Exports are falling, losses are growing — the main problems of the Russian coal industry

Alexander Titov, Head of the Global Oil Market Sector at the Energy Department of the Institute for Energy and Finance, commented on the decline in Russian coal exports to the Oil and Capital magazine.

As Alexander Titov said, two factors play a role most of all. The first is transfer by the Russian Railways network. The second is discounts on Russian coal relative to world prices, and prices have been kept at fairly low levels over the past four years.

"Of course, this is not the first time that the cost of coal on the world market is the same as it is now. But in 2019 and earlier, there were still no such indicators of inflation, transportation tariffs and costs. Moreover, we must not forget about the discount that Russian suppliers are forced to provide to customers from other countries. For example, if our coal in the western direction is about $85 per ton, then from South Africa it is already $ 110.

Due to Western sanctions, our goods are becoming "toxic" for many, there are difficulties with finding ships, organizing mutual settlements, and the transport shoulder has become larger, because it is no longer possible to send coal from the Baltic and Black Sea regions in the same volumes as before," the expert shared his opinion.

In his opinion, the abolition of duties on the thermal coal export by the end of this year will allow ussian companies to save an extra $ 5 per ton, which is already very good. The right decision was to cancel the surcharge to the mineral extraction tax and the duty, and with the condition of cutting off: if the price is higher, then there will be an "addition" to the mineral extraction tax. However, all this in general will not solve the problem systematically, but will only ease the difficult situation of companies. Low world prices, difficulties of Russian Railways and discount are problems that will not disappear overnight.