It has been a thorn in the side for Russian Railways (RZD): the official obligation to export around a hundred million tonnes of coal, reducing capacity for other types of freight. Yet, this week may be a good week for RZD, with Russian reports suggesting that the monopolist took some serious steps in reducing the coal quota.
Russian Railways has been quite vocal in its opposition against the prioritisation of coal exports on the rail network. Coal does not generate as much income as other goods, and with infrastructure already being used at peak capacity, coal takes up much-needed space for more profitable freight.
At the same time, the Russian coal mining industry is facing serious financial trouble. Coal prices have been rather low, transportation costs have been high, and China has been keen on getting its coal from elsewhere. Earlier in 2024, experts warned that the sector could go bankrupt.
Rail versus coal
Between the interests of RZD and the coal industry, it seems that rail is getting the upper hand. In 2025, the company will reportedly only be obliged to carry a certain amount of coal from the Kuzbass region, which produces the majority of Russia’s coal. All other regions will be left out of the arrangement – which means that RZD’s coal quota will essentially be cut in half.
In the next year, it will only have to transport around 54 million tonnes of coal eastward – to China and the Far East ports. That does not mean that the other coal won’t make it onto the rail network at all, but they will be much lower on the priority list. It gives RZD the opportunity to make more money with other goods, something that it is sure to be happy about, considering its profits were 90 per cent lower than projected in 2024.