Russia’s largest coal company to set its office in India amidst the US Sanctions imposed against the country
Russia’s largest coal supplier, Siberian Coal Energy Company (SUEK), is currently preparing to open an office in India. The country is emerging as one of the top export destinations after the sanctions made by Europe on Russia.
The sanctions made by Europe on Russia have resulted in the complete ban of the Russian goods of sea-borne crude oil and petroleum by the end of the year. This was done in harmony with the Ukrainian people who suffered the most in the war.
Basov has opened up about his plan stating that the company’s shipments to India have increased to 1.25 million tonnes in the first half of 2022, which is twice more than the value exported in 2021. The contribution may be small, but it is important.
SUEK, one of the world’s largest coal suppliers, can increase the coal supplies to India up to 10 million tonnes a year if all the challenges related to the imports are addressed. He talked about his proposal when he visited the country for talks to launch an Indian office.
Furthermore, he has opened that the Siberian Coal Energy company is interested to broaden its relationships with India.
Therefore, the company is mainly focused on solving the main obstacles of logistic options, assessing the demands, widening the range of partners, and determining the cost-effectiveness of the supplies.
India was not on the list of Russian coal suppliers to set up their workplaces. This mainly contributed to the expensive cost of setting up the establishments. Basov has opened up about one of the factors that changed the trajectory of establishing the office in India was the anti-Russian sanctions imposed by Europe.
With the imposition of the sanctions, the shipments are building up extensively. It is because the European countries are resorting to means to solve the energy crisis without the help of Russia.
In addition, the Russian coal suppliers have registered an increase of 50 percent or more supplies. Data shows that Russia used to supply about 5 to 7 million tonnes of coal per year. Currently, the value has gone down to 2 million tonnes methodically. Moreover, SUEK trades in with ecologically friendly coal, and the company will focus on finding the source of investments in Indian energy projects in the future, besides inviting foreign direct Indian investments to Siberia.
The company has shown distinct symptoms that company will collaborate with several energy and metallurgy sectors in India after the establishment of its office. Furthermore, they plan to spend a part of their investments in Indian coal or energy projects.
The partnership will be a long affair with India through the use of the International North-South Transport Corridor (INSTC) and Vladivostok port.
SUEK has ensured the quality of its coals supplied to India. It is a benchmark. All the coals produced by the SUEK exports have to go through enrichment plants and have undergone a multistage monitoring system.
Moreover, Basov has emphasized that the coals are environmentally friendly in terms of the impact they will have on consumption. Initially, the SUEK coals were directed to the European and Japanese markets because both locations have the most critical requirement for the distribution of coal- both in terms of ash and sulfur content.
Basov has visited India formerly. Furthermore, he is familiar with the country. Basov has studied in an Indian school in Moscow and has visited India multiple times in the past.
When he was asked about the mode of transactions the company would adopt for supplies, he mentioned that SUEK operates in US dollars, but the payment can be made in other currencies.
The change in the mode of payment has become common for Russian agencies. In the Indian market, most of the payments are made based on third-party currencies, including yuan, dirhams, Hong Kong dollars, and others. The financial systems of both countries are ready for such transactions since there is an intergovernmental agreement in place.
Modi’s response to SUEK, the largest coal company’s establishment of its office in India:
Prime Minister Modi has talked about his views about SUEK’s decision to launch an office in India, stating that India is interested to strengthen its collaboration with Russia on Arctic issues. India has much potential for cooperation in the field of energy. Furthermore, he has stated that he has often stood up for solving a crisis with diplomacy and dialogue. And the country stands by all the efforts to end the war.
If the scenario happens, Russia can even come out to be an important partner for the Indian steel industry by supplying coking coal to India. Previously, Russia supplied about 2.4 percent of coking coal to India, a value of 13.75 billion USD. Russia is one of the largest producers of coal supplies in the world.
India is open to increasing its footprint in Siberia. India has mentioned that they would talk about the chances of joint oil exploration around. Thus, it will help in increasing cooperation in the running offshore oil and gas fields. It can be a prospect for India when all the western countries are exiting.
To achieve a bilateral connection, India has contributed to the Russian Far East in pharma and diamonds. Modi emphasized that adding connectivity would be an important aspect of developing bilateral ties with Russia. Strengthening the chain of distribution destroyed by the Ukrainian war and covid-19 will be a key for the nations.
Coal demand is set to peak by 63% by the year 2030. Russia’s decision to set up its office in the country will prove to be beneficial for India in overcoming the energy crisis.
Edited by Prakriti Arora
