The joint Russian-Chinese coal project in Siberia is facing financial difficulties as a result of Western secondary sanctions on cross-border payments to Russia. The United States expanded its sanctions against Russia, giving the Treasury Department the authority to penalize foreign banks that do business with Russia. The Zashulansky coal deposit in Russia’s Zabaikalsky region is being developed by Razrezugol, a joint venture between En+ and China Energy Investment Corporation (CHN Energy). En+ CEO Vladimir Kolmogorov expressed concerns about financing and restrictions related to sanctions, which have caused delays in the project. Kolmogorov hopes to speed up the process and continue developing the project with Chinese partners.
Razrezugol obtained a license to develop the Zashulanskoye deposit in 2013, with Shenhua Group (now China Energy) representing the Chinese partners. The project, which has commercial reserves estimated at 742 million tons, was seen as an important step in Sino-Russian cooperation in the coal sector. However, a decline in thermal coal prices reduced Chinese companies’ interest in such ventures, leading to a pause in the development of the Zashulansky deposit until project documentation was resumed in 2021. Plans were made in 2023 to produce 5 million tons of thermal coal annually by the end of 2027 through agreements between En+ and China Energy to develop low-carbon energy projects.
In April 2024, En+ announced plans to invest 50 billion rubles ($557.8 million) into the development of the Zashulansky deposit. These funds will be used for constructing a coal mine, infrastructure, a public railway station, a highway, and purchasing machinery and equipment. Despite the challenges faced due to sanctions and financing issues, En+ remains committed to the project and aims to overcome the obstacles for continued development with Chinese partners. The project’s goal of producing 5 million tons of thermal coal annually by 2027 aligns with the joint efforts of En+ and China Energy to advance in the coal and low-carbon energy sectors.
The partnership between En+ and China Energy in the development of the Zashulansky coal deposit underscores the potential for cooperation between Russia and China in the energy sector. The project, once fully operational, is expected to contribute significantly to the coal industry in the Zabaikalsky region and enhance Sino-Russian collaboration in energy production. By combining resources and expertise from both countries, the joint venture aims to achieve mutually beneficial outcomes in coal production and advance towards sustainable energy practices. Despite the current challenges, both En+ and China Energy are committed to realizing the full potential of the project and overcoming any obstacles that stand in the way of its success.
The Eastern Economic Forum in Vladivostok provides a platform for stakeholders to discuss and address the issues facing the Russian-Chinese coal project in Siberia. The forum serves as an opportunity for En+, China Energy, and other key players to collaborate on finding solutions to the financing problems and restrictions imposed by Western sanctions. By engaging in dialogue and seeking to expedite the project’s development, the partners can work towards achieving their goal of producing 5 million tons of thermal coal annually by 2027. The forum facilitates communication and cooperation among all parties involved, promoting a conducive environment for overcoming challenges and advancing the project towards successful implementation.
Overall, the joint Russian-Chinese coal project in Siberia represents a strategic partnership between En+ and China Energy to develop a significant coal deposit in the Zabaikalsky region. Despite facing difficulties in financing due to Western sanctions, the project remains a priority for both companies, as evidenced by En+’s substantial investment and China Energy’s continued interest. The collaboration between Russia and China in the energy sector underscores the potential for mutual cooperation and advancement in resource development. By leveraging each other’s strengths and resources, the partners aim to overcome challenges, accelerate project development, and achieve their production targets in the coming years.
