“SUEK views the Far East as a strategically important area for growth” – SUEK CEO, Vladimir Rashevsky
- Vladimir Valerevich, what role does the coal industry play in the development of the Russian Far East?
- The Russian Coal Industry Development Programme, which shall be effective until 2030, makes provisions for a gradual translocation of coal mining centers to the Far East and Eastern Siberia. Besides, coal constitutes a third of the volume of supplies passing through Russian Railways, while at the same time being generally the major type of cargo transported along the Baikal-Amur Mainline and the Trans-Siberian Railway. It is within this context that I think it no exaggeration to call the coal mining industry one of the backbone industries of the Russian Far Eastern District.
- SUEK is known as one of the largest investors in projects in the Far East. What opportunities does the Eastern Economic Forum platform present to you?
- The Eastern Economic Forum is one of the most important events in our country in terms of its participants and the importance of the issues discussed and decided in it.
SUEK has been operating in the Far East for fifteen years. It has become obvious to us that in recent years, development processes in this region have become more intensive. It is my belief that quite a substantial and productive job has been done to attract investment and create a favorable climate for business.
Another similarly important fact is that the Eastern Economic Forum acts as a meeting place for representatives of the Asia-Pacific region, with which a partnership is now strategically important for not only SUEK, but all other domestic coal-mining companies as well.
- How do the Russian coal mining companies plan to strengthen their market position in Asia-Pacific?
- We consider our projects in the Far Eastern regions to be especially significant. This is primarily because we are currently witnessing the most active demand and growth prospects for our business on the Asia-Pacific markets. SUEK shall strengthen its position in the Asia-Pacific region. Presently, almost 60% of our export supplies is already being directed to countries in Eastern and Southeastern Asia, especially Japan, China and South Korea.
The rapid growth of Asian economies, in particular for countries like China, Japan, South Korea, Taiwan, Indonesia and others, has been greatly facilitated by a reliable supply of cheap coal as a source of energy. Prospects for the development of our product sales are directly dependent on the Asia-Pacific region. These particular countries’ economies shall continue requiring substantial supplies of coal for many more years.
All these factors have directly resulted in our company implementing large-scale investment projects in the Far East, which will significantly increase the production, processing and supply of coal to our Asian customers. Just last year, a total of RUB 3.3 billion was invested in mining projects in the Khabarovsk and Primorye regions. SUEK views the Far East as a strategically important area for growth.
- Which investment projects shall provide you with this strategic growth? What are your plans in the coming years within the framework of these projects?
- One of our priority projects involves the development of the Urgal facilities. In 2010, 2.5 million tonnes of coal were mined there, and in the coming years, we are planning to bring it up to 10 million tonnes. We have built a 6 million tonne capacity processing plant, and in the long term, we shall bring it up to 10 million tonnes. The overall total investment is in excess of RUB 20 billion.
A year ago, we signed an investment agreement with the Ministry for the Development of the Russian Far East, which provided for the granting of government subsidies in the amount of RUB 1.549 billion. These funds shall be allocated after we complete construction of infrastructural facilities for investment projects in the Pravoberezhny area, as well as after increasing the extraction and enrichment processes at Urgal. Construction work is already underway at all facilities. We plan to pass them into operation in 2017.
Another major investment project in the Khabarovsk region relates to Vanino Port. In 2008, we launched the Vanino Bulk Terminal, which, four years ago, reached its design capacity of handling 12 million tonnes, and within the framework of the completion of the development programme in 2017, we shall increase the capacity to 24 million tonnes. By October 2016, the volume of the transshipments already made at Vanino since its opening shall total 100 million tonnes of coal. Presently, the total investment has already reached more than US$ 650 million.
- Will the available infrastructure be able to support your development plans? Is there an agreement with Russian Railways on the improvement of transport infrastructure in the Far East, a region where it is not as well developed as in central Russia?
- We have developed a very effective working relationship with the Russian Railways, and are actively cooperating with them. In this process, we have accumulated extensive experience for positive and constructive cooperation. We are also actively working on debottlenecking and improving transport efficiency. In particular, a number of large-scale works within the infrastructure modernisation programme are currently being increased by about 70 million-tonne capacity towards the main Pacific ports. This will ensure the growth of Russian exports, including coal, to the promising Asia-Pacific markets.
- A number of environmental agreements were signed with the Ministry of Natural Resources within the framework of the Eastern Economic Forum. What will be done to improve the environmental situation in the Far East?
- An integral part of the company's strategy is to reduce our environmental impact. We have planned a range of activities to be implemented in the 2017 Year of Ecology announced by the Russian Federation. At the Forum, SUEK, the Russian Ministry of Natural Resources and Ecology and the Federal Service for Supervision of Natural Resources signed an agreement on the environment-oriented programme for Urgal, Vanino, Primorye facilities, as well as Maly Port. In short, we are focused on bringing the treatment systems for all types of discharge emissions almost to perfection. In 2017, we shall allocate a total of more than RUB 3 billion to environmental measures, including RUB 600 million to our Far Eastern operations.
- And what type of cooperation was established with other authorities?
- As I have already mentioned, SUEK has been operating in the Far East for a long time. And based on our many years of our experience, we can safely say that the work that the President and the Government of the Russian Federation are doing in the region has been exceptionally productive. Projects presently being implemented fall under a new investment plan that was established as part of the Far East Development Programme. A qualitative leap in improving the regulatory framework was achieved by providing investment incentives. This allows us to operate more actively and put new production facilities into operation, create jobs, generate regional tax bases and develop the Far Eastern region as a whole.