 19 (Interfax) - Russia's Energy Ministry and Japan's Economy, Trade and Industry Ministry signed a memorandum on cooperation in the development of the Elga coal deposit during President Vladimir Putin's visit to Japan.
The Russian ministry has not specified the details of the memorandum. Russian steel and coal company Mechel , which controls the operator for the development of Elga, declined to comment.
The document might be more important for Japan, which might want to enter into long-term contracts for coal supplies from Elga, BCS analyst Oleg Petropavlovsky said.
"The deposit is big, Zh rank [fat] coal, for which there is demand in Japan, is mined there. Especially since Russian coal is sold at a discount to Australian coal and the shipping distance is shorter," Petropavlovsky said. It is unlikely that the document concerns financing or the sale of a stake in the project, he said.
Elga, located in Southern Yakutia, is the largest coal deposit in Russia and one of the biggest coking coal deposits in the world, with JORC compliant reserves of about 2.2 billion tonnes. Open-pit mining at Elga began in 2011.
Mechel plans to increase coal production at Elga by 22% to 4.5 million tonnes in 2017.
Mechel sold a 49% stake in project operator LLC Elgaugol to Gazprombank in the middle of 2016.
