The devil is in the details: why Russia's coal industry has no encouraging prospects

Government's pride that Russia produces, as a typical third-world country, more coal, and carries it in ever larger quantities for ever greater distances, looks rather strange in modern conditions.
14.07.2017
Forbes
Origin source
During the recent "direct line" of Vladimir Putin, a boy from the Far East asked the president "how to now live" to those whose houses are located near the ports where coal is handled openly. Of course, the Duma and the government immediately began to "work through" this issue, and the coal industry lobbyists - point to its rapid development in recent years and the role in the economy as a whole.

Of course, one can not deny that there is a noticeable renaissance in the Russian coal industry (production for the 15 years - from 2003 to 2016 - grew by 40%, from 276.5 to 385.4 million tons, and exports - in 2.7 From 60.7 to 166.1 million tons, according to Rosstat.The export revenue of the coal industry grew over the same period from $ 3.8 to $ 8.9 billion, according to the calculations of the Customs Committee.However, if we leave aside environmental problems such as that , Which was raised during the president's conversation with the country, large-scale human victims in the coal industry (during this period, the industry Was one of the most dangerous, and death rates per million tons of mined raw materials exceeded the American index by 12.7 times, and the South African index by 4.5, the issues of the social development of the mining regions, and some other issues, remains the main issue - the economic success of the industry .

It would seem that everything is obvious. The total profit in the coal industry in 2016 reached 90 billion rubles, or more than $ 1.3 billion. Billions of rubles in taxes have been paid. However, as they say, the devil is in the details.

The coal industry has been growing steadily in recent years only in developing countries with their cheap labor and relatively contingent environmental legislation. Russia is no exception: the average salary in the coal industry amounted to 43 00 rubles per month ($ 640) in 2016, while in South Africa - slightly less than 18,200 rand ($ 1,360), and in Australia - about $ 7,500. Ecology is also not at all brilliant - even coal bed methane, which is now utilized in the US by almost 80%, and in Australia - by 65%, Russia uses no more than 10%, while the rest of the gas is simply thrown into the atmosphere, seriously Poisoning the lives of entire regions. So it turns out that of the 10 main producing countries, production in the last 15 years has grown in China, Indonesia, India, Russia, South Africa and Kazakhstan and declined in the US, Germany and Poland. The only exception - a developed country with growing production - remains Australia.

This, however, has an explanation: the country is the world's second largest exporter of coal, overtaking Russia more than 2.5 times - while the main production regions - the basins of Galilee, Bowen, Maryborough, Sydney, Gloucester and Gannedan - are at a distance from ... 40 Up to 250 km from the coast and the main ports - Sydney, Newcastle, Brisbane, the ports of Kembia and Abbot Point. The same goes for the leading exporter, Indonesia: the main fields in Borneo are not more than 200 km from the coast with the main export terminals - Bontang, Tanjun Bara, Balikpapan, North Pulau Louth, and others. In South Africa, the situation is similar, although somewhat less "optimal": from the main deposits concentrated around Johannesburg, to Durban - from 350 to 700 km. At the same time, on the world scale, the export of coal is 87% carried by the sea, and overland transportation - by slightly more than 10%.

In Russia, however, we have a truly unique situation. More than 75% of coal production in the country falls on three basins - Kuzbass, Pechora and Kansk-Achinsk - located within the continent, far from industrial centers. In 2015, the average length of transportation of each of the 357 million tons of coal mined in Russia was ... 2528 km - almost 11 (!) Times more than in Australia. And this should be looked at more closely.

The large-scale (and considered successful) reform of the Russian coal industry has not brought it to the world performance indicators. Today, 2300 tons of coal are produced for every employee in the sector (including office workers in the sector), while in the USA it is 11,100 and in Australia about 11,700 tons. This inefficiency is partly compensated by low salaries, partly by underinvestment, but the most important Element, in my opinion - hidden state subsidies. I knowingly remembered the above about transportation: if you look at the subject more closely, amazing moments are revealed.

Coal, in addition to being the historic "backbone" of the Russian economy, also acts as the main cargo transported on the Russian railways: in 2015, 39.6% of the total volume of transportation by JSCo "RZD" (in t-km) to coal accounted for 39.6% (We do not take into account the run of the empty wagons). However, judging by the detailed traffic statistics for 2015, the situation looks paradoxical: if for coal miners salvation comes from export supplies in conditions of stagnation of domestic consumption (in May 2017, the growth of coal shipment abroad by May 2016 was 10.1%, then for Railwaymen receive only domestic (and mostly short) routes, according to data for the year of 2015, with 135 million tons of coal (almost 90% of them inside the country) transported with a positive margin for the railwaymen at an average distance of 223 km With negative margin 222 million tons of coal were transported (of which almost 2/3 - to export terminals in ports or directly abroad), with an average run of the car at ... 3937 km. And now attention: in the first type of transportation, RZD received a general positive margin of 3 , 35 billion rubles, and the second type of transportation - a negative profit of 154 billion rubles. In other words: the state railway monopoly in 2015 "gave" to private coal companies an amount more than one and a half times their annual profit for the following year and the equivalent ¼ The cost of export Rates coal from Russia in 2016.

If you take individual companies, the picture is similar. For example, SUEK, 92% owned by Andrey Melnichenko, transported 84 million tons of coal in the same 2015, of which Russian railways, with a total volume of 35 million tons, for an average distance of 214 km, brought RZD 555 million rubles in profits, and relocation 49 million tons for an average distance of 3,391 km - a loss of 35.1 billion rubles. Thus, the state, as a 100% shareholder of JSC Russian Railways, has subsidized a successful entrepreneur for half a billion dollars a year. Almost the same can be said about other coal-mining enterprises.

I emphasize: we are talking about coal miners, not raw materials. In general, the carriage of goods of Class 1 (and these include crude oil, iron and manganese ore, bulk construction materials, and other "low-margin" goods) brought in 2015 a negative RZD of 149.8 billion rubles - which means that all The categories of goods transported in this group provided the company profit (for goods of Classes 2 and 3, I'm not saying). Today, the transportation of one ton of ferrous metals compensates the railway operators with a loss from transportation of 4.25 tons of coal, and one ton of oil - 4.42 tons of coal. The tariff for transportation of coal is today only 41% of the average tariff of Russian Railways - therefore, victorious reports about its record loading on domestic railways are not surprising.

However, all these "gross indicators" are fraught with serious problems. Over the past two years, during which the new head of Russian Railways Oleg Belozerov promises to develop a new strategy for the company's development, cross-subsidization remains the most important tool for maintaining the status quo both in the transport and coal industries. In the first, we are dealing with an annual inflation-leading "flat" indexation of railway tariffs, which fall on other sectors of the economy; In the second, we are faced with an increase in the volumes of non-competitive coal production, which will soon come across a reduction in demand in China and other markets (I'm not talking about a possible decline in prices).

Today, the Russian coal industry and related industries face complex challenges. On the one hand, the railway workers are running a so-called " "Rollover lever": the marginal profitability of transporting one additional ton of low-yield bulk cargo does not cover the growth of infrastructure costs associated with servicing this additional ton of cargo. The "rollover lever" significantly reduces the safety margin of Russian Railways in terms of revenues, which according to some estimates in 2016 was about 25 billion, which was equivalent to applying an incremental factor in the framework of flexible tariff regulation for the transport of goods for export. Naturally, if the indicators deteriorate and the distortion between the classes of this stock increases, the strength may not be enough already in 2017, not to mention the following years. In this sphere, as never before, an updated price list is needed that approximates tariffs to real costs of the carrier. On the other hand, at the government level, the state program for the redeployment of the centers for the export of coal to the East - to the Magadan Oblast and to Sakhalin - is urgently needed, as is currently being done only by private business, and quite successfully - the volume of production in the same Sakhalin has already exceeded the Soviet indicators. When will it become clear that the industry, in whose products the transportation costs for transportation of raw materials are higher than the cost of its extraction, has no promising prospects?

If you look at what is happening with a greater "height," the question is not so much transporting and mining as a format for the development of the Russian economy. We need to move away from gross indicators and think about efficiency; Raise tariffs for raw goods, stimulating their processing on the ground or building manufacturing facilities there, but at the same time subsidizing the transportation of finished products, encouraging transit and urging investors not to be afraid of Russian distances if they decide to deploy new plants and factories away from borders or ports. The joy of what Russia produces as a typical country in the third world, more and more coal, and at the same time transporting it more and more for ever greater distances, looks rather strange in today's conditions, when economies become more compact, and the most advanced industries successfully compete , Almost constantly reducing the price of its products with an increase in its consumer qualities or operational capabilities.