FTA, Russian Railways reject measures supporting coal exports

sxcoal.com Import & Export,  International 2024-06-05 08:36:15

Russia's Federal Antimonopoly Service (FAS) and Russian Railways have voiced their opposition to proposed measures aimed at encouraging coal exports, warning to reduce the country's exports by 30-40 million tonnes in 2024.

 

The energy ministry suggested in April reintroducing lower coefficients for the tariffs of Russian Railways, specifically for coal offtakes. These coefficients of 0.4 for distance and 0.895 for exports of thermal coal were abolished in June 2022.

 

Furthermore, the ministry proposed implementing a discount of 12.8% for shipments to northwestern and southern ports, as a means to support the Russian coal industry amid low global prices and rising shipping and production costs.

 

However, both the FAS and Russian Railways oppose the reinstatement of incentives and lower coefficients. Russian Railways is unwilling to provide discounts on coal transportation to the northwest and south without compensation for coal deliveries towards the east.

 

The current railway tariffs and freight rates at ports have rendered the supplies unprofitable in the south and northwest directions. The application of lower coefficients would help increase transportation volumes to the Eastern range, which experienced a rise in priority cargoes while coal was deprioritized.

 

Russian coal companies are facing additional pressure in thermal coal production in the second quarter this year due to the deflator coefficient being raised to 0.906, resulting in an 8% quarter-on-quarter increase in the mineral extraction tax rate. It is worth noting that the government did not have plans to further burden the industry with increased taxes.

 

Over the January-February period, the profits of Russian coal miners, after adjusting for losses, declined steeply year on year from $1.2 billion to $0.2 billion. The share of loss-making enterprises also rose from 39% to 46%.

 

Moreover, Russian coal exports in January-April decreased to 62.3 million tonnes, down 12.1% year on year, due to unfavorable conditions in the international market, increased costs, and the impact of sanctions, which would further impede Russian coal supplies.

 

(Writing by Riley Liang  Editing by Emma Yang)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

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