Russian seaborne coal exports halted by EU ban

Credit: Suek JSC

Russian coal exports were effectively halted by a European Union ban on entities within the 27-nation bloc servicing shipments of the fuel to anywhere in the world.

Suek JSC, Russia’s largest thermal coal miner, was unable to ship the fuel since mid-August, according to people familiar with the situation who asked not to be named because the matter is private. The insurance and reinsurance markets are dominated by EU, UK and Swiss companies, making it hard for shipowners to find cover, the people said.

An EU ban on imports of Russian coal and other goods into the bloc started on Aug. 10, following a wind-down period of four months. In a clarification earlier this month, the European Commission said the sanctions also prohibit EU operators from providing services — such as financing and insurance — to all shipments of such products originating in Russia.

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, the people said. That will drive prices even higher, they said.

Russia is one of the world’s top three coal exporters, controlling about 17% of the global shipments. The coal industry accounts for only about 1% of the Russian economy.

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.

The EU clarification also included some types of fertilizers. However, because the EU permits the import of set quota-based volumes of certain Russian fertilizers, it didn’t affect the situation much, people said. Still, even before August, it was more difficult find a ship or insurer for such cargoes, they said.

Suek’s press service as well as biggest Russian fertilizer makers declined to comment.


Your email address will not be published. Required fields are marked *