Coal news and updates

French utility turns away Russian thermal coal cargoes due to sanctions: sources

The trading arm of French utility EDF turned away Panamax cargoes of thermal coal from Russian producer Zarechnaya Coal due to EU sanctions against Russia, market sources said Friday.

Speculation was rife in the thermal coal market Thursday that Zarechnaya was facing logistics issues due to the sanctions, with one source saying that at least one of its recently shipped cargoes "has not been accepted by the final receiver," now identified as EDF Trading by two sources.

EDF Trading declined to comment on the matter, while requests for information from Zarechnaya's trading division -- CCZ Trade SA, based in Lugano, Switzerland -- were not returned.

In February 2013, CCZ Trade SA announced it had signed a six-year contract with EDF Trading for the delivery of 11.2 million mt of thermal coal. Prior to this, the two firms had agreed on a supply contract for 3.1 million mt in 2013-2014.

Europe-delivered CIF ARA thermal coal spot prices rallied to trade above $77/mt earlier this week amid the threat of tougher European trade sanctions against Russia for its backing of separatists in Ukraine blamed for the shooting down of a Malaysia Airlines passenger jet last week.

One European trading source said that in his opinion, while the refusal of Zarechnaya cargoes would have a temporary impact on market sentiment, "given that there's no shortage of coal globally, the most logical outcome is a redistribution of flows."

"The key question is whether this is the tip of the iceberg and whether there is potential for this to be applied to other Russian suppliers," he added.

EU countries imported 10.2 million mt of Russian thermal coal in the first quarter of 2014, up 9% year on year, Eurostat data showed.

Zarechnaya, which operates the Zarechnaya, Oktyabrsky and Alexievskaya coal mines, has a share in a 6 million mt/year coal terminal at the port of Ventspils in Latvia and exports 90% of its output, according to its website.

The coal company is a subsidiary of MPO Kuzbass, which is owned by businessman Viktor Nusenkis, who originates from Ukraine but is now a Russian citizen.

Source: Platts