The new “Coal Rush”: Europe resorts to non-green alternatives as Russia cuts energy exports

 

The war in Ukraine has caused energy prices to soar, with gas and petroleum being at an all-time high. Russia in order to arm-twist the European continent has cut off its supplies of gas significantly which has sparked fears of a new energy crisis and no means of generating heat during the upcoming winters.

This has caused nervousness in the EU and has compelled them to purchase coal as an alternative.

The war has caused thermal coal prices to soar to record highs, which has resulted in several European countries losing access to crucial supplies of natural gas and coal from their primary supplier Russia. Thermal coal is used to produce energy.

 

Nowadays, buyers from Europe and other regions compete to pay top dollar for coal coming from frequently inaccessible mines in nations like Tanzania, Botswana, and possibly Madagascar. Governments aiming to wean themselves off Russian energy while keeping a lid on power prices are driving a resurgence in coal consumption, which conflicts with climate objectives to move away from the most polluting fossil fuel.

“European players, after the Russian war, are going to any place where there is coal. They are offering to pay very good prices.” Rizwan Ahmed, managing director of coal miner Bluesky Minings said in Dar es Salaam, Tanzania.

Commodities trader Cargill has witnessed an upsurge in coal shipments to Europe in recent months as the company transported 9 million tonnes of coal globally in the June-August period compared with 7 million last year.

“Europe is competing with other buyers and the alternative is more expensive, which is gas,” said Dieleman. “Europe should be able to source coal and we will see very strong flows into Europe from Colombia, South Africa and even further away.”

According to Tanzania’s Mining Commission, the country’s output of coal is anticipated to rise by 50% to around 1,364,707 tonnes this year, while exports are anticipated to more than double to approximately 696,773 tonnes.

 

As per Yahya Semamba, interim executive secretary of the Mining Commission, a government organisation, the government is thinking of creating a railway that would connect the coal-producing

 

The war in Ukraine has caused energy prices to soar, with gas and petroleum being at an all-time high. Russia in order to arm-twist the European continent has cut off its supplies of gas significantly which has sparked fears of a new energy crisis and no means of generating heat during the upcoming winters.

This has caused nervousness in the EU and has compelled them to purchase coal as an alternative.

The war has caused thermal coal prices to soar to record highs, which has resulted in several European countries losing access to crucial supplies of natural gas and coal from their primary supplier Russia. Thermal coal is used to produce energy.

 

Nowadays, buyers from Europe and other regions compete to pay top dollar for coal coming from frequently inaccessible mines in nations like Tanzania, Botswana, and possibly Madagascar. Governments aiming to wean themselves off Russian energy while keeping a lid on power prices are driving a resurgence in coal consumption, which conflicts with climate objectives to move away from the most polluting fossil fuel.

 

“European players, after the Russian war, are going to any place where there is coal. They are offering to pay very good prices.” Rizwan Ahmed, managing director of coal miner Bluesky Minings said in Dar es Salaam, Tanzania.

Commodities trader Cargill has witnessed an upsurge in coal shipments to Europe in recent months as the company transported 9 million tonnes of coal globally in the June-August period compared with 7 million last year.

“Europe is competing with other buyers and the alternative is more expensive, which is gas,” said Dieleman. “Europe should be able to source coal and we will see very strong flows into Europe from Colombia, South Africa and even further away.”

According to Tanzania’s Mining Commission, the country’s output of coal is anticipated to rise by 50% to around 1,364,707 tonnes this year, while exports are anticipated to more than double to approximately 696,773 tonnes.

 

As per Yahya Semamba, interim executive secretary of the Mining Commission, a government organisation, the government is thinking of creating a railway that would connect the coal-producing Ruvuma region to Mtwara in an effort to raise sizable amounts of tax income from this increase in exports.

 

According to a Reuters’ investigation, Tanzanian coal miner Ruvuma Coal has already shipped at least 400,000 tonnes of coal via a trader to nations like the Netherlands, France, and India since November.

A Braemar’s research found that the trade routes have changed due to the high demand and limited supply of coal, which has resulted in record-high global “deadweight tonne days” for the fossil fuel in July. This term refers to a measurement of shipping levels in terms of fleet usage and the length of voyages.

 

According to data from Indian consultancy Coalmint, thermal coal imports by the European Union from Australia, South Africa, and Indonesia—traditional suppliers of Asian markets—rose more than 11-fold in the four months following Russia’s invasion of Ukraine.

 

The invasion has compelled EU countries to lessen their reliance on Russian gas, which has decreased its enormous supplies to the area. Pressure on electrical producers to find alternate sources has intensified as a result of the bloc’s prohibition on the import of Russian coal.

 

The benchmark for the top consuming region of Asia, Newcastle coal futures, traded at roughly $440 in September, down from a record high of $460 earlier in the month as worries over blocked US shipments subsided. A railroad strike that would have disrupted the supply of coal to the majority of the nation’s power plants was avoided thanks to a settlement that Washington reached with labour organisations.

Despite this, prices are still not far from historically high levels as economies become more dependent on coal as a result of the global power crisis. The IEA predicts that Europe’s coal consumption will increase by 7% in 2022, on top of the 14% increase in 2018. As a result of a halt in Russian imports, the region is now relying on seaborne coal from South Africa, Indonesia, and Australia.

In order to compensate for the natural gas shortages, EU nations including Germany, Italy, and Austria intend to increase production. Due to record-breaking heatwaves drying up rivers that supplied hydroelectric electricity, demand is considerably higher in top user China.