Russian coal exports stopped due to European sanctions

Russian coal exports have effectively ground to a halt due to the European Union’s ban on entities within the bloc servicing shipments of the commodity anywhere in the world, according to Bloomberg.

Suek JSC, Russia’s biggest thermal coal miner, has been unable to ship supplies since mid-August, according to people familiar with the situation who spoke on condition of anonymity. The insurance and reinsurance markets are dominated by EU, UK and Swiss companies, making it difficult for shipowners to find cover, the sources said.

The EU’s ban on imports of Russian coal and other goods into the bloc began on August 10, after a four-month phase-in period. In a clarification earlier this month, the Commission said the sanctions also bar EU bodies from providing services – such as financing and insurance – to all shipments of such products originating in Russia.

Russia is one of the world’s three largest coal exporters, controlling about 17% of global shipments. It is noted that the coal industry represents about 1% of the Russian economy.

As Russia diverted its coal to Asia, including India, exporters such as Australia replaced quantities in Europe. This has led to higher prices, which have already increased tenfold in the last year.

“The coal ban may also lead to global price increases for other energy sources, such as LNG, as everything is connected and Europe increases demand,” said Dmitry Smolin, an analyst at Sinara Investment Bank.

In Europe, wholesale energy prices have soared to more than 10 times their seasonal average over the past five years as Russia cuts natural gas supplies and power plant outages weaken supply.