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SUEK CEO: "Coal regions should get guaranteed export volumes"

11 October 2022
The coal market in Russia and abroad was one of the focal points during the Coal Industry – New Realities international coal forum, which was held in Kuzbass. Today, this market is undergoing significant changes, primarily due to sanctions.

Maxim Basov, CEO of SUEK, spoke about how major market players are adapting to new conditions. "SUEK was originally set up as a company focused on offering premium products for global markets and ensuring the energy security of Russian regions," he explained. As for deliveries to the domestic market - SUEK annually ships 50 Mt of coal, which powers half of Russia's coal generation - they have been consistent so far. On the other hand, maintaining export volumes requires new approaches from the company.

"We started to turn to the East in advance: invested in capacity expansion of our Far Eastern ports and mining facilities, first of all, the Daltransugol terminal in Vanino, an open-pit mine and a washing plant in the Khabarovsk region," Maxim Basov said. "Under Western sanctions, markets that need cheaper coal are still open for us. These are markets where our discount rate, as compared to similar products from Australia, can reach 50% or more. We already have a growing share of deliveries to India, China and Africa. But their product quality requirements are usually lower than in the premium markets of Europe and Japan."

"To support the profit margins of miners from Kuzbass and other coal regions of Siberia that produce high-quality products, government decisions in the field of logistics, export support and engineering are required," Maxim Basov said. "Without a significant cost saving, it is impossible to maintain production and export volumes, and social stability in coal mining regions depends on these parameters," he added.

According to SUEK’s CEO, the Government of Russia and Kuzbass Governor Sergey Tsivilev are doing a lot to resolve these issues. Their measures include upgrades to the Russian Railways' Eastern Polygon that are being made at a rapid pace, alongside the programme initiated by the Ministry of Industry and Trade for import substitution of critical equipment. Besides, benchmarks against which Russian coal is traded at a discount will be neglected when calculating export duties. However, all this work needs fine-tuning.

"In particular, our coal regions should have guaranteed export volumes for 2023, at least in line with the 2022 levels, given a planned increase in the throughput capacity of the Eastern Polygon. Moreover, there could even be a multiplier for Kuzbass, as its exports have suffered more, if compared to other regions," Basov said.

SUEK is the largest Russian coal producer and one of the leading coal mining companies in the world. In 2021, the Company produced 102.5 Mt of coal.

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