Coal heads to Korean countries as part of joint North-South operation

Siberian coal is being exported to North and South Korea as part of a unique trial exercise of cooperation between the two warring nations. Officials at the Ministry of Unification in Korea said that 140,000 tonnes will be transported 54km from the Russian border town of Khasan to Rajin, a port in North Korea.

From there, as part of the joint logistics project, two ships will then ferry the bituminous coal to South Korea's three port cities of Dangjin, Boryeong and Gwangyang. The shipment is the second to come from Siberia as part of the operation, with 45,000 tonnes sent to Rajin and then Pkohkhan in November last year.

The new export project to the Koreas has only been made possible as a result of the reconstruction of the Khasan to Rajin railway, which started in 2008.

According to recent figures South Korea accounts for 16.5 per cent of Russia’s export coal, narrowly behind Japan which imports 17 per cent. However if the pilot project involving the cooperation of North Korea is successful it could see this rise.

Certainly, there are plans to increase coal output in Siberia and the Far East to 75 million tonnes a year, as the Kremlin eyes up stronger economic ties with Asian countries. In the whole of Russia, about 480 million tonnes of coal is harnessed annually.

Anastasia Brazhina, deputy head of PR with RAO Energy Systems East, said: 'The development of coal sector will be related to increasing exports. Coal consumption [within Russia] won’t be as large as planned coal output.'

Deputy Prime Minister Dmitry Medvedev has already pledged an investment of about five trillion roubles ($100million) to help meet the export targets and improve the infrastructure required, particularly in terms of upgrading the rail network.

Igor Yushkov, an expert with the Fund for National Energy Safety, said: “The more industrial projects spring out in Far East and eastern Siberia, the more intensively will the regions develop. But it's necessary to develop the railways – it would boost trade and the economic growth of the region.'

The Siberian Coal Energy Company (SUEK) and Mechel are the biggest producers, with Mechel alone exporting one million tonnes a month to the Pacific Asia region.

But there are doubts about whether Russia can become a true global player in terms of exporting coal worldwide. Sergey Pikin, director of the Fund for Energy Development, said: 'In the Asian market Russia will have to compete with Australia. Japan, South Korea and Taiwan are among the largest consumers in Asia but the question is, will Russia be able to compete with Australia?'