Regional focus
Lack of alternatives to Russian coal is leading power plant operators throughout Europe to consider using lower- grade metallurgical coal.
Demand from international markets has fallen significantly as countries respond to Russia’s illegal invasion of its neighbour. However, until late February, Russia was a major global supplier, capitalising on its known 15% of global reserves of coal – second only to the US at 23%. In truth, despite the immediate collapse of many export markets, the country remains a major player, ranking sixth in worldwide production levels.
“The traditional buyer of Russian coal has been Europe, but Russia knows that European coal demand is declining.”
It will continue be so, at least for several years to come, thanks to its mature and well-developed coal industry, a multitude of established coal mining companies and its access to high-grade coal. “The type of coal Russia supplies to international markets is a very high quality,” explains Biggs. “There’s a bit of a stickiness around that type of quality because the plants that burn that coal are specifically designed to take it.” Currently, Russia supplies around a quarter of the world’s high-grade coal, securing its place as a critical stakeholder thanks to the limited number of other purveyors.
438mt
The amount of coal produced by Russia in 2021.
Climatic Change 14
So, despite the harsh words and doomsaying of what lay ahead for Russia’s coal industry from political leaders as they announced bans on its coal, the country continues to hold a prized position. In fact, even the EU delayed enacting the ban for four months after announcing it in April, showing Russia’s importance regarding the supply of coal. “There was this big buying spree of Russian coal into Europe, so they were trying
to stockpile ahead of sanctions actually taking effect,” Biggs notes.
Aside from stockpiling for the short term, though, the ban was arguably largely symbolic – demand for coal from Europe had already been falling for some time. “The traditional buyer of Russian coal has been Europe,” says Biggs. “But Russia knows that the European coal demand is declining. Europe has a very aggressive coal plant retirements schedule and so Russia has been trying to pivot, going from the West over into eastern markets.”
The eastern line Russia’s ambitions to become a major supplier to Asia–Pacific (APAC) markets have been long held, supported by investment in infrastructure, including expansions to the Trans-Siberian and Baikal-Amur Mainline railroads and other logistics projects, and a massive programme of new mine development and processing facilitates.
In 2020, the Russian Ministry of Energy said it planned to increase coal production by two-thirds of current levels by 2035, at the same time doubling exports. This was largely through eastern markets and an effort to capitalise on Russian reserves before carbon neutral initiatives put paid to any further expansion there too. This was all, of course, before the invasion of Ukraine; although that has perhaps expedited the closure of Western markets and proved APAC will likely be a valuable destination for Russian coal now. It’s clear that no matter what the West says about Russia’s coal, there will remain an insatiable appetite for it in some parts of the world. The Middle East, India and – more lucratively – China responded to Western bans by increasing their imports. By July and August, China – which was
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