Against The Tide Of The World, Russia Bets On Coal Growth; Country Invests $10 Billion To Expand Railways And Increase Trade With China

Betting On The Growth Of Chinese Coal Demand, Russia Invests US$ 10 Billion In The Expansion Of The Country’s Railroads

Coal-fired power plants seem to be on borrowed time. European countries have set goals to completely phase out coal plants, while some plants are already being closed in Spain. With the increase in environmental awareness, clean energy is becoming cheaper, facilitating the transition. However, Russia is going in the opposite direction, betting on the growth of consumption.

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According to information from Bloomberg, the Russian government, led by Vladimir Putin, is investing US$ 10 billion to modernize and boost the country’s railroads that will aid in the export of the commodity. The country is in a hurry to complete the project, even using prisoners to expedite the works.

The country is investing in railroads toward the far east, making a big bet. Even with the likely slowdown of coal plants, Russia bets that coal consumption will continue to rise even if demand in other countries decreases.

“It Is Realistic To Expect That Asian Demand For Imported Coal Will Increase If Conditions Are Favorable,” said Evgeniy Bragin, vice president of UMMC Holding, which has a coal company in Siberia.

The Russian government’s investment of US$ 10 billion aims to expand its largest railroads in Russia. The expectation is that the capacity to transport coal and other goods will be increased to 182 million tons by 2024. The current capacity is already more than double what the railroads had in 2013 when the expansion project promoted by President Vladimir Putin began.

“Russia Is Trying To Monetize Its Coal Reserves Quickly Enough So That Coal Contributes To GDP Rather Than Being Stuck In The Ground,” says Madina Khrustaleva, a regional expert.

President Vladimir Putin‘s bet is that the land border with China will make the country the main coal supplier for China. The situation of Russia may be facilitated by the crisis between China and Australia, the current largest coal exporter in the world.