On August 25, 2022, it became known that the export of Russian coal by sea was effectively stopped due to the prohibition of the European Union to serve deliveries of Russian coal anywhere in the world within the framework of the fifth package of sanctions.
Source: Bloomberg journalists
The agency found out that JSC “Suek”, the largest Russian mining company producing thermal coal, has not been able to export it since mid-August. According to the interlocutors, the insurance and reinsurance markets are dominated by companies from the EU, Great Britain and Switzerland, so it is difficult for shipowners to find insurance coverage for transport.
The EU ban on imports of Russian coal and other goods into the bloc came into effect on August 10 after a four-month transition period. Earlier, in an explanation of this, the European Commission stated that the sanctions also prohibit EU operators from providing financing and insurance services for all deliveries of such products of Russian origin.
“While Russian coal miners started re-directing volumes to Asia long before the ban came into force, the shipowners typically reinsure their risks with bigger providers that can no longer cover such exports. The companies are looking at other options, but those will be costly and take time to implement. That will drive prices even higher.”
As Russia re-directed its coal to Asia, including India, exporters like Australia have replaced the volumes in Europe. That’s fueled higher prices, which have already gained 10-fold over the past year.
Uaposition memo: Russia is among the top three global exporters of coal, controlling about 17% of global supplies. At the same time, the coal industry accounts for only about 1% of the Russian economy.
See also: The EU and Britain stop buying Russian coal from August 10
