Foreign investors wanted for $530m Far East coal terminal

RDIF, the Russian sovereign fund, is eyeing a stake in the 20m-ton port facility as it bets on expanding trade in the Asia-Pacific region.

The state-backed Russian Direct Investment Fund (RDIF) has announced a potential equity injection in the North coal terminal construction project of Vostochny Port, which is located in Russia's Primorsky region.
RDIF will also help enlist “leading international investors” as co-sponsors of the scheme, according to an agreement signed this week at the Russia-led Eastern Economic Forum in Vladivostok. The project is being marshalled by Primorneftegazprom, an entity managed by domestic energy and engineering conglomerate Summa Group.
The port will cost the federal budget around $340 million, according to reports in the local press. A further $190 million will be provided by private investors, including Summa Group and the China Bank of Development.
“Vostochny port is essential in connecting one of Russia's most important railroads with sea routes to leading Asia-Pacific countries. It has the potential to become a major transport link within Russia's Far East region,” said Kirill Dmitriev, RDIF chief executive, in a statement.
The coal terminal, which is expected to have an eventual capacity of about 20 million tons per year, will be used for the transhipment of Russian coal exports to countries in the Asia-Pacific region. It is due to open in 2018 with an initial yearly capacity of 7 million tons.
“We must strengthen the position of Russian coal in international markets, including the promising Asia-Pacific region,” said Ziyavudin Magomedov, chairman of Summa Group, in the statement. “The planned 'equal access' terminal will be specifically aimed at servicing small and medium-sized coal mining companies that lack their own transhipment facilities.”
After a slew of announcements earlier this year, RDIF has seen its deal flow slow down over the summer. At a time when Russia remains the target of Western sanctions, the institution has instead been busy crafting partnerships with Middle Eastern and Asian investors, including a July pledge by Saudi Arabia's Public Investment Fund to deploy $10 billion in sectors such as agriculture and infrastructure.
Yesterday, RDIF also said it had finalised an agreement with China's Silk Road Fund and Vnesheconombank, Russia's development bank, to bolster their cooperation in seeking investment opportunities in both countries.
That came after the institution successively announced backing small-scale hydro power plants in Russia's north-west, a $9.5 billion petrochemical project in the Tyumen region and toll bridges over railway crossings in Moscow, all in June and alongside co-investors.
RDIF was created in 2011 to attract foreign direct investment in the Russian economy. A $10 billion fund, it claims to have attracted $25 billion of international capital through partnerships with a number of sovereign wealth funds from the Middle East, China, Korea, Japan, France and Italy.
The platform has made RUB420 billion (€5.6 billion; $6.2 billion) worth of investments since inception, comprising more than RUB55 billion million of its own funds and RUB365 billion sourced from co-investors.