Demand for coal tipped to skyrocket due to Russia ban

International sanctions on at least one Russian fossil fuel is predicted to start a new Australian mining boom.

A prohibition on coal imports from Russia recently took effect, removing up to 187 million tonnes (Mt) of thermal coal from international commodity markets.

“The 10th of August is the end of the wind-down period for the import of Russian coal and no further exemption will apply,” a European Commission spokesperson said according to Reuters.

Australian mineral producers are likely to benefit from an estimated 45 per cent coal import shortfall due to Eastern Europe facing its largest military conflict since World War II. Germany, Poland and the Netherlands are the 27-nation bloc’s largest buyers.

“Russia exports 187Mt of thermal coal into the market and that is about 20 per cent of global thermal coal,” Coronado Global Resources CFO Gerhard Ziems said according to News Limited.

“[From this] 60Mt go into the European Union, United Kingdom and a little bit into Japan … so that means we take probably just under 60Mt of thermal coal out of the market, which means … the switching from metallurgical coal into thermal coal is probably here to stay for quite some time – and we will take advantage of that.”

Tata Steel separately urged the Queensland Government to ramp-up coal projects to meet a forecasted doubling of Indian steel production or consumption in the next decade.

“There is an opportunity for Australia to double its exports of coking coal shipments to India over the next 10 years, so there is a great opportunity for the metallurgical coal industry in Australia to invest and grow in free markets like India,” CEO Thachat Viswanath Narendran said according to the media outlet.

“Metallurgical coal is going to be operating for quite some time to come.”

However, Fortescue Future Industries still agrees with the Australian Energy Security Board on letting different states and territories ban coal or gas production.

“[Abandoning carbon generation] is a fundamental feature of the mechanism and without it the value to the market and, therefore industry’s support, materially changes,” the company earlier said.

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