The matter had already begun last autumn. “The people at the mines have assured us that there is enough coal,” says Alexander Bethe. Only the locomotives with the coal no longer drove in the direction of the Baltic Sea in Russia. “And at first we thought it was because of Corona.”
Bethe is the head of the Association of Coal Importers (VDKi). Its member companies, which are primarily energy companies and industrial companies, are no longer allowed to import coal from Russia from mid-August, according to a new regulation by the European Union. The international community wants to expand the sanctions after the Russian attack on Ukraine.
After all, one could adjust to it, says Bethe. As with natural gas, Russia had also cut back on deliveries of coal to the West. The coal trains from the Russian mines continued to roll eastwards, towards the Pacific. Despite Corona. Instead, more coal is coming to Germany from Mozambique or Kazakhstan. South Africa and Australia are also likely to deliver more in the near future.
However, there is also a lot to replace. According to figures from the federal government, around half of Germany’s hard coal has so far come from Russia, although the trend has been declining recently. After China, India and the USA, Russia’s mining areas – such as the Kuznetsk Basin – are the world’s fourth-largest hard coal producer. However, Russia uses a large part of its coal itself. According to the VDKi, countries such as Indonesia and Australia are more important as exporters. Switching to them is not that difficult. Because the coal comes by ship.
Hard coal arrives in Europe via ports such as Rotterdam, and continues by barge
Thyssenkrupp’s factory port in Duisburg is, if you will, a place of dark matter. Ships with names like Thyssen II sail from Rotterdam across the Rhine to Germany’s largest steel manufacturer. They are sometimes loaded with reddish iron ore from all over the world, which is initially stockpiled upon arrival. Or the ships bring dark coal. Thyssenkrupp needs this to produce raw iron and steel from the ore, which ultimately ends up in cars or washing machines. Because in addition to power plants, it is mainly steel mills that are dependent on coal – and now have to adapt.
So far, Thyssenkrupp has mainly received injection coal from Russia, says a spokesman. This is a raw material that flows into the blast furnace together with hot air through several nozzles as a supplement to the coking coal. “We are now replacing these references step by step,” says Duisburg, for example the USA has been developed as an alternative source. “As part of existing contracts, we are currently still receiving a few quantities from Russian suppliers,” the spokesman said. Thyssenkrupp will discontinue these purchases in accordance with the regulations. The Steel Association points out that some transport routes are now longer and therefore more expensive, which the coal importers can only confirm: a coal freighter from Russia needs six days – and from Australia six weeks.
Nevertheless, more coal will now come from there. So far, the fuel has also come from South Africa and Colombia without any problems, says Stephan Riezler, who is responsible for trading at the Steag power plant group. Coal is now being sourced from Australia for the first time. “And we’re also looking at Indonesia.”
Steag, the old stone coal electricity company, is one of the largest power producers in the republic. The people in Essen operate power plants primarily in places where Germany itself has been mining coal for decades: in the Ruhr area and Saarland. “Up to now, a maximum of 15 percent of the hard coal that Steag uses in its power plants has come from Russia,” the company reports. “This share can alternatively be obtained from the world market.” A spokesman says that Steag had already started rearranging procurement before the war began. Therefore, the company is already not expecting any further deliveries from Russia.
Importers only expect higher prices in the short term, but longer and more expensive transports
Overall, experts consider the consequences of the embargo to be manageable. Last year, 57 percent of hard coal came from Russia. “But it can be expected that this could be offset by imports from other countries, at least in the coming months,” says Karen Pittel, an energy expert at the Munich Ifo Institute. This is unpleasant in the short term, but ultimately bearable.
However, this also applies to Russia. Precisely because coal is so easy to transport, it can also find new ports. “Russia will try to switch to other buyers,” says Pittel. These buyers, in turn, would no longer compete with the Europeans for coal, freeing up new volumes for the EU. The effects on coal prices should therefore remain manageable, says Pittel. “The consequences for Russia, however, too.”
This coincides with surveys by the importers’ association VDKi. A majority of its 44 members assume that prices will rise in the short term but stagnate in the long term. However, the freight is likely to be more expensive because of the longer distances. And that’s just one of the problems that are brewing.
Because coal had recently enjoyed growing popularity – especially in power plants. Because of the high gas and electricity prices, it was worth burning coal. Almost a quarter more hard coal was used in power plants last year than in 2020. Greenhouse gas emissions from power generation rose by more than twelve percent. This is likely to continue – especially since gas is now increasingly being replaced by coal: the gas is needed more urgently in storage than in power generation. The Steag Group is also wondering whether it wants to shut down four coal-fired power plants as planned – now. This will not leave German emissions unaffected. “We are expecting a consumption of 30 million tons of steam coal for this year,” says VDKi boss Bethe. That would again be an increase of more than eleven percent.
Only: The entire logistics had recently adjusted to lower imports. Ships in Amsterdam and Rotterdam are currently waiting easily two weeks before they are unloaded. “There’s a lack of staff,” says Bethe. On top of that, the ships get bigger the longer the distances they have to cover. A so-called Capesize from Australia with a draft of 17 meters can only be unloaded in a few European ports, which makes logistics even more challenging.
On top of that, hard coal is not just hard coal. The calorific values differ and so does the sulfur content. The latter is low with Russian coal, but high with American coal – that’s why people like to mix the two, says Steag man Riezler: “Coal is just a natural product.” Colombian coal could now replace the mixture, with a few changes. And in the case of German hard coal, that was once successful: the complete renunciation.