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. Last Updated: 07/27/2016

Port Delays Slow Coal Exports to Asia

The country has cut coal exports to Asia this month because of severe delays unloading frozen rail cargoes at the Pacific port of Vanino, where one export terminal is shipping only half of the volumes seen last month.

Market sources told Reuters that a backlog of 718 rail cars carrying coal to Asian markets had accumulated at Vanino, Russia's second-largest Pacific coal port after Vostochny.

"At this time of year, it's normal to have problems unloading wagons at Vanino, but the situation now is simply tragic," said an official working at the port, who declined to be identified.

Russia, the world's third-largest thermal coal exporter in 2008, is keen to boost its share of fast-growing Asian coal and energy markets and is expanding port capacity on the Pacific to diversify from traditional markets in Europe.

SUEK, Russia's largest thermal coal producer, launched a new terminal in Vanino one year ago with annual capacity to handle 12 million tonnes. The official said it was handling 8.4 million tonnes annually at present.

Neither of the two coal stevedoring companies operating at Vanino had pinned down a November loading schedule, he said.

Daltransugol, which operates the SUEK terminal, had unloaded only 68 percent of its planned volumes of 440 wagons per day, the official said. The other stevedoring firm, Port Vanino, had planned 94 wagons a day and achieved 63 percent of this rate.

Port Vanino handles between 1.5 million tonnes and 2 million tonnes of coal per year. In November, shipments are expected to almost halve to 63,000 tonnes versus 120,000 tonnes in October.

SUEK declined to comment on the situation at Vanino.

The port official said 1,353 coal wagons were en route to Port Vanino and 2,999 were headed to Daltransugol, compared with typical levels of 750 wagons and 1,900 wagons respectively.

Coal, supplied mostly from the western Siberian mining heartland of Kemerovo region, is loaded onto wagons with high moisture levels. In winter, it freezes en route to the Pacific.

"It's difficult to unload coal here, in Vanino, because producers are economizing on techniques to defrost coal," the official at the port said.

The SUEK-owned terminal operated by Daltransugol was still working on a trial basis, he said, while an official at Port Vanino said its own terminal had not yet been modernized.

"We don't have the same specialized equipment to defrost coal that Daltransugol has, so we need to chisel out coal with compressors," the Port Vanino official said.

Vanino's importance as a coal hub is set to increase after Mechel, Russia's largest coking coal miner, constructs its own terminal there to tap into coal-hungry Asian markets. It will have the capacity to handle 25 million tonnes per year.

But construction of the terminal, which was scheduled for completion by 2012, had been pushed back as a result of the global financial crisis, Mechel spokesman Ilya Zhitomirsky said.

"Its launch will correspond to the development of the Elga deposit," Zhitomirsky said.

Mechel acquired Elga via a state auction in 2007. The deposit, in the Yakutia region of eastern Russia, contains more than 2 billion tonnes of coking coal and could potentially become Russia's largest coal project.

"We are working with Japan, South Korea and China. It's possible we will work in more markets in the future," Zhitomirsky said.