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10 Oct, 2022 18:23

Russia may redirect EU coal supply

Around 25 million tons of the commodity destined for the bloc could be shipped east instead, a deputy PM has said
Russia may redirect EU coal supply

Russian coal suppliers may divert trade flows elsewhere after the EU suspended coal purchases from the country, Deputy Prime Minister Aleksandr Novak wrote in an article published on Monday in the magazine Energy Policy.

“The possibility of increasing deliveries to Asia-Pacific countries is being considered, part of the volumes from the European market can be sent by rail to the eastern ports and border crossings,” Novak wrote, adding: “Thus, about 25 million tons can be redirected from west to east, including through the ports of the Azov-Black Sea Basin.”

He added that the Russian government, together with the Transport Ministry, will work to increase rail capacity in the Far East and the availability of maritime transport, and will also strive to accelerate the development of coal port terminals in promising export directions. It will also seek to reduce the cost and time of transportation.

According to the Federal Customs Service, as cited by Novak, Russia exported 46.8 million tons of thermal coal and 3.6 million tons of coking coal to the EU last year, which represented approximately 35% of the bloc’s total imports. He indicated that over the past ten years this share has grown significantly, and despite declaring a reduction in dependence on Russian energy resources, EU countries actually only increased their reliance.

“Therefore, today consumers both in the EU and in other countries are forced to urgently look for new coal suppliers, disrupting the existing balance and breaking durable supply chains, which leads to additional financial costs for transportation, increased demand, market chaos and rising prices,” Novak noted in his article, which was titled: ‘The coal industry of the XXI century: Decline or renaissance.’

The EU prohibited Russian coal imports starting August 10 as part of a sanctions package against Moscow that was announced in April. EU companies have been banned from providing insurance and other financial services for the supply of Russian coal not only to the countries in the bloc but throughout the world.

The 27-nation bloc had been heavily dependent on Russia for its coal imports, with Germany, Poland and the Netherlands the biggest buyers. 

Analysts have been warning that the ban on Russian coal imports will further strain the energy supply and force European consumers to look elsewhere during what is expected to be an energy crunch in the winter.

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