Europe looks to Kazakhstan for coal

The EU’s blanket ban on Russian coal imports since August has left utilities seeking replacements from elsewhere, including the Central Asian republic of Kazakhstan.

Around 1.43m tonnes of Kazakh coal will be taken by train to Russian ports this month, for seaborne export, of which 0.36m tonnes will head to western European, official rail schedules show. This compares with 1.04m tonnes and 0.96m tonnes railed to seaports in August and July, respectively, of which 0.51m tonnes and 0.58m tonnes were shipped to western Europe, according to the data obtained from a Moscow-based trading house.

“In past years, Kazakhstan has exported 1-3m tonnes/year to Europe but this year it will be maybe 8-10m tonnes,” said a Switzerland-based coal trader, with close links to the CIS coal market. In previous years, much of the country’s produce went to Asia but with prices in Europe so attractive, there was “no reason to export elsewhere”, he added. A source with another European coal-trading firm disputed this, saying it was more likely to be 3-8m tonnes in total and the rail plan data was often 50% higher than actual exports.

The Global Coal Des ARA index – a benchmark for physical coal volumes delivered in Europe – has so far this year averaged USD 288/t, compared with USD 97/t in the same period last year. Countries without an embargo on Russian coal – such as China and Turkey – could buy coal free-on-board from Russian export ports for as little as USD 100-120/t, thereby undercutting Kazakhstan in some of its former export markets, said the first trader.

Higher quality
“There are lots of Mickey Mouse companies offering a few tonnes of Kazakh coal now,” he said, adding, however, that the main suppliers to Europe were Swiss trading firm Telf and producer Shubarkol Premium, based in the Kazakh city of Karaganda. A head coal trader with a Polish trading firm agreed, as he was receiving up to three offers for Kazakh coal a day. “But they do not necessarily have any direct link to [Kazakh coal miners],” he said, adding Polish buyers were not keen on Kazakh coal due to its use of Russian logistics infrastructure. Kazakh coal is generally of higher quality than Russian export coal, with lower ash and sulphur content but a similar calorific value.

A spokeswoman for state-owned Russian Railways (RZD) said she could not comment on current or forecast volumes of Kazakh coal railed via the country to export ports.