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Ukraine considering coal supplies from the US

November 17, 2014, 19:40 UTC+3 KIEV
Earlier British company Steel Mont Trading Ltd refused to continue South African coal supplies to Ukraine
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© ITAR-TASS/Yuri Smityuk

KIEV, November 17. /TASS/. Ukrainian power generating company Tsentrenergo is considering terms of American coal supplies, according to a statement on the company’s website.

“For stable provision of generating capacities with coal fuel, Tsentrenergo held a meeting with representatives of the Recursion Ventures company today, November 17,” the report said.

The statement said these were only preliminary consultations.

The meeting focused on basic technical characteristics of coal products, anticipated volumes, conditions and terms of deliveries, as well as price proposals from the American company, Tsentrenergo said.

On November 11, Ukrainian state-owned foreign trade company Ukrinterenergo director Vladimir Zinevich said British company Steel Mont Trading Ltd refused to continue South African coal supplies to Ukraine. Zinevich said the trader currently is not ready to supply “coal at $86 (per ton) as demand for anthracite coals in winter grows.”

Zinevich said the decision is also connected with the non-payment for deliveries of South African coal at the fourth vessel (second batch), which is expected to arrive November 25.

Ukraine currently buys South African coal at $86 per metric ton. Steel Mont finances 80% of the purchase volume. Three vessels with coal cargoes have arrived, another three are expected to arrive, but the price could change.

Ukraine’s National Security and Defense Council on November 4 raised the question of whether the deal to buy coal from South Africa was transparent. In connection with that, Ukraine’s Prosecutor General’s Office launched criminal proceedings on state property embezzlement. Zinevich, as well as Ukrainian Energy and Coal Industry Minister Yury Prodan were summoned for questioning last Monday.

A shortfall in certain coal brands emerged in Ukraine as a result of the conflict in Donbass (the Donetsk and Luhansk regions), where coal of these brands had been produced and where there is about 2 million metric tons of such coal at state mine depots. According to the Energy and Coal Industry Ministry, the import requirements for these brands totals 1 million tons a month.

Bloomberg reported November 12 that Steel Mont Trading Ltd. will “cancel its contract to deliver thermal coal to Ukraine after delivering less than half the agreed amount as the eastern European nation seeks to secure supply before freezing winter weather.”

The news agency reported that In August, the London-based company agreed to supply 1 million tons of South African coal to Ukrinterenergo. Steel Mont CEO Rajesh Saraiya said by phone the company is pulling out of the contract as it does not want to become involved in Ukraine’s domestic “political situation.”

Military conflict in Ukraine

Fierce clashes between troops loyal to Kiev and local militias in the Donetsk and Lugansk regions during Kiev’s military operation, conducted since mid-April, to regain control over the breakaway southeastern territories, which call themselves the Donetsk and Lugansk People’s republics, have killed over 4,000 people.

The parties to the Ukrainian conflict agreed on a ceasefire at talks mediated by the Organization for Security and Cooperation in Europe (OSCE) on September 5 in Belarusian capital Minsk. The ceasefire took effect the same day but has reportedly occasionally been violated.

The Trilateral Contact Group on Ukraine comprising representatives of Ukraine, Russia and the OSCE adopted a memorandum on September 19 in Minsk, which outlined the parameters for the implementation of commitments on the ceasefire in Ukraine laid down in the Minsk Protocol of September 5.

The nine-point document in particular stipulates a ban on the use of all armaments and withdrawal of weapons with the calibers of over 100 millimeters to a distance of 15 kilometers from the contact line from each side. The OSCE was tasked with controlling the implementation of memorandum provisions.

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