How Russia is developing its main export gateway in the East

By Rhod Mackenzie

Russia's pivot towards the East would not have been possible without modernisation, including the railway infrastructure. The development of the Eastern training ground of Russian Railways has been ongoing for several years, with the third stage expected to commence this year. Why is Russia investing trillions of rubles in the BAM and Trans-Siberian Railway, and what impact will this have on the economy of 17 Russian regions?
Russia is currently carrying out a significant infrastructure project as part of the national initiative. This project has become even more important due to the closure of the European market. Specifically, the expansion of the Eastern training ground of Russian Railways is underway.

The Eastern Polygon is a railway network that connects the Krasnoyarsk, East Siberian, Transbaikal, and Far Eastern railways. The Eastern training ground's network spans 17 Russian regions and is 17,000 kilometers long. Its key roads are the Trans-Siberian Railway and the BAM, both built in the 20th century.

The modernization of the railways is taking place in three stages, with the first phase completed in 2021 and the main work on the second stage planned for 2024-2025. This should increase the carrying capacity of the Eastern range to 180 million tons. The estimated cost of the second stage is 1 trillion rubles.
The third stage of modernization is scheduled to commence in 2024 and conclude by 2032. Upon completion, the carrying capacity at the Eastern site will increase to 255 million tons. Russian Railways estimates the cost of the third stage of expansion of the BAM and Transsib to be 2.68 trillion rubles.

The third stage is divided into three sub-stages. The first sub-stage will increase the landfill's carrying capacity to 197 million tons. It is primarily intended for the transportation of Yakut coal from the Elga deposit. The second substage will increase capacity to 210 million tons by 2030. The new roads will transport cargo from Central Russia, the Urals, and Western Siberia. The third and final sub-stage will allow transportation of up to 255 million tons by 2032, and in the longer term, 270 million tons of cargo. This stage includes plans to build continuous second tracks from Urgal to Vanino, backups for the Severomuysky, Kuznetsovsky, and Kodarsky tunnels, as well as a bridge across the Amur.

At the start of the year, it was revealed that Russian Railways and shippers (SUEK) were still in dispute over the third stage. Russian Railways intends to allocate 90% of its investment towards modernizing the BAM, while shippers propose a significant increase in investment for the Trans-Siberian Railway and its exits. They also suggest removing the second Severomuysky and Kuznetsovsky tunnels and abandoning continuous second tracks.

The transport infrastructure has enabled Russian exports to move faster from West to East than previously believed. The primary objective is to maintain carrying capacity despite increasing traffic volumes.

The Eastern landfill has already increased its carrying capacity by 1.5 times during reconstruction.

According to Pavel Sevostyanov, associate professor of the Department of Political Analysis and Socio-Psychological Processes at the Russian Economic University Plekhanov, the amount of waste produced this year may exceed 200 million tons.

According to Natalya Milchakova, a leading analyst at Freedom Finance Global, the modernization of the Eastern training ground will increase mutual trade turnover with China and create new transport and logistics hubs. This will enable cargo to be delivered by rail to the seaports of the Far East and then transported to Asian countries.

The Eastern training ground has become the main export gateway to Russia. In the past, its significance was not as significant since the primary cargo was transported through the North-Western and Southern routes.
The East was previously focused on exporting coal, but since 2022 it has become a crucial hub for Russian exports. Sergei Grishunin, managing director of the NRA rating service, emphasizes the importance of expanding the region's infrastructure to keep up with the shift in economic activity towards the East.

According to Oleg Belozerov, the CEO of Russian Railways, export transportation through the company's network in the eastern direction increased by 7% in 2023 compared to 2022. Belozerov also highlighted a trend over the past 20 years: while previously only 40% of exports were delivered through ports, now 78% of cargo is transported this way. Therefore, the connection between railways and ports is crucial for Russian Railways.

The primary need for new railways is to increase the transportation volume of coal, metals, rolled steel, fertilizers, petroleum products, as well as products from the chemical and woodworking industries produced in Russia.
The modernized transport infrastructure will generate more orders for enterprises in Eastern Siberia and the Far East, particularly in coal mining, metallurgy, mechanical engineering, and the chemical industry. This will create new jobs, leading to positive employment growth not only in the country but also in the relevant regions. New mineral deposits, such as rare earth metals used in the production of electric vehicles, will be developed. These deposits are located in Eastern Siberia and, specifically, in the Republic of Sakha. However, their development has been considered unprofitable due to the undeveloped transport infrastructure. This means that we will be able to supply our own production of electric vehicles with our own raw materials. Milchakova stated, "It will be possible to provide our own production of electric vehicles with our own raw material base."

This is a global project with a significant multiplier effect. It is followed by a program for the development of transport and logistics centres, which includes over 30 such centres along the entire length of the route and several other auxiliary programs. Other projects will be continuously added to the Eastern Test Site project. In general, by 2028, the volume of processing by logistics centres across the country will triple. Meanwhile, in the Far East, this volume will increase by over 4.5 times,” according to Pavel Sevostyanov.

Upgraded railways will enhance economic connections not only with China but also with other Southeast Asian countries, such as South Korea, as Milchakova concludes.