Energy-pinched Ukraine orders 1mn tons of coal from South Africa

Energy-pinched Ukraine orders 1mn tons of coal from South Africa
​Ukraine has agreed to import 1 million tons of coal from South Africa according to Prime Minister Arseny Yatsenyuk. Fighting in the east has shut down production at half the country’s coal mines, and stocks will only last until November.

The first ship has already been loaded for delivery to Ukraine, which has found itself in an energy-pinch since fighting erupted in eastern Ukraine. The Donbass area supplies 90 percent of the country’s coal, but many mines have been closed due to the Ukrainian army’s action against anti-government forces in the region. Supply networks have also been disrupted. Currently only 35 mines are operating in the Donbass, according to trade union sources.

Prime Minister Yatsenyuk said Ukraine has only 1.7 million tons of coal in storage, and the annual demand is 50 million tons.

“The government has already signed an agreement for the supply of 1 million tons of coal from South Africa,” Prime Minister Yatsenyuk said at a cabinet meeting on Wednesday.

Power stations in Ukraine are burning through more coal to meet energy demands, depleting stocks by between 50,000-55,000 tons per day.

Ukraine is Europe’s second-largest coal producer with 115 mines, the majority of which operate in the country’s east. In 2013, Ukraine produced 83 million tons of coal, 60 percent of which was used to generate electricity. In July, output fell 22 percent. If this trend continues, Ukraine will have lost 16 million tons of coal production by March.

In August, Ukraine declared a state of emergency in the electricity market due to the difficulty posed by transporting coal to the country’s power stations.

READ MORE: Ukraine may need extra $19bn if fighting continues – IMF

Normally a coal exporter, Ukraine is discussing limiting exports, as well as boosting imports from Poland, Indonesia, Colombia, Australia, and New Zealand, according to Ukraine’s director of Energy Resources, Andrey Fafaorov.

Energy Minister Yury Prodan said Kiev may be in talks with the US, which already exports more than half of its coal production to Europe. However, buying American coal would cost Kiev $125 per ton, as opposed to $85 per ton from neighboring Poland.

In terms of natural gas, Ukraine only has 15.5 billion cubic meters of gas stored ready for winter, and experts believe they need at least 20 billion cubic meters. More coal may also be needed to offset the gas shortage.