Europe’s Energy Demands Create Coal Rush

The rising demand for coal in Europe to replace natural gas and coal from Russia has increased coal mining and shipping activity from African countries.

Countries like Tanzania, which used to produce coal and transport it to neighbouring countries, are suddenly shipping the mineral to Europe.

The coal prices have skyrocketed due to Russia’s invasion of Ukraine. Europe weaning itself from Russia – its top supplier has since turned to remote mines in African countries Tanzania, Botswana, and Madagascar to supply it to them, offering top dollar for the coal. The offer is too good to turn down for these countries.

The article on Reuters, “Coal Rush! Energy crisis fires global hunt for polluting fuel“, tells how coal mining and import have increased in some regions in Africa to supply European countries and how coal prices have soared beginning in March this year.

According to the article, coal shipments into Europe in June and August reached 9 million tonnes, 2 million more than the previous year.

Australia’s front-months trading prices – the global benchmark- have also seen its coal prices triple compared to last year. On 16 September, coal prices were at US$429 per tonne and reached an all-time high of US$483.50 in March, from just US$176 per tonne last year.

In Tanzania, Africa, its sleepy Mtwara port that in the past has only exported cashews has seen shipments after shipments of coal totalling. Since November 2021, its coal-producing region Ruvuma has already shipped 400 thousand tonnes of thermal coal to the Netherlands, France, and India.

The sudden demands for thermal coal and the massive tax revenue the country can amass from it has its government consider building a railway to connect the Port to Ruvuma, its coal-producing region, to meet global demands, mainly to Europe.

But Europe’s demands for coal have seen its prices skyrocket. It has suddenly made mining and selling the most polluting fossil fuel very lucrative, an opportunity challenging for coal miners to turn down. As long as European countries are willing to pay top dollar for coal, supplies from coal-producing countries like Tanzania, Australia, and Indonesia will continue. How long will the coal rush end will largely depend on how long the war in Ukraine is.

The soaring coal prices will put poor and developing countries at a disadvantage that are already struggling with the current inflation. Countries like the Philippines, which is still heavily reliant on coal for power generation and imports 70% of it, buy most of it from Indonesia and some more expensive supplies from Australia and Vietnam.

Reuters reports that the Philippines recently asked Indonesia to lift its coal export ban, which drove coal prices in China and Australia because it would be detrimental to its economy.

The resurgence of thermal coal puts governments in conflict with their climate ambition targets. Still, European governments are saying the situation is temporary, although it will largely depend on how long the energy crisis will last. 

Meanwhile, coal producers in Africa expect the coal market to remain strong until mid-2023, if not longer and look forward to doubling its production. Germany, in the meantime, has delayed the planned shutdowns of its coal mines to ensure its energy security.

Burning more coal will increase GHG emissions and accelerate climate change. European governments are saying this is just a temporary change, although it will depend on how long the energy crisis drags on whether the war in Ukraine will drag on.