Dmitry Bosov's VostokUgol will produce "the Arctic carbon"

VostokUgol of Dmitry Bosov, the owner of Alltech Group, and his partner Alexander Isaev intends to mine in the Taimyr up to 30 million tons of "carbon Arctic." However, the industry experts believe the plans of the company to be "Napoleonic".
Origin source
About plans to mine up to 30 million tons of coal in the Taimyr and build two deepwater ports with a capacity of over 10 million tons per year, Dmitry Bosov, Chairman of the Board of Directors and co-owner of VostokUgol, told journalists on Wednesday, March 29, at the International Arctic Forum. "According to our plans, every year we will be able to increase production by about 5 million tons, reaching 30 million tons of total production by 2022-2023," he said. VostokUgol owns 50 sites in the Taimyr Coal Basin, Bosov estimates the total reserves of these deposits to exceed 10 billion tons. It is planned to start industrial production in one of these areas near Dixon village this year, RBC was told by General director Vadim Bugaev. In the meantime, according to him, the company is testing the demand for coal from that deposit: it recently shipped about 70 thousand tons to China on two dry cargo ships-forty-crosses.

VostokUgol is developing deposits where an "arctic carbon" is discovered: high-quality anthracite, widely used in power engineering, chemical industry, metallurgy, the company's website says. The company started development of deposits of the Taimyr coal basin in 2015. Now the reserves of the deposits are in the process of staging the balance, Bosov said. VostokUgol within the framework of the Arctic Forum also agreed with Atomflot about the export of its coal: the companies signed an agreement on icebreaking on the lines of the Northern Sea Route. "VostokUgol" is building two deep sea ports in Taimyr for the future sale of its coal. One of them, Chaika, will begin work this year, says Bugayev. The designed capacity of the ports is 10 million tons each. "We will be able to increase the capacity of both ports to export 30 million tons of coal," he said.

Dmitry Bosov has already invested about $100 million in the project, and the whole project is estimated at $250 million.

Vadim Bugaev sees demand for anthracite coal in the world after reduction of its supplies from Vietnam, Ukraine and North Korea. In Vietnam, this coal is in demand on the domestic market amid the economic growth, the Donbass is plagued by a military conflict, and the export of anthracite from the DPRK was limited by Western sanctions after the ballistic missile test conducted by the country. "Western Europe will consume 10-12 million tons of our coal without problems. In general, I am sure that in the Scandinavian countries there will soon be a CHP plant on our anthracite. The rest will be delivered to India, China," he told RBC.

Director of the analytical agency Rosinformugol Anatoly Skryl notes that "there really is a niche in the world for anthracite coals." "There is a buyer for coal from the Taimyr coal basin. Another question is that if VostokUgol succeeds in bringing production to the specified level at the intended time, then this will be a precedent in the history of the coal industry. The pace is unprecedented," he emphasizes.

According to the trader in the coal market familiar with Bosov's projects, they have "a huge problem with the organization and project managers." "All at once will not be drawn with such an organization," he believes.

In addition to the Taimyr project, VostokUgol extracts coal by open-pit mining at the Kiizas field in Kuzbass and at the Vostochny section in the Novosibirsk region. According to the announced plans, the total production of VostokUgol will reach 15 million tons in 2017. And if all the plans announced by the company are implemented, then VostokUgol with a production volume of about 50 million tons will be among the three largest coal producers in Russia. Industry leaders - SUEK (Siberian Coal Energy Company) and Kuzbassrazrezugol - in 2016 produced 105.4 million and 44.3 million tons of coal, respectively.

In addition to VostokUgol, the company's owners have other coal assets. The company "Siberian Anthracite" (Dmitry Bosov is the main owner) in 2016 produced 5.4 million tons of anthracite and exported 4.8 million tons of this coal. Also, Bosov and Alexander Isaev have another coal project in Indonesia, Forbes reported. The Blackspace company owned by them at the coal field in Central Kalimantan in 2017 intends to produce 500,000 tons of coal, and by 2020 to increase production to 10 million tons.

Coal from the Arctic

The interest towards "The Arctic Carbon" was manifested in Russia since the 1920s. "Arktikugol" in Soviet times mined coal in the Svalbard archipelago, whose reserves are estimated at 10 billion tons. But with the termination of state subsidies, extraction at former Soviet concessions turned out to be unprofitable. The ambitious plans for coal mining in Taimyr were also announced by the Severnaya Zvezda company, affiliated with Norilsk Nickel, in 2009, Vedomosti reported. "Norilsk Nickel" was going to develop the project together with BHP Biliton, coal was planned to be exported to Europe. But the plans so far remain unrealized due to the difficult conditions in the remote area and the need for investment in infrastructure development.