Stepan Solzhenitsyn, CEO of SUEK (Siberian Coal Energy Company), in an interview with TASS talks about the impact of COVID-19 on SUEK, the market prospects for coal and the company’s response to current challenges in the industry.
- What was the impact of the last COVID-19 year on the company's activities? Did you have to change your strategic goals?
- Our company has a sufficient margin of safety to adequately respond to external situations. Yes, we made some changes to our work. However, they mainly concerned protecting the health of our employees and supporting the regions where we operate. As for strategic priorities, we are engaged in environmental modernisation programmes, which rely on present-day standards, and new environmental projects. SUEK is also leveraging the benefits of synergies between coal, energy and transportation. A single corporate centre encompasses a number of functions, while the development of each of these business areas (energy company SGC, logistics company NTC) is independent and market-oriented.
- What did the company do to support its employees and regions?
- In March last year, SUEK established an emergency response centre with local centres in each region. They developed and introduced a number of measures to prevent the spread of COVID-19 among employees, cooperated with regional authorities and regional medicine to identify and meet their needs.
We donated huge amounts of medicines and personal protective equipment to 29 district and regional hospitals, including 1.5 million medical masks and respirators, hundreds of thousands of sterile gloves and overalls, oxygen modules and X-ray machines, tonnes of sanitizers and other disinfectants.
In agreement with municipal administrations, SUEK's special equipment was used to disinfect the streets of the cities where we operate. The company supplied electricity to field hospitals, provided transport to medical and social institutions. Our volunteers joined the All-Russia campaign called #WeTogether to support local residents, for which the company, including our management and active volunteers, received awards such as commemorative medals and diplomas from the President of Russian Federation.
In the regions, we continued our projects important for social stability: improving public spaces in small towns, building community centres, museums, delivering joint educational projects for young people from mining single-industry towns, supporting children with various congenital anomalies, etc. We did everything that really mattered for the quality life and development of the regions. It is no coincidence that this year the company received the status of a partner in national projects.
- What are the market prospects for coal? Will they be hampered by new environmental requirements and carbon restrictions, which are becoming increasingly active around the world?
- Coal is a reliable and affordable energy source, which helped to build our modern civilisation. Whether it harms the environment or not depends only on the technologies involved in its use.
Yes, coal is now facing some challenges, they are serious, but absolutely manageable. We understand that this is the reality of the 21st century, and those who can find quick and high-quality solutions to environmental issues will have a competitive advantage.
The requirements of modern society for the cleanliness of energy sources are reasonable, and they are linked to the emergence of new technologies that can really make energy production clean. The most important and relevant activities for coal-fired power plants in Russia are to upgrade gas cleaning equipment and filter 99% or more solids. Moreover, Russia has a very important advantage, as the country generates a third of all heating in a combined cycle (heat and electricity) at CHPPs located in Russian cities. This is equivalent to building over 30 GW of renewable energy sources!
Besides, coal-fired CHPPs are absolutely cost-efficient and successfully operated in the Netherlands, Japan and other countries, relying on the most stringent environmental standards.
Concerning the global demand for coal, it is not falling, especially given that new coal-fired units hardly differ in emissions from gas-fired ones. The share of coal in the global energy balance remains at 30%, and even 40% in electricity production. Its major consumers are located in the Asia-Pacific region. These are primarily China (3.8 Bt, or 49% of the total coal consumption) and India (0.95 Bt, or 12%). Coal consumption is growing rapidly in Southeast Asia (Vietnam, the Philippines, Thailand, etc.) and Africa. The share of Asia-Pacific countries in global coal consumption increased from 48.7% in 2000 to 77.4% in 2019. This is almost 80% of all international coal trade.
- How does SUEK respond to these challenges? What is your strategy?
- In terms of strategic indicators, our target in the coal segment is to boost processing capacities by 20% until 2025, which will enable us to increase coal shipments to Asia by 16%. We are trying to ease our bottlenecks in the transport chain. SUEK is developing and building ports, with a focus on the Daltransugol terminal [Vanino Bulk Terminal] in the Khabarovsk region to increase transshipment by 67%. At the same time, Russian Railways are engaged in a strategic project for the development of its Eastern Polygon, which, despite going far beyond the coal industry, is crucial to our coal strategy.
Today, Russia has every opportunity to join Australia as a key global exporter of coal in seven to eight years. We cannot afford to miss such an opportunity, and I am happy that our country's leaders understand this. We also find support from Russian Railways, heavily investing in the development of the Eastern Polygon.
- What about environmental challenges? How do you cope with them?
- In the coal industry, they mainly relate to the rehabilitation of lands disturbed by production activities, water treatment, utilisation of mine methane, minimisation of dusting during coal loading and transportation. As for water, we have completed advanced treatment facilities in Kuzbass and are now building similar facilities in five more coal-mining regions because we want to return only potable quality water to the environment. This is a huge investment, as we invested $126m last year alone!
Other activities include the ongoing increase in the share of washed coal to reduce ash content and improve calorific value.
For private houses, we offer smokeless briquettes, an innovative product of deep coal processing.
Of course, our programme for the power industry is also very ambitious. We continue to replace polluting boiler houses with co-generated heat from our CHPPs, whose capacity will be expanded under DPM-2 (capacity supply agreements), with the installation of new electrostatic precipitators capturing over 99% of solids. 55 boiler houses have already been replaced, and our decommissioning programme is far from over. This means around $100m in environmental investment!
By replacing our deteriorated networks and connecting private homes to centralised heat supply, we improve the energy efficiency of heat supply activities and reduce heat losses. Overall, the programme will cut annual CO2 emissions by nearly 1 Mt from 2025, in addition to saving 9 Mt of CO2 emissions through co-generation. This outperforms all programmes for the construction of renewable energy sources in Russia targeting 5.5 Mt of CO2 savings from 2025.