Due to high transshipment rates at OTECO terminal in Taman, that make coal exports unprofitable, Russian mining companies suspended rail shipments to the port from the end of January 2024. In Q1 2024, railway supplies to Taman collapsed to 1.4 mio t (-5.0 mio t or -80.0% vs. Q1 2023).
Coal volumes intended for transshipment in Taman are lost for the export market, as they cannot be redirected to other destinations (North-West, Far East and border crossings) based on the regulations on approval of coal transportation planning. For instance, in January-March 2024, rail shipments to the port of Ust-Luga also fell strongly to 10.2 mio t (-2.4 mio tons or -18.9% y-o-y).
The coal volumes in RZD’s schedule have already been allocated to export destinations, taking into account the decline in production by a number of coal companies, resulting from losses caused by lower global prices and rising costs. Because of the strict policy of Taman on handling rates, many large producers were forced to cut production and currently, even if OTECO reduces tariffs, they will not be able to promptly restore coal extraction volumes, as it will take months, subject to the availability of funds, necessary to resume previous level of output.
In Q1 2024, Russian coal producers continue to face challenges and unfavorable factors, including: falling global prices, higher railway tariffs and transshipment rates in ports, as well as logistical issues, resulting from limited throughput capacity on the RZD network and a longer transportation distance (expensive freight), when supplying coal to the Asia Pacific via terminals in the European part of Russia.
In 2023, the total transshipment volume of OTECO, owned by Michel Litvak, totaled 25.1 mio t (-4.9 mio t or -15% y-o-y).
Source: CAA, TheCoalHub
