Russia expands coal export operations

Russia is presenting more competition for Australian coal exports to China, as the North Korean port of Rajin comes into service.

A joint venture between Russian Railways and the North Korean Ministry of Railways has rebuilt one of the port’s wharfs and a rail link connecting it to Russia, in a rare example of foreign involvement in the economy of the notoriously isolated dictator state.

The 70 per cent Russian-owned RasonKonTrans joint venture, sought to relieve the congestion at Russia’s Pacific ports.

The port was funded by Russian Railways to the tune of 9 billion rubles, about $AUD269 million, and was opened in September 2013.

Late last month saw the first shipment of Siberian coal transported by Russian Railways subsidiary RZhD Logistika to the Rajin Port, for which the current load capacity is 4 million tonnes of coal per year.

The coal was mined by Russian coalminer and steelmaker Mechel, according to PortNews.

A statement from RZhD Logistika said that it sent a total of 9000 tonnes of coal to the Rajin port, bound for the Chinese ports of Shanghai, Lianyungang and Guanzhou.

“The company has started to provide a full suite of services to ship coal through Rajin to Asia-Pacific countries,” the statement read.

The statement also pointed out that the price of coal had declined 10 per cent last year due to strong rivalry among Russian suppliers and competition from Australia.

The new Russian terminal at Rajin is Asia’s most northerly all-year ice-free port, which will at first handle only coal freight from Russia to ship it further to China’s eastern and southeastern provinces.

In addition, last week the Russian government last backed a plan to boost development of the coal-mining industry in the country’s Far East to cater to Asian markets, with the idea being to have a shorter transportation leg for the shipments, compared with the distance that the coal travels from Siberia.

Russia’s biggest coal export port which sits on the Pacific coast, Vostochny, has the capacity to handle 18 million tons a year, and it and other key ports operate at maximum capacity.

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