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Lavna coal terminal build starts

Russia’s State Transport Leasing Company (GTLK) has started construction of the 18 Mtpa Lavna coal terminal on the western shore of the Kola Bay, opposite to the existing Russian Barents Sea harbour of Murmansk.

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Phase 1, estimated at around US$400M, involves the development of the harbour’s existing rail infrastructure on the eastern shore of Kola Bay, as well as construction of new rail connections on the western shore.


It will entail building a new 46 km-long rail line (including a bridge over the Kola Bay), which will connect the two shores, and have an annual rail capacity of 28 Mt. This stage is due to be financed from Russia’s federal budget, according to the nation’s deputy minister of transport, Viktor Olersky.


Phase 2 will see building of the new coal terminal itself by 2021. Also estimated at around US$400M, it will be financed from private funds.


In that regard, Switzerland-based Mercuria Energy Trading has asked approval of Russia’s Federal Antimonopoly Service (FAS) for the acquisition 75% minus one share in Lavna Port (LP), the terminal developer currently fully owned by GTLK.


In September last year, GTLK revealed its readiness to sell LP’s controlling stake to a strategic investor for at least US$15M. In June 2017, GTLK signed a cooperation agreement with Mercuria for the Lavna terminal construction. Back then, the Swiss energy trader expressed its readiness to provide the would-be terminal with coal handling volumes of 6-12 Mtpa.


The Lavna project was initiated back in 2006by Russia’s major private coal producers, KuzbassRazrezUgol (KRU) and Siberian Business Union (SDS), but has remained ink on paper since then.


In 2013, SDS sold its 50% interest in LP to KRU. In late 2016, KRU withdraw from the project, in view of the shrinking cargo base and soaring construction costs because of the weakened rouble. Finally, GTLK entered the project, and immediately started looking for investors.


According to Sergey Khramagin, GTLK director general, China’s Poly Group would be ready to invest up to US$300M in the project.


In November last year, GTLK suggested the Russian federal government award a concession to strategic investors to build the coal terminal.


Murmansk is Russia’s only ice-free transpolar harbour navigable all year round and accessible for the ships of all types and dimensions. Furthermore, unlike the country’s Baltic ports, bottlenecked by the Danish straits, Murmansk provides Russia with direct access to the world’s seas.

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