Russia to build Pacific coal export port

Russia will begin building a new coal export terminal on its Pacific coast to increase its exports to Asia Pacific nations.

The new port comes as coal prices fall and the Australian market begins to suffer economically. 

Currently Australia is facing a coal crisis.

The commodity has faced a massive decline. 

It has fallen in price by more than a third in a year from December 2013 to December 2014, as Chinese demand waned and projects came online, flooding the market and causing excessive supply problems.

The Bureau of Resources and Energy Economics (BREE) said Australia exported 181 million tonnes of metallurgical coal in 2013-14, with this expected to increase to 185 million tonnes in 2014-15, while thermal coal exports are tipped to top 196 million tonnes in 2014-15.

Queensland alone managed to export 216 million tonnes of both thermal and coking coal for 2014, setting new export records.

For some miners it is a case of mining more, at these lower margins, to stay profitable.

According to Queensland Resources Council CEO Michael Roche: "We are seeing are Queensland coal producers replacing the high prices of a few years ago with the volumes necessary to keep their operations viable in a currently depressed market".

Making matters worse for miners in Australia is the supply coming online from other competitors such as Indonesia, Colombia and South Africa, further flooding the market, while Russia has plans to quadruple its coal output levels by 2030.

This output will be supported by the new US$545 million coal export facility, which will be located in Russia's Primorye Territory, according to Itar-Tass.

The facility will be called the Sever (north) terminal, and will be built at Cape Petrovsky, near the existing port of Vostochny in Nakhodka, with construction slated to start in the spring of this year.

Focused solely on the Asia-Pacific region, it will move around 18.115 million tonnes of coal annually, with initial ramp up allowing it to move around 6 million tonnes within three years.

This new coal terminal is the second planned for the region, with construction already underway of a coal port at Sukhodol Bay, which will also ship 18 million tonnes annually to the Asia-Pacific region.

Image: ITAR-TAss/ Yuri Smityuk