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Russia to shift to trading via Turkey if coal supplies to EU shunned, experts say

Russia supplies around 50% of energy coal, which is used as fuel for European power stations

MOSCOW, April 12. /TASS/. The potential ban on imports of Russian coal by EU member states may push coal producers to redirect their supply routes to Turkey or make Russian producers to enter new sales markets, according to research conducted by the Department of Economic and Social Geography of Russia at Lomonosov Moscow State University (MSU) obtained by TASS.

"In the first case, trade with EU countries will be carried on via Turkish traders, which will result in a reduction in the marginality of transactions for Russian coal companies and an increase in the cost of coal for consumers in the EU. In the second case, coal producers will redirect their supplies to the markets of China, India or Turkey. China’s coal imports exceeded 300 mln tonnes in 2021, with China ready to accept new volumes of Russian coal. However, as the Baikal-Amur and the Trans-Siberian railway lines remain fully occupied, coal will have to be supplied through northwestern and Black Sea ports, which will make transportation costs roughly 6.5-7 times higher. The Indian market is more focused on coking coal, meanwhile, the Turkish market will not be able to receive the entire volume of unclaimed coal," an engineer with the Laboratory of Regional Analysis and Political Geography at Moscow State University’s Geography Department Mikhail Makushin was quoted as saying.

Experts expect the ban to affect the Kemerovo Region, Khakassia and the Novosibirsk Region, first and foremost. Western routes, particularly the ports of Ust-Luga, Vysotsk and Vyborg, can potentially lose more than 45 mln tonnes of cargo per year, while southern routes may see losses of over 6 mln tonnes. That said, the import ban will almost not hit the eastern regions, such as Yakutia, the Khabarovsk and Zabaikalye Regions.

"If the decision to ban is taken quickly, Russian coal suppliers may cut exports to EU countries by 30 mln tonnes from August to December 2022, which equals around $3.1 bln. Meanwhile, energy coal suppliers will be hit the hardest as thermal coal accounts for 95% of deliveries to EU states, while coking coal makes up for only 5%," Makushin suggests.

Russia supplies around 50% of energy coal, which is used as fuel for European power stations, Moscow State University noted. Meanwhile, for Russia itself neighboring Asian countries, such as China, Japan and South Korea, and Europe are the key sales markets for energy coal. According to data provided by Russia’s customs service, in 2021, EU countries consumed 22% of Russian coal exported in terms of volume (49.35 mln tonnes) and 20% - in terms of financial flows ($3.84 bln).