Russian Railways ponders ending freight agreements for Kuzbass coal in 2026

Russian Railways (RZD), the country's largest railway freight company, is opposed to extending agreements on guaranteed coal transport volumes for 2026 with the Kuzbass region in Southwestern Siberia, Russia's major coal mining area, TASS has reported.

"When developing plans, the company advocates organizing transportation in accordance with the sequence stipulated by the NDA [rules for non-discriminatory access to rail infrastructure], without concluding an agreement with coal regions," TASS quotes Irina Magnushevskaya, deputy general director of RZD, as saying.

Earlier in January, RZD agreed to transport 54.1 million tonnes of coal from Kuzbass to eastern export ports this year, the same volume agreed for 2024, Mysteel Global learnt.

In fact, RZD had been attempting to cancel guaranteed freight agreements with domestic coal regions in recent years, as the company hoped to allocate its rail capacity to other commodities promising with better profits, according to RailFreight, a freight information platform headquartered in Rotterdam, the Netherlands.

Last year, RZD reportedly transported about 100 million tonnes of coal to eastern ports under agreements with six coal regions. The high coal-export target squeezed the company's freight quotas for other commodities on its eastbound rail line, prompting it to only provide freight service for Kuzbass this year, nearly halving its coal transportation to the Russian Far East, Mysteel Global observed.

Over January-October this year, RZD shipped 44.8 million tonnes of coal from Kuzbass east, 0.4% more from the planned 44.6 million tonnes for the period under their current agreement, TASS reported, citing Konstantin Grigoryev, Deputy Director of the Department of State Policy in Railway Transport at the Russian Ministry of Transport.

If RZD eventually annuls its guaranteed coal export agreements, Russian coal miners might need to bear higher transportation costs in the future, given that they could be bidding for rail capacity against shippers of other commodities. This would place even heavier financial pressure on the region's already weak coal sector, Mysteel Global notes.

For example, as of early September, 18 out of the 151 Kuzbass coal companies had suspended operations because of unbearable losses, with another 30 among them on the brink of bankruptcy, as reported.

Written by Adrian Zhou, zhouwenhaoa@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com