Russian Railways (RZD) has put forward plans to significantly revise its coal transportation tariffs for 2024, a move that industry players warn could squeeze margins and disrupt exports.

The state-owned rail monopoly is proposing to reclassify coal from the first tariff class, in which coefficient ranges from 0.55 to 0.75, to the second, where coefficient is at 1, and without incentives.

This would translate to a 20-30% jump in the rail freight cost, according to estimates. "The new proposal threatens project economics and our ability to serve international markets," said a coal executive who asked not to be named.

RZD's revenues from coal transportation would more than double if the amendment comes online, according to analysts. However, producers argued margins are already thin after previous tariff increases.

The measure could make supplying thermal coal long distances uneconomical and force mine closures, particularly in major coal basins such as Kuzbass.

RZD also wants authority over state support for coal devolved to regional authorities from the federal level.

However, the industry countered that energy security and export revenues from coal shipments must be considered.

The outcome could have ramifications for domestic coal pricing and export competitiveness from Russia, one of the world's largest producers and exporters of energy coal.

In 2022, frail freight volume of coal in Russia totaled 354.4 million tonnes, with 157.28 million tonnes to domestic users and 197.12 million tonnes for export, data from statista.com showed.

(Writing by Alex Guo  Editing by Emma Yang)
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