Nearing completion Vostochny Port P3 gets head start
The first in a scores of long-awaited coal port expansion projects in Russia's Far Eastern ports will be completed soon. The Vostochny Port Phase 3 is due to be launched in 2017. The dedicated coal port terminal expansion final phase has been ready by 75%. It's worth noting that the largest port infrastructure investment project in the Far East is financed by private investors with the project valued at RUB 27 billion.
About five years ago, Russian coal exports started to rise, increasing by nearly a third by the end of 2015. According to the Russian Ministry of Energy statistics at the end of last year, the volume of Russian coal exports was slightly below of that in the domestic market, 151 million vs 198 million tonnes. The commodity is exported from Russia largely to the Asia-Pacific Region (APR), which determines the cargo transportation logistics from coal mine basins (mainly in Kuzbass) by railway to the seaports of the Far East.
By the 2015 year-end results the Russian Far Eastern basin ports handled about 70 million tonnes of coal, which represents a 6% increase year-on-year and a double growth in the last five years.
The growth of coal exports from Russia to the Asia-Pacific countries will continue, but not indefinitely, experts say, mentioning several reasons. First, it is quite challenging for Russian coal exporters to elbow their way into the crowded Asia-Pacific market competing with Australian and Colombian coal suppliers. Secondly, the need to build new seaport terminals for new coal export volumes. These terminals must be dedicated, state-of-the-art, as the coal consumers are willing to buy only the high-quality product without contaminations that would comply with international requirements. Third, the new export volumes should be delivered by rail to seaports. Considering the capacity of two major Russian railways (BAM and The Trans-Siberian Railway), not all of the additional volumes have a chance to "get through" smoothly in this infrastructure bottleneck.
However, exporters, followed by the port investors are going to prepare a new infrastructure to boost coal exports in the Far East. In recent years, there have been several stevedoring projects announced: three new coal complexes in the Port of Vanino based in Khabarovsk Territory, Russia with capacity in excess of 40 million tonnes, the Vostochny Port Coal Terminal Phase 3 and the project "North" of Summa Group in Primorsky Krai based Vostochny port with participation of the state through Rostransmodernizatsiya, with additional capacity of about 20 million tonnes each. Besides, there are a number of smaller projects for handling coal in the region.
Of all the above projects the first one will be launched in 2017. The Vostochny Port Phase 3, giving the project a head start as it will ensure its freight base and capability to obtain RZD's rail capacity on the off-dock access roads to ports.
"We see today a strong demand for port services in the Far East, we see the growing coal volume handled on railways,” comments Irina Olkhovskaya, Deputy General Director of Managing Port Company LLC (the management holding comprising Russia's largest coal ports JSC Vostochny Port and JSC Rosterminalugol). “Commissioning of our project in the tseaport Vostochny is cheduled for 2017, that is we will be the first to launch new port facilities. This makes the project a priority for our business among other projects for the construction of new transshipment facilities in the Far East."
She explained that the prime objective of the MPC was to anticipate, be ahead of the growing market trend, seen by many in 2010. Therefore, in 2012, the company set out to develop very large-scale investment projects in Primorsky region, the construction of Vostochny Port Phase 3.
It will not take a couple of years, but at least five years, to build a modern, high-quality services port, with excellent standards that will ensure environmental safety, a priority for modern coal terminals. Therefore, those who are now approaching with their projects in hands the construction sites, have a much greater risk associated with the problem of providing the projects with a cargo base.
Irina Olkhovskaya said that currently the loads for Vostochny Port Phase 3 capacity has been contracted by 80%. Among the coal suppliers of the terminal are major coal mining companies, such as JSC Kuzbassrazrezugol, JSC SUEK, JSC Kuzbass Fuel Company, JSC Russian Coal, JSC Sibuglemet, LLC Promugolservice CJSC Belovskaya Mine, LLC Stepanovsky Razrez, LLC Razrez Bungursky Severny and other Russian coal producers. Over the next three years, in 2019, JSC Vostochny Port will be able to handle 39 million tonnes of coal.