A total ban on the import of Russian coal began in the UK and the European Union.
A total ban on the import of Russian coal began in the European Union on August 10. The EU agreed to this measure in early April, as part of the fifth round of sanctions in response to the full-scale invasion of Russian military in Ukraine. Today, Great Britain rejected Russian coal. The US banned the import of gas, oil and coal from Russia in early March. Correspondent.net telling the details.
Russia lost the European coal market
Just four years ago, about half of Russia’s coal exports went west, to Europe. At the beginning of this year, Germany, the EU’s largest economy, imported more than 50 percent of the hard coal it needed from Russia.
Before the full-scale invasion of Ukraine, Russia supplied 70 percent of the EU’s coal energy needs, according to BCS Global Markets. But now the situation has dramatically changed.
On August 10, after a four-month transition period, the EU embargo on Russian coal imports, introduced in early April as part of the fifth round of sanctions due to Russia’s aggression against Ukraine , has started. Prior to this, parties were allowed to fulfill contracts concluded before April 9.
The European Commission estimates that the embargo will affect 25 percent of all Russian coal exports. According to Forbes, the Russian Federation loses more than 130 billion in revenue per year. A ban on coal imports would have the least impact of any energy source.
Who does the Russian Federation sell energy to?
Even with the removal of coal sanctions from Russia, Russian coal miners have finally lost the European sales market: over the course of this decade, most European countries intend to completely abandon the use of fossil fuels, the most harmful for the global climate, in the electricity industry.
“What we must not do under any circumstances is that we slide into a kind of global renaissance of fossil fuels and especially coal,” said German Chancellor Olaf Scholz.
He said the current reopening of decommissioned coal-fired power plants is “a strictly time-limited emergency measure that should not adversely affect the achievement of our climate goals.”
The loss of this market will not force Russian leader Vladimir Putin to withdraw troops from Ukraine, the EU said, but reminded that the coal embargo is just one of many Western sanctions designed to maximize the value of the war against the Ukrainians for Russia.
However, for some important sectors of the Russian economy and for some regions of the Russian Federation, the rejection of Europeans from Russian coal will result in huge losses, writes DW.
The miners of Kuzbass and other coal regions of the Russian Federation, as well as a large Russian employer such as the Russian Railways company, where coal transportation is one of the main sources of income, are will suffer more.
In Russia they say they have found new markets for coal. However, it is not possible to fully compensate for the losses: the transport capacities in the eastern direction are limited, and it will take many years and large investments to increase the railway capacity in the Baikal region and the Far East.
Russian ports dedicated to the transshipment of coal will also suffer, especially Ust-Luga, as well as the Murmansk transport hub, which has almost no other business.
In addition, according to the NKR rating agency, Russian coal is now sold on the world market at a discount of up to 50 percent.
Europe heats up the global market
For a long time the USA, Canada, Australia, Columbia and South Africa were the main suppliers of coal to Europe. Then they were replaced by cheap supplies and coal from Russia. Today the EU replaces Russia’s supplies with coal from North America, Australia, Colombia, South Africa and Kazakhstan.
EU coal imports from Colombia quadrupled in June, to 1.2 million tonnes, according to Braemar. Australian coal deliveries hit 1.1 million tonnes, the highest ever. Exports from the US rose 27.9 percent to 618,000 tons. South Africa sent 854 thousand tons to Europe, a year earlier it was not in this market. Deliveries from Kazakhstan reached 300-400,000 tons per month, although a year earlier they did not exceed 70 thousand.
Europe’s rejection of Russian fuel will provide significant support to the coal market, according to Fitch Solution analysts, whose opinion was cited by Bloomberg.
In particular, the ban on the purchase of Russian fuel will increase demand for coal from other countries such as Indonesia and even Australia. And plans to replace Russian gas with LNG will cause many countries to run out of gas and increase their use of coal.
Fitch has significantly raised its forecasts for thermal coal prices from Asia for this year and beyond. According to the agency’s new estimates, coal loaded in Newcastle, Australia, will cost $320 per ton this year, and an average of $246 per ton in 2022-2026. Previous forecasts quoted prices of $230 and $159 per ton, respectively.
Record prices for coal in Asia were recorded in June against the scenario of Russia’s war against Ukraine, as well as the lack of alternative energy sources and increased demand for electricity due to heat in the region. Then the regional reference price per ton of coal at the Australian port of Newcastle reached $402.5 and exceeded $400 per ton for the first time.
The situation in futures markets, according to Bloomberg, also indicates that high coal prices will continue. Thus, futures contracts for coal for delivery in December 2026 are at $233.15 per ton. At the beginning of this year, their price was $111.15 per ton, and at the beginning of 2021 – $80.8 per ton.
Remember that by the end of the year, European countries plan to partially abandon the supply of Russian oil. An exception is provided for the import of crude oil by pipeline. At the same time, the West is working on introducing a price ceiling for Russian oil.
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Source: korrespondent
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.