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Kazakhstan and Russia Agree to Increase Kazakhstani Coal Transit

Negotiations have been going on since the end of the summer

Image: Shutterstock

NUR-SULTAN—Kazakhstan managed to reach an agreement with Russia on the increase of Kazakhstani coal transit to Ukraine through the Russian territory, according to the Trade Ministry press service in Nur-Sultan, Kazakhstan.

Previously, Kazakhstan was allowed to deliver to Ukraine no more than 90,000 tons of coal through Russian territory, but now that limit has been raised to 140,000 tons. Negotiations between the neighboring states started at the end of this summer.

Since June 1, coal and oil products exported from Russia to Ukraine are allowed only by special permission from the Russian Ministry of Trade. As a result of this barrier to coal transit to Ukraine, Kazakhstan loses $11 million in profit per month.

According to the Kazakhstani Trade Ministry, Russia’s ban on transit for a range of Kazakhstani goods discredits the basic principles of the Treaty on the Eurasian Economic Union because it restricts the freedom of transit of goods.

Transit restrictions by Russia have negatively affected the entire coal industry in Kazakhstan, according to the Trade Ministry.

On Oct. 15-16, a special Kazakhstani-Russian commission met in Nur-Sultan and discussed transit issues. As a result, the volume of coal that Kazakhstan can ship to Ukraine has increased to 140,000 tons or 55% per month.

Nevertheless, even that “isn’t enough to cover Kazakhstani coal exporters’ needs in full,” Minister of Trade Bakhyt Sultanov said.

“In November, Kazakhstani coal exporters requested the Russian Railways company to allow transit of more than 200,000 tons (204,610) to Ukraine. From the Kazakhstan point of view, Russia’s intention to unilaterally restrict our export is nothing but a barrier," he stated.

Kazakhstan planned to transit 103,500 tons of coal through Russia to Ukraine in July, but Russia approved only 60,200 tons. In August, transit of 240,800 tons was requested, and only 86,500 tons was allowed. The September request included 189,700 tons, but Russia set a limit of 86,500 tons. In October, Kazakhstan requested 191,900 tons and again Russia approved only 86,500 tons. Further, Russia confirmed these restricted numbers too late, so Ukrainian buyers lost interest in Kazakhstani coal and in some cases rejected the purchase.

Coal buyers are commonly obligated to purchase coal from the departure station, according to Kazakhstani officials. Late provision of information on the coordinated transit’s volume doesn’t allow buyers to make plans on exports in advance. This has already led to delivery failures and contract withdrawals.

Also, according to Kazakhstani Trade Ministry information, there have been several incidents of Russian Railways officials stopping coal cars without any specific reasons given.

For example, in July “ArcelorMittal Temirtau” JSC requested transit of 80,400 tons of coal. Russia confirmed only 55,200 tons, but later the volume was cut down to less than a third, – 13,600 tons. Meanwhile, 288 railway cars with 19,600 tons of Kazakhstani coal were already on their way. As a result, 189 cars were stopped by Russian Railways next to a Russian-Ukrainian border.

Thus, within three months (July through September), Kazakhstan failed to deliver around 340,000 tons of coal to its Ukrainian partners.

“We are going to continue negotiations with Russia both bilaterally and within the framework of the Eurasian Economic Union (EEU). EEU guarantees equal terms for all its members with freedom of transit of our goods to non-EEU countries. EEU partners aren't allowed to put barriers on our trade with other countries,” Sultanov said.

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