Russia coal exporters oppose rail tariff hike

Tuesday, 18 Oct 2011

Reuters reported that Russian coal exporters are lobbying against a proposed rail tariff hike of up to 15% due to take effect from January 1 because this could make some exports uneconomic.

The huge distance between Russia coal mining heartland in Siberia and ports on the Baltic and Pacific coasts is a major part of exporters cash costs.

Russia and the United States already have the highest cash costs globally of over $80 a tonne FOB and so need coal prices to remain high enough to give them a profit margin.

Russian exporters have cut exports when prices have fallen in the past.

Spot coal prices have held near the USD 120 mark for DES ARA cargoes for most of this year. The Federal Tariff Service FTS last week said that rail tariffs would rise by an average of 15% in 2012.

One exporter said "The latest we heard was a proposal to raise tariffs 6% on shorter routes and up to 15% on longer routes. A rise of 15% could cause problems for some companies that have higher-cost mines and routes to ports and could make it difficult for them to export."

Exporters speaking on the sidelines of the Coaltrans conference in Madrid said their companies senior managers were continuing to lobby authorities in a bid to reduce the proposed rail rates hike and hoped for something slightly lower than 15%.

Another exporter said "We don´t know exactly how far the tariffs are going to rise. We are waiting still for an official notification from the authorities."

(Sourced Reuters)