Hydropower, Rail Shortages Will Likely Hit Coal Exports

LONDON — Russia's hydropower levels have fallen to the lowest in 16 years and coal-fired plants are struggling to take up the slack because a chronic rail wagon shortage is making it hard for them to get enough fuel, the country's coal exporters said Monday.

For years there have not been enough rail wagons available to move all the commodities competing for space, but the shortage of hydropower would make the situation worse this year, they said. "It is much worse this year, and it is earlier than usual this year because of the hydropower situation," said one of the largest coal exporters and suppliers of domestic coal.

There are about 20,000 rail wagons in the country, but 30,000 are probably needed, with old wagons falling apart three times as fast as they can be replaced. Higher coal prices make it more affordable to buy wagons costing over $40,000 each, but the supply is just not there.

"The Chinese don't have wagons to spare for export. They have their own huge need to meet," an industry source said.

Not only larger coal-fired plants but also smaller communal combined coal-fired heat and power plants serving several apartment blocks could run out of fuel in the winter due to transportation problems. "If nothing changes, we think there could be four power stations shut down during the winter in the west of Russia, at Murmansk, St. Petersburg and elsewhere," an exporter said.

The government is likely to displace some coal exports from the rail network in order to prioritize the movement of domestic coal, the exporters said.

"The producers all have large stocks of coal in Kemerovo and elsewhere at the mines, but they can't move it because there are so few wagons," another major exporter said.

"They will have to move the domestic coal as a priority, and we will lose even more wagons for export coal," the first exporter said.