The US slapped new sanctions on Russia last month, this time clearly targeting coal suppliers, including Elga and Coalstar. The inclusion of Elga could potentially have a significant impact on the metallurgical coal market. Elga has been the key driver of growth from Russia, with the potential to produce up to 45Mtpa at maximum capacity.
The Elga complex is the largest of
the newly restricted companies, with 2.2Bt of metallurgical coal reserves under
the JORC classification, and it produced around 23 Mt of ROM coal in 2023.
However, this high production rate may not continue as Elga contends with the
operational challenges brought about by the sanctions.
AME expects that the updated
sanctions are expected to delist around ~10% of total Russian export volumes,
leading to a significant imbalance in the global supply of coal. Including the
two previously sanctioned companies, Mechel and Sibanthracite,
AME expects that these new sanctions
could potentially impact up to 8Mt of Russian metallurgical coal in the global
market in 2024.
A History of Sanctions
Despite
the ongoing conflict between Russia and Ukraine, which has severely curtailed
Russia's ability to export coal, the country still managed to export around
50Mt of metallurgical coal in 2023.