Coal invented by cunning – Gazeta Kommersant № 54 (7255) from 30.03.2022

Poland was the first European country to abandon Russian coal due to a military operation in Ukraine. Poland accounted for 7 million tons, or 3% of Russia’s coal exports. Russia did not supply coal in transit through Poland, sending it to other European countries by sea. Now Russia will have to redirect the flow of raw materials to the Asia-Pacific region, and Poland will have to replace it with supplies from other countries, which will lead to higher prices.

On March 29, Polish government spokesman Peter Mueller announced that Poland was abandoning Russian coal without waiting for a general EU embargo. “Referring to security issues, we went a step further and proposed rules that block the import of coal from Russia at the national level. This will be enshrined in law, “Mr Mueller explained, stressing the” passivity of the European Council in adopting further sanctions “against Russia.

The Ministry of Energy of the Russian Federation told Kommersant that a one-time replacement of Russian coal with any other, taking into account similar characteristics of coal and the characteristics of Polish equipment for power and thermal power plants, is unlikely.

The ministry believes that the transition, if it takes place, will be delayed in time, and given the logistical factor, it will cost Poland significantly more.

Russia exported mainly coal to Poland: according to the Central Energy Center, last year’s deliveries amounted to 7 million tons, according to the Ministry of Energy – 7.8 million tons.

A Kommersant source familiar with the situation says that Poland was not a transit destination. According to him, there is a railway to Bialystok with the Russian track 1520, and it is unprofitable to reload coal into wagons for transportation on the European track 1485, so shipments of Russian coal to other EU countries go by sea.

Despite the gradual abandonment of coal generation in European countries, Russia in 2021 increased exports to Europe by 10.3% to 50.4 million tons. In 2021, large volumes went to Cyprus (21.2 million tons), Turkey (14.7 million tons) and the United Kingdom (12.3 million tons). At the same time, all Russian exports amounted to 227 million tons, of which 129 million tons were delivered to the Asia-Pacific region.

Poland ranks eighth in terms of Russian coal imports. On the eve of the conflict in Ukraine, Polish companies increased their purchases: in January, they grew by 45% to 646 thousand. tons.

The largest suppliers are Karakan Invest, CTC, SUEK, and SDS-Ugol. Kommersant’s interlocutor in one of Poland’s coal exporters says that the company intends to redirect flows to the Asia-Pacific region.

The supply of Russian coal to Europe is not prohibited by the current sanctions, however, according to Kommersant sources, European consumers are wary of coal from Russia. This affects the conclusion of long-term contracts.

The situation could be taken advantage of by Indonesia, which, according to Metal Expert, has started offering its coal to European consumers. In an interview with Platts, the head of the Indonesian Coal Association, Pandu Shahrir, confirmed this, adding that some coal miners have entered the markets of Poland, Spain and Italy. In 2022, Indonesia plans to produce 663 million tons of coal.

Dmitry Orekhov, Managing Director of the NKR Rating Agency, says that even before the events of February this year, Russia began to reorient the export flows of thermal coal from West to East: if in 2019 Asia accounted for about 45-47% of all exports, then in 2021 more than 53%. “In our view, India and China may consider increasing purchases of Russian thermal coal, which will also be facilitated by the development of railway infrastructure at the Eastern landfill,” said the analyst. Indonesia, Australia, South Africa and the United States can replace Russian coal supplies, but this will require a redistribution of existing raw material flows, which will take time. The expert also notes that the replacement of Russian coal will require additional costs from Poland.

Eugene Zainullin


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