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  • 2016 October 3

    Stop feeding foreign ports

    According to publically available information, the recent meeting of RF Government was dedicated to withdrawal of Russia’s foreign trade cargo from the foreign ports of the Baltic Sea. Apart from liquid bulk cargo those ports handle Russian dry bulk cargo: coal and mineral fertilizers. Their complete withdrawal from foreign ports will, nevertheless, require new investments in development of specialized terminals.

    Coal limits

    The ports of Latvia, Lithuania and Estonia have been traditionally handling Russia’s liquid bulk cargo, coal, mineral fertilizers, containers and Ro-Ro cargo. The current situation in the sector of liquid bulk cargo and containers has been covered recently >>>> 

    As for coal, the process of redirecting cargo flows to Russia is as fast as in the liquid bulk sector. In HI’2016 transshipment of Russia’s coal at the ports of the Baltic states dropped by 32% to 7 mln t which is about 10% of all Russian coal exported via ports. The port of Ventspils saw a reduction of 2.8 times to 1.08 mln t, Riga – by 22% to 5.8 mln t. According to Port of Ventspils Authority, Baltic Coal Terminal ceased handling Russian coal in spring of the current year.

    Amid this situation, coal terminals in the Baltic Sea Basin of Russia build up their throughput. The terminal of Rosterminalugol (port Ust-Luga) reached a record high throughput in 2015 – 17.5 mln t. Total coal transshipment via port Ust-Luga (Rosterminalugol and Multipurpose Reloading Complex) increased by 11% to 21.5 mln t in 2015. The capacity of coal facilities in Ust-Luga is close to its limit, the throughput is stable now (it showed no changes in 8M’16 – 13.86 mln t).

    Apart from Ust-Luga, coal is exported via the Port Vysotsky terminal (port Vysotsk). Its capacity is not exhausted yet. In 8M’16 coal transshipment grew by 14.2% to the port’s record high result – 4.04 mln t. Having undergone the modernization, the terminal can handle 100,000 DWT dry bulk carriers. When the Losevo-Kamennogorsk railway is fully operational, annual capacity of port Vysotsk can reach 7 mln t of coal, we think.

    Besides, coal is exported via the port of Murmansk. Coal transshipment volumes also surpass their record high in Murmansk having exceeded 14 mln t per year. The existing facilities on the right shore of the Kola Bay have almost exhausted their capacity. Within the framework of a project on comprehensive development of Murmansk Transport Hub, construction of port Lavna and shifting of the facilities to the left shore of the Kola Bay, coal transshipment capacity of the Murmansk Region is likely to increase considerably. The capacity of Lavna terminal is to be as high as 18 mln t per year.

    So, to take over the remaining 14 mln t of coal which is still exported via the foreign ports of the Baltic Sea Russia will have to develop the existing facilities and infrastructure. Russia is not likely to shift all the coal flows in the short term run, only partial redirection is under discussion today (if export volumes are stable).

    Fertilizing the neighbors

    The situation with mineral fertilizers is even more challenging. There are no specialized terminals for fertilizers in the Baltic Basin of Russia. In HI’2016 foreign ports of the Baltic Sea handled 3.7 mln t of Russian fertilizers, a 3-pct increase, year-on-year. It should be noted that Russian company Uralchem earlier selected Riga as its key transit port, Riga Fertilizer Terminal was established there. In 2014, the company also becam the main shareholder of Ventamonjaks, a terminal in Ventsipls for transshipment of liquid ammonia. So, it is too early to speak about shifting these cargoes to Russian ports. 

    Back in 2010, EuroChem announced its plans to build a 7 mln t terminal for transshipment of mineral fertilizers at the port of Ust-Luga. With this terminal the company was going to cease exporting mineral fertilizers via the ports of Tallinn and Ventspils. Yet the project implementation has not been started physically yet. In March 2016, the company head Dmitry Strezhnev told journalists about the plans to launch the terminal in 2019-20. According to him, the terminal will be economically viable if it handles at least 4 mln t of cargo per year.

    Tariff policy of the railways could become one of the measures encouraging the redirection of cargo flows to Russian terminals. RF Transport Minister Maxim Sokolov has recently announced that Russian Railways can be allowed to raise tariffs up to 25% (against current 13.4%).

    Vitaly Chernov

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