Coal imports from Russia on the rise

After South Africa and Indonesia; Russia may emerge as India's third source of thermal coal imports.

Though still in an evolving phase, coal imports to the country from the Eastern Russian ports of Vladivostok, Vanino Vostochny and others on the Pacific are surely rising and may cross the one million tonne (mt) mark this year.

Major Russian miners are also building large coal terminals on Pacific ports to meet Asian demand.

The imports from Russia – though insignificant at this juncture when compared to India's projected import bill of over 100 mt for 2011-12 – may, in the longer run, help reduce the country's dependence on existing sources, especially on Indonesia.

The first move in this direction was made by India's largest coal importer and infrastructure major Adani Enterprises in early 2011 when it brought a Capesize coal cargo from the largest coal port of Vostochny on the Pacific to the group-run Mundra Port. Capesize is one of the largest bulk carriers, which are typically above 1,50,000 tonnes deadweight.

Since then, the Adani group has brought four coal cargoes to India. While comments were not available from the company, market sources told Business Line that the Adani group was pursuing more such imports from Russia during the year. To add momentum to the trend, the trading arms of the Kolkata-headquartered Visa Group – Visa Resources Pte of Singapore and Visa Comtrade – are now pushing import plans from Russia.

According to Mr Siddharth Kasera, General Manager of Visa Comtrade, the company is now planning to import a Capesize cargo – to be unloaded at the newly built Dhamra port in Orissa – from the Russian port of Vanino at Muchka Bay on the Pacific.

A major importer on behalf of cement plants, Visa Comtrade posted a turnover of Rs 1,000 crore in the last fiscal.

Available information suggests that Russian coal is similar to the South African varieties currently imported into the country.

Despite a longer sea-route what apparently is working in favour of Russian coal is a price discount compared with South Africa ($116 a tonne on f.o.b. basis at the spot market) and lower freight rates on the Pacific.

However, that is not sufficient to convince the coal importers at large to make a beeline for Russia.

Mr Abhay Chaturvedi, Vice-President of Gupta Coal (India) Ltd, another major importer in India, feels that while the imports from Russia are viable only in Capesize cargoes as there are limited options available in the country for unloading of such very large crude carriers.