Meeting on coal industry development 2021-03-02 16:45:00 The Kremlin, Moscow The President held a meeting, via videoconference, on coal industry development. The meeting was attended by Prime Minister Mikhail Mishustin, Chief of Staff of the Presidential Executive Office Anton Vaino, First Deputy Prime Minister Andrei Belousov, Deputy Prime Minister – Chief of the Government Staff Dmitry Grigorenko, deputy prime ministers Alexander Novak and Marat Khusnullin, presidential aides Igor Levitin and Maxim Oreshkin, Minister of Industry and Trade Denis Manturov, Minister of Economic Development Maxim Reshetnikov, Minister of Transport Vitaly Savelyev, Minister of Finance Anton Siluanov and Minister of Energy Nikolai Shulginov, as well as some regional heads and CEOs of major coal industry and transport sector companies. * * * President of Russia Vladimir Putin: Good afternoon, colleagues. I can see that everyone is here. We are in various regions of our country. I hope that our equipment will function smoothly, and that we will be able to work fruitfully. Today, I suggest that we discuss the situation in the national coal industry, a key pillar of the national fuel and energy sector. It has great significance for the socioeconomic development of entire Russian regions; we have five coal-mining regions. It is also important for the labour market, for securing employment to hundreds of thousands of Russian citizens and securing their incomes. We have a total of 11 million residents in these regions. Of course, the industry employs far less. However, a total of 11 million people live in these regions. We regularly address this subject in various formats. In the past few years, we have drafted a number of strategic documents reflecting the coal industry’s plans and tasks. First of all, they include the programme for coal industry development through to 2035, as well as decisions of the Commission for Strategic Development of the Fuel and Energy Sector that met in Kemerovo in the summer of 2018. Today, I suggest reviewing the implementation of our tasks. And, of course, we will discuss subsequent steps to develop the coal industry, with due consideration for the transport sector projects because it is impossible to ensure cost-effective operations, unless they operate in unison. Russia’s traditional and new coal-mining centres have substantial capabilities. And, of course, proceeding from global coal demand trends, we have to assess current and future developments. I would like to note that Russia has been producing over 400 million tonnes of coal per year since 2017. Over 50 percent of this amount is exported elsewhere. Coal export volumes have soared by over 33 percent in the past eight years. For further sustainable development of the industry, it is necessary to constantly analyse the market and make plans both for the next three to four years and for a longer period, based on the strategic challenges and long-term prospects of the global coal market. We understand what this is about. Today, the main coal sales are happening in the Asia-Pacific. Last year, 122 million tonnes of Russian coal were supplied to the region. At the same time, there is an additional demand in the Asia-Pacific that Russian companies could meet. And it is important not to pass up this opportunity; flexibly using the logistics capabilities of our transport system, we should increase the export capacity of the domestic coal industry. And this, I emphasise, means new jobs and higher incomes for people employed in this industry and Russia’s transport sector. We have already launched plans to develop the Eastern Operating Domain and to expand the capacity of the BAM [Baikal-Amur Mainline] and Transsib [Trans-Siberian Railway], which go to the seaports in the Far East. Today I am expecting to hear a report on how this work is going. As for the long-term prospects of the global coal market beyond the current decade, I know that there are different forecasts in this regard. It is no secret that some of them suggest a significant market contraction, including due to technological changes in the global fuel and energy sector, as well as the active use of alternative fuels. We also know what is happening with this: Texas froze because of the cold weather. And the windmills had to be thawed in ways that are far from environmentally friendly. Maybe this will also cause adjustments. In any case, it is necessary to carefully study all possible scenarios in order to guarantee the steady development of our coal-mining regions even with a decrease in global demand for coal and with a decline in the global situation. In particular, it is important to use the export revenues of the coal industry to strengthen and diversify the economies of coal-mining regions. And of course, this resource should really work to improve the well-being of people and to create modern, comfortable living conditions. A separate, highly important task is certainly environmental protection, improving the environment in coal mining and transhipment areas. These issues also need constant monitoring. All these issues require the coordinated, joint work of businesses, regional and federal authorities. Instructions in this regard have already been given more than once. Today I am asking you to report on the progress, including on the implementation of the socioeconomic development programme for Kuzbass, the country's leading coal region. Let us get down to work. <…> Vladimir Putin: Colleagues, I would like to thank you for our joint work today. I would like the Government to analyse and make use of all the proposals voiced today, including those made by representatives of the regions and our colleagues from the coal companies who have spoken here. This is what I would like to point out in conclusion of our meeting. First of all, today we paid much attention to the development of the Eastern Operating Domain. In point of fact, we keep returning to this subject. Today we spoke about it in detail, listening to how this project is being organised and the potential risks. We must carry out this work as precisely and smoothly as possible. Therefore, based on the discussion we have had today, I would like to ask the Government to provide a clear construction timeframe and the extension parameters for the BAM and the Trans-Siberian Railway. We started talking about this back in 2018, and today we can see that the problems are still with us. We must do what I have mentioned, stipulating the throughput and carrying capacity, not of the railway line in general but of its individual sections, as well as the maximum weight of trainloads before and after we finish this project. I would like to ask you to provide this schedule. I know that there were disagreements about this before the meeting; I am asking you to provide a quarterly schedule until the end of 2024. Please, submit it to me and formalise it in a government enactment. Yes, and do please show it to me, because unless we strictly regulate this matter, the problems will remain. I would like to remind you once again that the quantity framework for the expansion of the Eastern Operating Domain has been approved. Mr Belousov has reported on this today. The next task is to set a concrete timeframe for the work. This is important both for the implementation of regional development programmes and for the coal companies’ investments. Our colleagues from these companies have pointed this out just now. Second, I would like the Government to strictly coordinate the implementation of the development plans for the BAM and the Trans-Siberian Railway, as well as the obligations of the parties involved in this work. I would like to ask you to ensure, before July 1 this year, the signing of relevant agreements (I understand the companies do not object to this) between the coal companies and Russian Railways. These agreements must run up to 2024 so they have a clear idea of how much they can take out. The agreements must be based on mutual responsibility. I do not know what rules underlie them now: carry-or-pay or some other regulations but this does not matter. What matters is that the commitments of the coal companies and the carriers, including the volume of coal, loading stations and destinations must be determined precisely. I would like you to pay special attention to the export potential of our leading coal region, Kuzbass. By 2024, we must ensure (even though this is not what we agreed on before, but I agree with Mr Belousov) at least a 30 percent increase in coal shipments to the east over 2020. Please stick to this target. Yes, we adjusted it compared with what we had planned before but this is life, it’s understandable. That said, the plans for shipping Kuzbass coal must be based on an understandable and transparent foundation. I heard today that this is what seems to happen in reality. If this is the case, well done. If so, there is no need to change anything. This must be based on the shipping volumes to the west and the domestic market, as my colleagues said today, and also based on existing port capacities. I am also instructing the Government to present additional proposals on expanding the eastern section of the Baikal-Amur Railway (BAM). We need to increase eastbound coal shipments from Yakutia. The governor mentioned this today as well. I would like you to review mechanisms for funding this project, including from the National Welfare Fund as the Minister of Economic Development suggested today, if this is necessary, of course. In any event, I would like to say that I will not object to this in any way. Please present your proposals, if necessary. The third point. As I said in my opening remarks, we must diversify the economy in the coal-mining regions. Mr Siluanov made a convincing speech today to this effect. It is necessary to achieve priority development of other economic sectors and services with a view to stabilising the regional labour markets and preventing critical dependence of people’s lives on one industry alone. I want the Government to identify the benchmarks and closely monitor the employment dynamics in the coal-mining regions. Everything must be done in a timely manner. Please focus on creating jobs in the non-coal mining sectors and on bringing in more private investment. As we have just heard, the companies operating in this industry have no objections to that. As I noted earlier, it is important to use the proceeds from coal exports to develop non-coal mining sectors in regions like Kuzbass. Again, our colleagues have no objections to that. It is good that the coal companies are receptive of this idea. I want to add here that other enterprises are also willing to invest in the coal-mining regions’ economies and to work in priority development areas. If these tools can be used, please go ahead and use them. We heard about such examples today. One such company plans to invest in the construction of a logistics centre in Kuzbass which will create several thousand new jobs. Of course, we must support these initiatives, adjust the regulations to fit the businesses and regions’ needs and find new and appropriate solutions. I also want you to approve the programme for the socioeconomic development of the Kemerovo Region by the end of March. This should include investment in the region’s transport, utilities and other infrastructure, and promotion of the tourism industry, which includes Sheregesh that we discussed today. It also includes a new motorway to bypass Kemerovo and the expansion of the Sheregesh resort in line with today’s proposals, as well as building new social facilities, which was put on hold because of the coronavirus pandemic. Colleagues, there are many questions. Please systematise them and present them to me soon as proposals to expand the industry that is critically important not only for the coal-mining regions of our country, which is home to 11 million people as I said earlier today, but also for the rest of our vast country. Please, finalise what we have agreed on today as soon as possible, put it in the form of regulatory acts, and submit it to me. I want to see this. These will be Government decisions, but I want to see them. Thank you.