Deni Creek goes to Asia
The Chairman of the Board of Directors of Kolmar Sales and Logistics (KSL AG) Anna Tsivileva talks about a new brand of coal and exports to the Asia-Pacific countries
The coal mining company Kolmar started operations in 2014, in South Yakutia, very close to Neryungri. Today, this Russian enterprise has already entered the world market of energy commodities, has created its own trader, Kolmar Sales and Logistics (KSL AG), and is building new washing plants and a port in the Russian Far East. Moreover, Kolmar has serious plans to squeeze and replace premium Australian coal grades in the Asian market. The Chairman of the Board of Directors, Anna Tsivileva, told us how KSL AG is going to become one of the top coal traders.
– Anna Evgenyevna, is the coal produced by Kolmar already in demand abroad?
– Absolutely. Over the past year, KSL AG exported more than 1.5 million tons (mt) of coal, almost 50% of Kolmar's total coal sales. And recently, we have introduced a new brand of coking coal to the world market – Deni Creek coal which is mined in South Yakutia. The first trial delivery to China already took place in July.
Deni Creek is a high-rank coking coal. It's a low-volatile hard-coking coal, according to the Australian classification. The volatile matter of this coal is 21–23%, sulfur content is 0.4%, vitrinite is 98–99%, and fluorine content is 55–60 mg. Coke strength after reaction is about 45%. By the end of 2017, our company plans to mine 1 mt of coal. And next year, we intend to increase the production of Deni Creek to 3–4 mt.
– What is the main commodity market for your products?
– We don't exclude the European market. But first of all, we intend to export Deni Creek to the Asia-Pacific — China, India, Japan, and South Korea. After all, Asia is the largest importer of coking coal at the moment. Last year, the countries I just listed imported 79% of the world's 63 mt of coal supply.
– APAC countries now import 70–80% of coal from Australia. What is the benefit of working with a Russian supplier?
– The advantage is our location. Kolmar is located in South Yakutia. It's not far from the ports of the Far East, and hence, from the countries of APAC. Proximity to the customer allows us to guarantee the regularity, stability, and reliability of deliveries. We have the opportunity to work with both large and small customers. Coal shipping volume can vary from shipload to shipload, from 10,000 to 30,000 tons, and up to 160 000 mt when our own port starts operating.
– What are the logistics of working with APAC countries right now?
– Now Kolmar exports its coals through the ports of Nakhodka and Vostochny. And by the end of 2019, we plan to build and put into operation our own cargo terminal in Khabarovsk region near Vanino. This terminal will allow us to ship up to 12 mt of coal per year and deep-sea ships will be able to enter the port. By 2023, we plan to double out shipment volume.
– What other varieties of coal does Kolmar produce today?
– In addition to the already mentioned Deni Creek, we also supply coal produced by Inaglinsky open cut in South Yakutia. We are steadily increasing production volume and intend to reach a mining volume of 20 mln mt per year. We are building washing plants for processing extracted coal. The first washing plant, Inaglinskaya-1, officially opened on May 31, 2016. Its production capacity is 2 mln mt per year. Now the second plant, Denisovskaya, is being built, with a production capacity of 6 mln mt. We plan to put this plant into operation at the beginning of next year. Then we start the construction of Inaglinskaya-2, with a production capacity of 12 mln mt.
– Does Kolmar have sufficient resources to ensure such a growth?
– Kolmar's total coal reserves in South Yakutia are more than 1 billion tons. It's the huge volume of the resource base that made Kolmar think about establishing its own trader. We didn't want to accumulate profits from export sales on accounts of third-party traders, which would be inevitable if we used their services. Having our own subsidiary allows us to keep all our profits within the Kolmar Group.
Having our own export-trading structure gives us also another advantage. Now we can quickly satisfy the needs of the final customers of our products and react to the behavior of the market. One example: we have already visited many iron and steel works in Asia, inviting them to try working with our coal. A third-party trader would never spend so much time and invest so much effort in promoting our products on the market.
– Do you intend to open offices in other countries?
– We are considering opening offices in China, Japan, India, and South Korea. But that's a long-term project. The absence of offices abroad does not prevent us from concluding mutually beneficial contracts. For instance, we have already signed a long-term contract with the Chinese company Baowu Steel. Under this contract, we are committed to supplying high-quality coking coal from Inaglinskaya-1 to Baowu Steel.
Now we are negotiating with Japanese and Indian steelmakers. We are already in direct cooperation and negotiations with ArcelorMittal, Japanese companies JFE, Nippon Steel, Nippon Coke, POSCO (South Korea), and JSW (India)
– Do you supply exclusively self-produced coal, or do you also work with coal from third parties?
– We also work with third-party coal, but our priority is to promote our own products. Kolmar is developing and gradually becoming a successful world-class mining company that builds relationships of trust with its partners.