Ukraine to Import Coal From ‘Far Away’ as War Curtails Mines

Ukraine’s coal supplies are at unprecedentedly low levels because of the conflict with pro-Russian rebels, requiring imports from as far away as Asia to avert rolling blackouts this winter.

The former Soviet, which had about 1.4 million tons of coal in reserve stockpiles as of Dec. 1, needs another 1 million tons to get through the winter, said Energy Minister Volodymyr Demchyshyn today at a briefing in Kiev.

Ukraine, which blames Russia for supporting a violent separatist movement in the east that has killed more than 4,700 people, is looking for alternative fuel sources as supplies are curtailed at coal mines in the war-stricken regions of Luhansk and Donetsk and the country faces the possibility of blackouts if temperatures suddenly plunge this winter.

“We are incapable of independently supplying our power plants with coal,” said Demchyshyn. “Money was designated to purchase additional volumes of coal and negotiations were held with all participants, starting from Australia, South Africa and Kazakhstan, to work on the possibility of shipping coal from far-away countries.”

Historically coal self-sufficient and a net exporter of the fuel, Ukraine has seen its carbon production decimated because of the separatist conflict and after rail transport became unavailable or uncertain.

Falling Output

Coal supplies from domestic sources are only providing 2 million tons of coal a month, compared with 5 million tons overall before the conflict broke out earlier in the year.

Geographically, 70 percent of power-generating coal is mined in Luhansk and Donetsk, where the fighting is centered.

In particular, all mines that produce anthracite coal used for power generation are currently in rebel-held territory, said Oleksandr Parashchiy, head of research at Kiev-based investment house Concorde Capital. Seven of the nation’s 14 thermal power stations use anthracite coal.

To cover the shortfall, the country plans to import 320,000 tons by sea and another 500,000 tons from Russia as well as 200,000 tons from the mines in disputed areas.

Last year, Ukraine produced about 60 million tons of power-producing coal and maintained that level during the first half of 2014, the Energy Ministry’s website says.

Plunging Production

The fighting intensified in June and eventually led to coal production plunging for the first 11 months of the year by 61 percent from a year earlier, according to the State Statistics Service website.

Eurocoal said on Nov. 18 that production from 66 coal mines had been lost, with just 60 left in production.

Ukraine gets roughly 40 percent of its electricity from coal. Another 45 percent is from nuclear power, 10 percent from gas and 5 percent from hydroelectric power, the International Energy Agency reported.

There is enough nuclear fuel stockpiled for all of 2015, said Ilona Zayets, a spokesman for Energoatom, Ukraine’s state-owned nuclear energy generating company, by phone.

Before it's here, it's on the Bloomberg Terminal.