SUEK proposes to increase coal shipments from mining regions in proportion to growth of eastern railway capacity

KEMEROVO. Sept 14 (Interfax) - Siberian Coal Energy Company (SUEK) is proposing to increase coal shipments from coal mining regions of Siberia eastward in proportion to the expansion of the throughput capacity of Russia's eastern railways, the company's director of logistics, Denis Rakhimzhanov said at the PRO//Motion.Siberia transport and logistics conference in Novosibirsk on Tuesday.

Russian Railways (RZD) reached throughput capacity of 144 million tonnes on eastern railways last year, and by the end of 2022 it is expected to increase to 158 million tonnes, he said, adding that there have been assurances that infrastructure still needing work will be finished. This is a capacity increase of 9.7%, he said.

"We believe that it is possible to take a base period, it could be the three-year period of 2019-2022, it could be shock-hit 2022 [at which] we fix volumes by coal regions - Novosibirsk, the Kuznetsk Basin, Khakassia, Krasnoyarsk, Irkutsk. And in 2022 we add 9.7% of the volume [of coal shipments from each region] to each of them, exactly the increase of infrastructure throughput capacity," Rakhimzhanov said.

This would "give coal companies prospects," and it "will enable them to invest money, manage their costs and confidently see the volumes that they can count on [shipping by rail] in 2023," he said.

The method of distributing these increases among coal companies within a given region is "also a debatable matter, we could go by the example of the well-proven method of Kuzbass, but with certain changes," Rakhimzhanov said.

Right now the company has to redirect shipments from some of its coal divisions located in regions where there are no priority rules of access to the infrastructure of eastern railways he said. The mining units that have suffered most from the changes in the coal sector and the geography of product shipments are the Tunguisky coal mine, SUEK-Khakassia and Vostochno-Beisky mine. They currently ship because SUEK subsidizes them with shipments to the west so that they do not suffer, Rakhimzhanov said, adding that these mines also supply coal to Tommot, Yakutia.

RZD deputy CEO and head of the company's Corporate Transport Service Center, Alexei Shilo did not support the idea of quotas for coal mining regions. "We believe that the whole increase in carrying capacity should be somehow equally distributed among all sectors. Perhaps for the country's economy it will be far more important to give this whole capacity increase to other sectors - to metallurgy, to the oil industry, to shipment of forest products," he said.

Companies that receive quotas "stop looking for other alternative possibilities" and routes for shipping their product, he said.

"If we're already talking about some strict stipulation [of obligations to ship out freight], this should be in the form of binding contracts, such as ship-or-pay. This requires fine-tuning legislation, but this is already a comprehensible economic, rather than administrative stipulation of given obligations on both sides," Shilo said.

After the rules of non-discriminatory access to railway infrastructure were suspended in the spring of 2022 and RZD "slightly adjusted" the order in which freight was accepted for shipping along eastern railways, more than 700 businesses appeared that had "never before used shipping services on the eastern railways," and "this is mostly not coal freight, of course," Shilo said.