Russian steel producers Evraz, Severstal and mining company Enisey Production Company (EPC), a part of United Industrial Corporation (OPK), are to create a consortium to construct the Kyzyl-Kuragino railway line to the giant Ulug-Khem coal basin in Tuva, Siberia, Russia.
According to Viktor Basargin, Russia's regional development minister, the 418 km-long railroad is expected to cost a total of Ruble 130 billion ($4.2 billion), of which more than Ruble 49 billion ($1.59 billion) will consist of state investments, while private investments will account for Ruble 81 billion ($2.63 billion). The railway line is expected to be put into operation in 2014.
The railway line is to link the Ulug-Khem coal basin situated in the Tuva region to the Russian railroad network. EPC was the first company to be granted a license for the basin's Elegest coking coal deposit, which is one of the largest undeveloped coalmines in the world, with reserves of one billion mt of high quality coking coal. As a result, EPC in particular needed to start construction of this railway, but implementation of the construction project was delayed.
Fields of the Ulug-Khem basin are also held by Evraz, which in March this year obtained rights to the Mezhegey coal deposit with 213.5 million mt of reserves, while in October it obtained rights to mine the Eastern Field of the western part of the basin, which holds 569 million mt of reserves. Meanwhile, in September this year Severstal won the license for the western part of the Central Field of Ulug-Khem basin with 693 million mt of reserves.
According to reports, the parameters of the Kyzyl-Kuragino railway line project may now change, as the railway's planned annual cargo capacity of 15 million mt meets the needs of EPC only. In addition, it is necessary to expand Transsib (Trans Siberian main line) and to build a railway line to China. Russian officials have said that China has agreed to open a $6 billion credit line for development of greenfield coal deposits in Russia. The funds will be invested in the development of coal fields and in surrounding infrastructure.