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Will the Coal Industry Remain a Driver of Economic Growth in Developing Countries?
3 October 2018
09:00—10:15
KEY CONCLUSIONS
APR countries are becoming the top coal consumers

Global coal consumption has shifted from Europe to countries of the Asia-Pacific region [...] The consumption centres are also located in the East — Anatoly Yanovsky, Deputy Minister of Energy of the Russian Federation.

Sustained growth in demand for coal, primarily on the Asia-Pacific market, will continue for the period up to 2025–2030. It’s in Russia’s interests to maximize this potential for additional demand as well as maintain and strengthen its position in the supply of high-quality coal for export. India will be the main consumer of coal in the coming decades. Other countries include China, Japan, and South Korea — Aleksey Kontorovich, Academic Advisor, Institute of Coal Chemistry and Material Science SB RAS; Academician, Russian Academy of Sciences.

Coal production is an important factor for developing countries first and foremost — Gareth Carpenter, Head of Coal Markets, S&P Global Platts.

Coal production is on the rise in Russia

Russian coal production increased by 15.5 percent to 410 million tonnes from 2012 to 2017. This year, we will surpass the milestone of 420 million tonnes and exceed the maximum level of Soviet-era production that was reached in 1988 — Sergey Mochalnikov, Director, Department of Coal and Peat Industry, Ministry of Energy of the Russian Federation.

Coal exports from Russia are growing at a rapid pace

Last year, domestic companies exported more than 190 million tonnes of coal. Russia ranks third in the world in terms of this indicator. The current situation presents an opportunity to expand Russia’s presence on the global coal market, strengthen its position, and increase this share — Sergey Mochalnikov, Director, Department of Coal and Peat Industry, Ministry of Energy of the Russian Federation.

Over the past 20 years, the coal market has grown at an average annual rate of about 4% [...] while exports grew at a faster pace [...] In particular, from 1997 to 2017, our market share increased by 4 times throughout the whole world — from 4 to 16% — and by 5 times in Asia [...] Russia ranks third in the world in coal exports [...] The main growth is taking place in the Asia-Pacific Region — Vladimir Tuzov, Chief Strategy Officer, SUEK.

Russia has few competitors on the global coal market

The only coal that can compete with [Russian] coal is Australian coal, which has a number of advantages. The Russian Federation has one of the best sets of features for coal consumption — Anatoly Yanovsky, Deputy Minister of Energy of the Russian Federation.

ISSUES
Difficulty of forecasting the energy market

We will keep an eye on how the energy sector of ASEAN group countries develops [...] There has been a decrease [in coal generation capacity] and a lot [of projects are being] frozen due to a lack of funding due to green [requirements] — Alexander Kovalchuk, General Director, Coal Marketing Research Institute Ltd.; Advisor to the General Director, Russian Coal.

Environmental problems

In coal-producing areas, improving the environmental situation is no less important a problem as reducing CO2 — Aleksey Kontorovich, Academic Advisor, Institute of Coal Chemistry and Material Science SB RAS; Academician, Russian Academy of Sciences.

Limited capabilities of Russian transport infrastructure

The main thing that could limit our exports is transport infrastructure — Alexander Grigoryev, Deputy General Director, The Institute of Natural Monopolies Research (IPEM).

We need to get to the East. Jointly with Russian Railways, we are building the Sukhodol port for the transhipment of 20 million tonnes, and I think this is only the start — Mikhail Fedyaev, President, Siberian Business Union.

SOLUTIONS
The search for new consumers

In this region [ASEAN countries], our traditional major coal consumers — South Korea, Taiwan, and Japan — are of the greatest interest to the Russian coal industry. Of the new countries, I would seriously consider Vietnam — Alexander Kovalchuk, General Director, Coal Marketing Research Institute Ltd.; Advisor to the General Director, Russian Coal.

Increased investment in mining and infrastructure

In order to ensure the next breakthrough in the APR [...], we need an increase in investment by 2025 of almost RUB 2 trillion, half of which will be provided by coal producers [...] Part of it will be provided by ports and growth in the railway car fleet [...] and a third will be provided by investment in the development of [...] the Baikal-Amur Mainline and an increase in the cross-country capacity of the Trans-Siberian Railway — Vladimir Tuzov, Chief Strategy Officer, SUEK.

Increasing coal production in the Kemerovo Region and the Republic of Sakha (Yakutia), and I would also single out Tyva [...] is the only way to improve people’s living standards there — Aleksey Kontorovich, Academic Advisor, Institute of Coal Chemistry and Material Science SB RAS; Academician, Russian Academy of Sciences.

A strategic approach to the industry’s development

In recent years, a number of fundamental decisions and strategic documents have been adopted on the development of the coal industry. Chief among these is the long-term programme for the development of the coal industry in Russia for the period until 2030 — Sergey Mochalnikov, Director, Department of Coal and Peat Industry, Ministry of Energy of the Russian Federation.

Introduction of efficient, eco-friendly technologies

Serious efforts should be focused on [...] maintaining our cost base [...] in order to stay competitive on the global market — Alexander Kovalchuk, General Director, Coal Marketing Research Institute Ltd.; Advisor to the General Director, Russian Coal.

Power plants today have achieved efficiency of 99.9. The only problem is carbon emissions. If this issue is resolved, there will be no problems with the coal sales [...] in the world — Mikhail Fedyaev, President, Siberian Business Union.

There are special technologies that can significantly reduce the negative environmental impact. And these technologies aren’t just expenses, but an opportunity to generate a certain economic effect — Alexander Grigoryev, Deputy General Director, The Institute of Natural Monopolies Research (IPEM).

We need to continue work to introduce efficient and safe coal mining technologies and develop coal enrichment technologies [...] This will require investments [...] We need to develop [...] coal and coal-chemical science [...] It simply doesn’t exist today — Aleksey Kontorovich, Academic Advisor, Institute of Coal Chemistry and Material Science SB RAS; Academician, Russian Academy of Sciences.

Development of a public-private partnership

State support and a public-private partnership in terms of logistics development and increasing speed to expand shipments to the East is what [...] we need — Georgy Krasnyansky, Founder and Chairman of the Board of Directors of coal mining company KARAKAN INVEST.

Development of coal engineering

We need to attach great importance to the development of domestic coal engineering. We have completely lost it over the past 30 years [...] This will require serious investments — Aleksey Kontorovich, Academic Advisor, Institute of Coal Chemistry and Material Science SB RAS; Academician, Russian Academy of Sciences.

Development of competition on the energy market

Industry related to the creation of other types of fuel [...] also needs to be addressed — Kirill Molodtsov, Aide to the Chief of Staff, Presidential Executive Office .

The material was prepared by the Russian news agency TASS