Russia is gearing up to take advantage of Canberra’s poor relationship with China to expand its coal exports, analysts say, as Chinese authorities allow some of the millions of tonnes of Australian coal stranded off its coast on dozens of ships to be offloaded.
Russian President Vladimir Putin last week met industry executives and government officials to plan ways to increase Russian coal exports to Asia by up to 30 per cent over the next three years, suggesting an increase to output of 34 million tonnes a year by 2024, according to a recent Wood Mackenzie report.
WoodMac analysts said Mr Putin ordered officials to draw up plans for the expansion of rail routes to carry coal to ports that export from Russia’s main coal district in Kuzbass to Asia, suggesting government funding could be available for a rethink of its export strategy.
“Until the meeting on March 2, the consensus in the industry was that eastbound coal exports from Kuzbass will remain flat in 2021 and then grow very little, if at all, until 2024,” WoodMac said.
“The President’s announcement on March 2 suggests a major departure from the current status quo. A 30 per cent increase would mean Kuzbass’s eastbound coal exports would grow from 53 million tonnes in 2020 to 69 million tonnes in 2024. If extra quotas are made available in 2021, we could see a 4 million tonne increase each year through 2024 of just Kuzbass eastbound coal exports.”
Other Russian coal hubs were planning to lift production, WoodMac said, pointing to a lift of about 34 million tonnes a year of coal exports to Asia over the next three years.
Prices for Australian thermal and coking coal have both risen in recent months as global trade flows around China’s bans on Australian output, with the US lifting shipments to China and Australian cargoes heading to South Korea, Vietnam, Japan and other parts of world.
But the Russian move suggests President Putin is planning a longer-term push into the Chinese market to replace Australian coal amid ongoing tensions between Canberra and Beijing.