The Weekend Essay: Russia to plunder Arctic Coal for India

Published by MAC on 2019-11-03
Source: Independent Barents Observer

Dark days threatened on many fronts

Russia finds a market in India for its vast reserves of Arctic coal

Coal from the Taymyr Peninsula will be shipped out via the Northern Sea
Route.

By Atle Staalesen

The Independent Barents Observer -

1 November 2019

It was not alternative and green power that was discussed when Indian
Minister of oil, natural gas and steel Dharmendra Debendra Pradhan visited
Russia last month.

The minister was on a four-day tour in the Russian Far East and he had
with him a powerful delegation of leaders from the country’s biggest
industrial companies.

It was coal that was on top of Pradhan’s agenda as he sat down with
Russian government officials and business representatives.

“Our negotiations must end with a successful project decision on the
development of metallurgic coal, that is to be exported from Russia,” the
minster said in a meeting with the Russian Ministry of the Far East and
Arctic.

According to Pradhan, India needs about 70 million tons of high-quality
coal for its aluminum and steel industry.

Pradhan and the Indian business leaders are looking towards the Russian
Arctic, where they will find all the carbon-rich rocks they ever might
need.

From Taymyr to New Delhi

Several new major mining projects are under development in the remote
northern region. Among them is the projects of company Vostok Coal in the
Taymyr Peninsula.

Vostok Coal plans to extract an annual 30 million tons of anthracite, a
high-quality coal, from its fields in Taymyr.

Since 2016, the company has prepared the ground for a huge industrial
project that includes several open pits and the building of seaports,
roads and other infrastructure.

During the visit of Minister Pradhan to Russia, Vostok Coal held talks
with representatives of Coal India, the state-controlled company, over the
development of the Taymyr resources.

The Indian side expressed interest in establishing partnership relations
both with regard to purchase of the coal and joint efforts for its
extraction, Vostok Coal said.

An Indian business delegation is now expected to soon visit Taymyr.

Dirty business

Coal India Limited is the largest coal-producing company in the world. It
produces more than 500 million tons of raw coal per year and accounts for
for more than 80 percent the coal production in India.

According to newspaper the Guardian, the Indian company is among the ten
worst emitters of climate gasses in the world. Since 1965, the company is
believed to have emitted more than 23 billion tons of carbon dioxide
equivalents.

Emissions are likely to increase as the company continues to increase
production and hike imports.

Vast resources

Vostok Coal believes that the lands of the Taymyr tundra hides
unprecedented volumes of coal. According to the company the Taybass, the
Taymyr coal basin, has as much as 225 billion tons of high-quality coal.

Not only Vostok Coal is represented in the region. Also company Severnaya
Zvezda owns production licenses in the area and intends to send millions
of tons out from a new port terminal located near Dikson on the Kara Sea
coast. The company’s Syradasayskoye field is believed to hold about 5,7
billion tons of reserves and annual production is to reach at least 10
million tons. Production start is set to 2020.

‘We can deliver’

Russia can offer what India needs, the Russian Ministry of the Far East
and the Arctic underlines. In last month’s meetings with the Indians,
First Deputy Minister Sergey Tyrtsev confirmed that Russia by year 2025
will be able to increase its exports to India by 700 percent.

“I believe that we will able to boost the volumes of our deliveries to
India six-fold, to 28 million tons by 2025,” he said.

The outlined volumes are equivalent to the combined production targets of
Vostok Coal and Severnaya Zvezda.

Russia in 2018 exported a total of 4.5 million tons of coal to India.

Northern Sea Route

The coal exports from Taymyr constitute a core part of Russia’s ambitious
development plans for the Northern Sea Route.

Russian President Vladimir Putin’s national 5-year plan presented after
his re-election in 2018 includes a total annual shipping volume on the
Arctic shipping route of 80 million tons.

That objective will not be possible to reach without the coal from Taymyr.

The Arctic cooperation between Russia and India consequently comes with
backing from the highest political level in Moscow.

Environmental violations

The massive coal extraction on the Arctic tundra does not come without
grave environmental impact.

Already in 2017, Vostok Coal and its regional subsidiary Arctic Mining
Company was sued by the federal Environmental Protection Agency and
subsequently fined 600 million rubles.

According to the environmental inspectors, Vostok Coal has inflicted
serious damage to local environment and did not have the permissions
needed.

The inspectors reportedly found about 70,000 tons of extracted coal stored
on site. In addition, more than 180,000 tons were exported in a complex
logistical operation in winter of 2017.

The company denies any wrongdoing. The extracted coal is part of
geological testing of the area, it argues.

Following the inspection, the company even tried to sue the
representatives of the environmental agency for illegal entry to the
production area. The court rejected the case.

Despite the violations, Vostok Coal and its partners got federal
authorities’ blessing for the building of two major seaport terminals on
the coast of the Kara Sea.

The two projected seaports, the Chaika and the Severny, are to provide the
necessary infrastructure for the export of coal from the nearby mines.

However, the problem for Vostok Coal has been that the terminals are
located within areas strictly regulated by environmental legislation.

The federal Ministry of Natural Resources long rejected the company’s
construction plans in the area because they were located too close to the
borders of a local natural park. Ultimately, the federal government still
approved the plans and changed the borders of the local national park.

Russia invests in coal

While coal is a dying industry in Europe, nearby Russia continues to place
its bets on the polluting mineral.

Over the last 10 years, Russia has boosted its coal production by more
than 30 percent to a total of 440 million tons, and the country is now the
world’s third biggest producer.

In the same period, investments in the industry surged 150 percent.

And production is to continue upwards. According to a draft development
program, annual coal production might reach as much as 670 million tons in
the course of the next 15 years.