The way we cancel and launch projects

There have been two announcements recently on the Far East port facilities expansion. The first announcement came from Primorsky region Governor’s press office about the decision to cancel the Slavyanka coal terminal project, and the second one was the launch of survey work in the framework of Sukhodol bay terminal project. Meanwhile, Primorsky Krai Duma legislators are set to oblige all stevedoring companies in Russia to utilized only indoor coal warehouses.

How we cancel

The Slavyanka locals have long been opposing the coal terminal construction. The local activists had teamed up on social networks, bombarding authorities with numerous appeals. However, until recently the regional administration had remained positive on the project.

Noteworthy, at the turn of June, the region’s administration press office reported that the public advisory council on investments in Primorsky Krai had given a positive assessment of the coal terminal project in Slavyanka.

The coal terminal was projected to be created on the on the territory formerly owned by Slavyanka shipyard. The area allocated for the terminal is 290,000 sqm.

The facility was planned to operate year-round. The terminal Phase 1 annual capacity was projected to reach 2.5 million tonnes of coal, of the second phase – up to 8.5 million tonnes. The facility features capabilities for simultaneous storage of four types of coal, 175,000 tonnes in the first phase.

To ensure smooth handling of coal-laden trains the project included the construction of the near-dock railyard of throughput capacity of 8 million tonnes of coal, to receive and handle two trains at a time each of 71 railcars. The coal terminal inauguration was scheduled for May 2014.

The project developers promised to implement a wide range of stringent environmental standards, namely the utilization of dust catching systems at all stages of unloading / loading operations, the use of other technologies and applications to prevent the formation of dust and avoid coal freezing, dust-proof installation and wind barriers and dust collection systems.

The coal terminal supporters said the project would create in the Slavyanka village initially more than 180 new jobs and up to 480 jobs on the second phase. The owner and operator of the terminal is JSC International Marine Transshipment Terminal with authorized stock of $1.9m. The project management functions were in the hands of LLC Management Company "Berkut", which is part of the holding. According to open sources, International Marine Transshipment Terminal is is 100%-owned by Singapore-based Triumph Alliance Pte. Ltd., a beneficiary of which is allegedly one of the deputies of the Primorsky Krai legislative assembly.

The decision of the Primorsky Territory Gov Vladimir Miklushevsky to halt the project looked quite unexpected. The regional administration’s spokesmen told that the first whistle blower was Sergei Ovchinnikov, Chairman of the Khasan District Duma. The man in authority himself submitted a petition to regional authorities "on behalf of all residents of the village of Slavyanka" who had collected a few thousand of signatures, opposing the construction of the coal terminal. The locals claimed such a facility would eventually damage the environmental situation in their neighborhood.

"Khasan is the pearl of Primorye. We have already had an infamous example in Port Possiet, where a similar coal terminal had been launched. Even plastic windows in apartments do not save from dust. So people are categorically against the construction of the terminal in the village", the petitioner said.

Gov. Vladimir Miklushevsky commented: "I agree with the people: we should not allow turning the resort area into a contaminated object. I will instruct the first vice-governor Sergei Sidorov work out this issue as soon as possible".

The head of the region has also ordered the relevant departments in conjunction with the Khasan District Duma and the administration of the village of Slavyanak to prepare an agreement to stop the construction of the terminal in Slavyanka.

Yet the question arises - if the terminal is a serious environmental threat, why the project was not cancelled in the very beginning, but instead was promoted by the same regional authority and approved by the public advisory council?

This arbitrariness in dealing with investors has become a style of work of Primorsky Krai authorities. As we wrote earlier, a shipbuilding and engineering firm Pacifico Marine, contracted to build high-speed crafts at Vostochnaya shipyard, had filed complaints against regional authorities. As a result, the company was just squeezed out of the region, losing its business there.

Be that as it may, the story with Slavyanka project provoked the Primorsky Territory Legislative Assembly to take the initiative on amendments to the Law "On Seaports." The local legislators insist that all stevedoring companies handling coal and other dangerous goods be equipped with indoor warehouses and enclosed cargo handling equipment. They also insist on continuous monitoring of dust concentrations in the air.

... and how we launch

In the meantime, almost simultaneously with the closure of the Slavyanka coal terminal project, in the same Primorsky Krai, survey works commenced in the framework of another coal terminal project, now in the Sukhodol bay. We may only guess how these two events are interrelated.

In January 2012, the then Prime Minister Vladimir Putin chaired a meeting in Kemerovo on the development of coal industry in the Russian coal region. The meeting focused on building on in the Far East of a terminal of capacity of 20 million tonnes a year, for transshipment of coal produced by small and medium-sized companies. Several areas around the ports of Vanino, Nakhodka-Vostochnaya or Posiet had been considered as possible sites for future terminal.

So, to provide easy access to port infrastructure for all coal producers of the Kemerovo region, regardless of the size and volume of production, was the main task set in the Sukhodol project by Primorsky Territory Administration and coal companies.

"In connection with a surge in coal demand in the Far East, the question arises on competent planning of port capacities. No one wants to share with competitors the important resource - access to port facilities. That’s why there are so many coal terminal projects, rivalry for interesting sites, while many of the projects are not implemented, and the people are suffering from the coal dust. After all, when there is no general plan for the facility allocation on suitable areas, is too great a temptation to place the terminal just somewhere... But Sukhodol bay is the answer, the adequate one. It may benefit all if we build a powerful terminal that would guarantee access for coal producers. And we can spend funds more efficiently…", said Sergey Semionov, Director for Development of LLC  MorStroyTechnologiya (MST), which is engaged in the project survey works.

The project of specialized port on the Far East coast (Port Sukhodol provides for several phases of construction. Project throughput is 20 million tonnes per year. The year-round operation terminal will be receiving and handling a wide range of vessels.

Breaking into Asia

According to the International Energy Agency (IEA) estimates coal demand from 2007 to 2030 will soar 53.5%: in China – by 85.4%, in India – by 142.1% and in the ASEAN countries – by 189.5%. Europe and Japan are expected to cut down on coal by 29.4% and 14.8%, respectively.

All this explains the interest of investors to build and expand coal terminals in the Russian Far East.

For an example, in 2013 Sakha-Trans (related to Gannady Timchenko’s structures) plans a groundbreaking ceremony for the coal terminal in Vanino, Khabarovsk Krai. There are some more similar projects to be implemented.

Thus, we can observe severe competition for operation of the Far East-based coal terminals. So, to avoid corruption and "behind-the-scenes" practices the procedures of granting access of investors to the region and the decisions on the project should be, in our view, absolutely transparent.

But all these plans will be futile without a boost in the capacity of Trans-Siberian Railway and the Baikal-Amur mainline. At a July 26, 2013 meeting Russian President Vladimir Putin ordered the Russian government to work out a schedule of further steps in the project of modernization of Trans-Siberian Railway.

"Integrated Development of Trans must unlock the potential of the eastern territories of the Russian Federation, to help upgrade their industrial base, to put into circulation new mineral resources, strengthen the status of Russia as a key element in the continental transport system ",  Vladimir Putin said.

Vitaly Chernov