Russian State corporation Rostec, one of the largest Russian industrial conglomerates, and Chinese State corporation Shenhua, world’s leading producer and distributor of coal, have signed a Memorandum of Understanding. The parties plan to jointly explore coal deposits in Siberia and Far East Russia, develop industrial and transport infrastructure and build generating capacities and high-voltage transmission lines for exporting electricity to China. Total investments of up to $10 billion are expected. The MoU was signed on September 4, 2014 by the CEO of Rostec Sergey Chemezov (shown here) and the Chairman of the Board of Directors of Shenhua Zhang Yu Zhuo during the visit of the CEO of Rostec to China. According to the MoU, the parties plan to begin the exploration work at Ogodzhinsky coal deposit in the Amur Region of Russia and the construction of coal terminal Port Vera in Primorsky Krai. This project will solve the energy deficit problems of, and meet the electricity demand of, the Russian Amur Region and northern China.
“Rostec develops cooperation with the Chinese partners in a number of areas,” –underlined Chemezov – “strengthening of this cooperation is mutually beneficial. Partnership with Shenhua is a part of the comprehensive effort to expand the Russian energy presence in the Asia-Pacific region. The total investment in the project will be $8-10 billion.”
Comprehensive development of the deposit will include the construction of mining and enrichment facilities (open-pit coal mines, washing plant), power generating facilities as well as development of related social and transport infrastructure. Rostec says “the project is unique because it allows to produce electricity with a high added value. It is planned that high calorific value coal concentrate will be exported to Asia-Pacific countries, mainly to China. Low calorific value coal will be used for the electric power plant to be built at the deposit. That is why Rostec’s specialists believe that the construction of generating capacities and high voltage transmission lines for exporting electricity to China could be the next stage of development of the field infrastructure. The decision on the volume capacity of power generation facilities to be constructed will be made, depending on the demand in Russia and potential of exporting electricity to China and other countries of Asia-Pacific.”
Subsequent to the results of the meeting Rostec and Shenhua will establish a joint working group aimed at coordination of activities of the parties, resolving technical issues, and preparing feasibility studies for each project. After that, negotiations on the establishment of joint ventures and approval of further areas of cooperation are planned.
RT – Global Resources (Rostec’s operator and leading coordinator) closed the deal that allows the sea trans-shipment terminal Port Vera to participate in the project. The Port Vera coal trans-shipment terminal is planned to be constructed in the vicinity of Mys Otkrytyi, Primorsky Krai, in an ice-free area. It is designed for vessels with a displacement tonnage of 40,000-150,000 t. The cargo turn-over of the port is anticipated to be 20 Mt/y, with a possibility to double this capacity. An area of 826 has already been allocated for the construction of the terminal. The project has been approved by all government institutions. Technical specifications for development of railway infrastructure to support the shipment of 20 Mt/y of coal have been received. Design of port facilities is in the final stages of completion. Construction is to begin in 2015. Total investment is estimated at $1 billion. It is expected that the port will become operational in 2018-2019. Implementation of the project will ensure long-term supplies of coal for domestic consumers in the Russian Far East, and significantly improve access of Russian coal mining companies to the markets of Asia-Pacific.
Total reserves of the Gerbikano-Ogodzhinsky coal district, located in the Amur Region, are estimated at 1,600 Mt. According to geological experts the actual volume of mineable reserves can be considerably higher. Development of the deposit is stipulated in the program for development of Russian coal industry for the period of up to year 2030, as well as Russian – Chinese Memorandum of Understanding and Cooperation in Coal Industry, signed in September 2010. As a result of implementation of the project, estimated annual production of thermal coal will be 30 Mt by 2019. This will allow creation of a modern mineral resource cluster in the region.
Rostec was established in 2007 with an aim to facilitate development, production and exports of high-tech industrial products for civilian and military application. It includes 663 organisations that currently constitute nine holding companies in the military-industrial space and five in civil industries. Organisations of Rostec are located across 60 regions of the Russian Federation and export products to over 70 countries. Rostec’s revenue in 2013 was $32.59 billion, net profit – $1.25 billion. Tax allocations exceeded $4.32 billion.
Shenhua is the largest coal mining company in China and one of the largest in the world. It is a coal-based integrated energy company with businesses in coal production, power generation, railway, shipping, as well as production of coal-to-chemicals and coal-to-liquids. It is headquartered in Beijing.
