En+ will continue to sell coal to China

Oleg Deripaska

En+, a Russian industrial company run by tycoon Oleg Deripaska, will continue to try its hand at exporting coal to nearby China, despite the presence of weak coal markets.

The company made its first delivery to China in May and anticipates that deliveries will increase in coming years even though competitively priced U.S. shale gas supplies threaten coal demand, Reuters reports.

“The center of economic activity is shifting eastwards,” Andrei Churin, the managing director for En+, said, according to Reuters. “While consumption of electricity in Europe is declining, it is increasing in the East. We see there’s a colossal potential here … and we are moving in this direction.”

En+ runs electricity, mining and metals operations, mostly in eastern Siberia north of the border with China. The coal division plans to produce 20 million metric tons of coal annually by 2016. The company anticipates the ability to export five million metric tons by that time. Deripaska has decided to go on with the coal export plan despite an unstable coal market and European Union plans to move away from coal to reduce pollution.

“On the one hand we are increasing both extraction and sales, but on the other prices are showing negative dynamics, especially the coking coal rates,” Churin said, according to Reuters. “It also looks like demand is falling too…so we are trying to find optimal solutions to do efficient business. Russia is much nearer to China than Indonesia and Australia, its key coal suppliers. But there are logistics concerns, and we take a sober view of the situation.”