Siberian Coal plans to raise exports 10%

Production and Markets

Siberian Coal Energy Co, Russia’s largest producer of the fuel, said it plans to raise exports by 10% this year on higher demand from Asia.

The Moscow-based company, also known as SUEK, exported 12.2Mt of coal in the first five months of 2009, 11% more than a year earlier, deputy chief eExecutive for strategy Anna Belova said in an interview yesterday in Moscow.

"Asian demand is growing and will continue to grow," she said. SUEK is seeking to boost the Asian share of its total exports to at least 40% this year, from 25% in 2007, Ms Belova said.
SUEK, which is owned by Russian billionaires Andrei Melnichenko and Sergei Popov, has long-term contracts to supply Asian customers including Korea Electric Power Corp, South Korea’s biggest utility, and Electric Power Development Co, Japan’s largest electricity wholesaler, helping SUEK to buck the trend of falling Russian exports.

The country will post a “double-digit” percentage decline this year, Ms Belova said.

Russia, the world’s third-largest coal producer, recorded a
9% percent drop in exports to 37Mt in January through May, according to CDU TEK, a unit of the Energy Ministry.

SUEK reduced its production by 8% to 34Mt in the period as Russian electricity consumption fell because of the country’s economic contraction. Some domestic utilities also switched from coal to gas to generate electricity after natural-gas prices dropped.

SUEK’s exports benefited from its long-term contracts with Asian utilities and the start earlier this year of exports through its coal terminal in Vanino in the Khabarovsk region, Belova said.
Japan has the potential to receive more imports from Russia. It imports 123Mt of coal a year, of which just 3-4Mt comes from Russia, Ms Belova said.

"It’s a very important market for us," she said.

SUEK, which says it’s the world’s fifth-largest coal exporter, had sales of Rb92 billion (US$3.1 billion) last year, according to its annual report. That excludes US$1.2 billion of revenue from its utility units, Ms Belova added.