Kazakhstan prepares draft ordinance banning coal exports for six months to secure supply

Kazakhstan has prepared a draft order banning coal exports by road for the next six months, as part of its efforts to secure national supply and meet local electricity needs, the industry ministry said. and Infrastructure Development at S&P Global Commodity Insights on August 4.

The draft order – reviewed by S&P Global and currently undergoing public comment – ​​comes at a time when global markets, particularly Europe, are scrambling to maintain security of supply in coal in a context of high prices due to the Russian-Ukrainian war.
Kazakhstan, for a time, was seen as a potential supplier to Europe due to its rich coal reserves in the absence of Russian coal due to sanctions imposed by the former.

According to the draft order, Kazakhstan must notify the Eurasian Economic Commission about the introduction of the ban.

“In accordance with Articles 47 and 29 of the Treaty on the Eurasian Economic Union, the parties have the right to introduce temporary trade measures,” the Eurasian Economic Commission told S&P Global earlier this week.

S&P Global recently reported that Kazakhstan is among the new origins (along with Tanzania and Nigeria) seen as additional reserve by many European coal buyers. Besides the United States and South Africa, the most important alternative sources of supply are being explored in Colombia, Australia and Indonesia.

Europe assesses the impact

With the end of the flow of Russian coal to Europe, buyers scrambling for alternatives are increasingly in favor of tapping into non-traditional markets.

The high ash content of most coal found in Kazakhstan limits its ability to penetrate European Union export markets. However, “an exception to this general situation is the Shubarkol Basin, where the coals have much lower ash and sulfur levels (5-15% and 0.5%, respectively) and higher calorific value (5 600 kcal/kg)”, the 2021 national energy report published by the Kazakh Association of Oil and Gas and Energy Sector Organizations (Kazenergy).

Kazakhstan produced 109.2 million tons of coal in 2020, including 10.1 million tons of coking coal. It exported 22.4 million tons of coal during the year, of which 22.1 million tons were supplied to former Soviet republic countries, according to the Kazenergy report.

“High transportation costs, due to long distances between production sites and consumers, make coal from Kazakhstan relatively expensive for consumers and reduce its competitiveness even in the Russian market,” the International Agency for Energy said. energy in a 2021 report.

The price of Australian low ash coal of 5,500 kcal/kg NAR rose to $209.85/mt on August 4 from $163.4/mt FOB on February 24 when the Russian-Ukrainian conflict began, according to data from S&P Global.

The FOB price of Baltimore 6,900 kcal/kg NAR with 3% sulfur from US coal rose from $140.2/mt to $268/mt during the same period. At the same time, the price of 6,300 kcal/kg premium quality Russian GAR coal fell to $158/tonne FOB from $200/tonne between February 25 and July 29.
Source: Platts

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