Domestic shortages force Ukraine to import Russian coal

Ukrainian coal market participants have been sourcing low-calorific coal from Russia because of domestic shortages, physical coal traders confirmed.

Ukraine is traditionally a major coal supplier to Turkey but has become a coal importer since several major coal mines, supplying the country’s thermal coal power plants, were bombed during its geopolitical conflict with Russia.

Vital infrastructure such as railway lines, roads and bridges were also damaged during the conflict, which has made it challenging for coal to be delivered to power plants in Ukraine.

At the beginning of September, the Ukrainian government signed a tender for supply of 1 million tonnes of South African coal ( see CSD 4 September 2014 ). However, Ukrainian coal miner and electricity producer DTEK told ICIS on Wednesday it has not imported any coal from non-CIS [Commonwealth of Independent States] countries.

In addition, physical coal traders said it has become extremely difficult to source coal from South Africa because most of the lower quality South African coal is used for domestic electricity production and is not offered into the international market.

“We are not hearing any further talks as it seems they [Ukraine] needs low volatile coal which is very hard to source. The may have to turn to Russia to supply which is a bit ironic,” a physical coal trader said.

Other sources confirmed that both Ukrainian and Turkish market participants are trying to source coal from other producing regions such as Russia as well as Poland to boosts stocks due to its close proximity and access to low volatile coal.

For Turkish buyers this means that the government may need to grant some electricity producers a permit to use high sulphur coal – usually from US – or coal with a higher percentage of volatile matter. Stacy Irish