Kazakh coal goes to the Baltic – Newspaper Kommersant No. 27 (7472) dated February 14, 2023

Kazakhstan, replacing Russian coal in Europe, increased the export of its own coal through Russia in 2022 by 11%, to 9.9 million tons. From the growth of deliveries, the ports of Latvia primarily benefit, the shipment of Kazakh coal through which has increased many times over. According to experts, further growth in exports may be difficult, as thermal coal prices in Europe have seriously decreased compared to the fall of 2022.

Kazakhstan increased the transit of coal through Russia to non-CIS countries by 11.2%, to 9.9 million tons, follows from the Argus presentation “Changes in the logistics of supplies and transit of dry cargo in the countries of Central Asia and the South Caucasus” (available to Kommersant) . The bulk of the coal was sent in the direction of seaports (an increase of 8.1%, to 9.3 million tons).

After the introduction of the European embargo on Russian coal, Kazakhstan has become one of the countries that replace Russian supplies in the EU market. According to Eurostat, for 11 months of 2022, the EU countries increased coal imports from Kazakhstan to 4.9 million tons against 780 thousand tons in the same period of 2021. Russian coal companies, meanwhile, are diverting supplies to Asia.

Although shipments of large volumes of Kazakh coal are still carried out through the ports of Taman and Ust-Luga, the Latvian ports of Ventspils and Riga demonstrate the highest growth dynamics. According to Argus, shipments through Ventspils grew 2.4 times to 2.4 million tons, and through Riga – 13 times, to 630,000 tons. In January 2023, the Freeport of Ventspils Authority reported that the sanctions against Russia were a “serious shock to the transit industry” and especially to the port, where traditionally most of the transshipment was in transit cargo from Russia. “Already at the end of 2021, the port entrepreneurs managed to start cooperation with the owners of coal cargoes from Kazakhstan, which made it possible to complete 2022 with good results,” the port said in a statement. In 2022, the volume of coal transshipment in the port increased by 420%, or by 2.6 million tons.

Argus believes that in the first quarter of 2023, an increase in shipments from Kazakhstan to the ports of the Baltic States and Poland is possible due to discounts for rail transit through Russia.

The largest coal producers in Kazakhstan, occupying more than 50% of the market, are Bogatyr Komir and Shubarkol Komir, says Boris Krasnozhenov from Alfa Bank. Another 16% of production is accounted for by JSC EEC, which produces steam coal at the Vostochny open pit in the neighborhood of Bogatyr. At the moment, the expert notes, Kazakhstan replaces 20% of the volumes previously supplied to the EU by Russia. Further growth in exports will be associated with the development of enrichment facilities and the improvement of the quality of Kazakh coal.

At the same time, coal prices both in Europe and in the world as a whole are declining. The price of 6,000 kcal thermal coal on a CIF ARA basis in Europe has now fallen to $130 per ton compared to $380-400 per ton in September 2022. “At the current price level and the volume of investments, there are certain restrictions on the further replacement of Russian volumes with Kazakh coal in the European market,” the analyst says.

Evgeny Zainullin