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Rostec and Shenhua to invest up to $10B into coal mine development and infrastructure in Russian Far East; coal and power

Russian State Corporation Rostec, one of the largest Russian industrial conglomerates, and Chinese State Corporation Shenhua, the world’s leading producer and distributor of coal, have signed a Memorandum of Understanding. The parties plan to explore jointly coal deposits in Siberia and the Far East of Russia; to develop industrial and transport infrastructure;and to build generating capacities and high-voltage transmission lines for exporting electricity to China. The partners expect total investments of up to US$10 billion.

According to the Memorandum, the parties plan to begin the exploration work at Ogodzhinsky coal deposit in the Amur Region ofRussia and the construction of coal terminal “Port Vera” in Primorsky Krai.

The partners said this project will solve the problem of energy deficit and meet the electricity demand of the Russian Amur Region and Northern China.

Comprehensive development of the deposit will include the construction of mining and enrichment facilities (open-pit coal mines, enrichment plant); power generating facilities; as well as the development of related social and transport infrastructure. High calorific value coal concentrate will be exported to Asia-Pacific countries, mainly to China. Low calorific value coal will be used for the electric power plant to be built at the deposit.

Rostec’s specialists believe that the construction of generating capacities and high voltage transmission lines for exporting electricity to China could be the next stage of development of the field infrastructure. The decision on the volume capacity of power generation facilities to be constructed will be made, depending on the demand in Russia and potential of exporting electricity to China and other countries of Asia-Pacific.

Subsequent to the results of the meeting Rostec and Shenhua establish a joint working group aimed at coordination of activities of the parties, resolving technical issues, and preparing feasibility studies for each project. After that, negotiations on the establishment of joint ventures and approval of further areas of cooperation are planned.

Rostec develops cooperation with the Chinese partners in a number of areas. Strengthening of this cooperation is mutually beneficial. Partnership with Shenhua is a part of the comprehensive effort to expand the Russian energy presence in the Asia-Pacific region. Total investment volume in the project will be US$8-10 billion.

—Sergey Chemezov

Port Vera. The Port Vera coal sea transshipment terminal is planned to be constructed in the vicinity of Mys Otkrytyi, Primorsky Krai, in an ice-free area. It is designed for vessels with a displacement tonnage of 40,000-150,000 tons. The cargo turn-over of the port is anticipated to be 20 million tons per year, with a possibility to double this capacity.

An area of 826 hectares has already been allocated for the construction of the terminal. The project has been approved with all government institutions, technical specifications for development of railway infrastructure to support the shipment of 20 million tons of coal per year have been received. Design of port facilities is in the final stages of completion. Construction is to begin in 2015. Total volume of investment is estimated at $1 billion.

Rostec expects the port will become operational in 2018-2019. Implementation of the project will allow to ensure long-term supplies of coal for domestic consumers in the Russian Far East, and to significantly improve access of Russian coal mining companies to the markets of Asia-Pacific.

Reserves. The total reserves of the Gerbikano-Ogodzhinsky coal bearing district, located in the Amur Region, are estimated at 1.6 billion tons. According to geological experts, the actual volume of mineable reserves can be considerably higher, Rostec said. Development of the deposit is stipulated in the program for development of the Russian coal industry for the period of up to year 2030, as well as Russian - Chinese Memorandum of Understanding and Cooperation in Coal Industry, signed in September 2010.

As a result of implementation of the project, estimated annual production of thermal coal will equal 30 million tons by 2019. This will allow creation of a modern mineral resource cluster in the region.



Will moving CPPs north reduce pollution level in large Chinese cties?

Even if it does, it will not decrease total world wide pollution and GHG.

More CPPs = more GHG and more pollution.

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