Flabbergasting stuff, Europe could not be more confused about its energy security, or who's drinking and who's buying so to speak!
We all know that Poland has one of Europe's largest coal reserves. However, all this time (until recently) it has been importing 20% of its coal consumption from Russia. The only logical reason for this would be coal quality. Deeper coal reserves tend to be of a higher caloric value. Russia is known for its quality high CV coal.
Meanwhile, Ukraine has been receiving coal supplies from Australia on a 'charity' basis. The government refuses to disclose the financial arrangements on which it supplied this coal. Recently, Ukraine came forward again and asked, "please sir, can I have some more?", to which there seems to have been no response. It would seem Ukraine is appealing for free coal and selling it on and pocketing the proceeds to fund its war effort.
So, we have a Poland that is energy starved while the land beneath their feet is packed with coal. The question must be asked why they have not made themselves energy independent prior to the war or become an exporter themselves. Now that prices are sky high, they are appealing for investment into their coal fields to achieve this. Money does talk and these sky-high coal prices would bring out the rod against any that would deprive a nation of this revenue stream.
It has become so desperate that Polish people are stooping to new lows as illegal coal miners reminiscent to the likes of India or China. Where they make more money in a day than most people do in a week digging up coal in their backyards. We seem to be heading to sky high investment into Poland's coal. Regardless of its quality, it's what the people seem to need and want. Climate crisis or not, people must eat and stay warm.
It will take years, if not a decade to develop the mines and infrastructure needed to extract and distribute the coal. That is of course if Poland remains relatively peaceful and detached from the Ukraine conflict, which in recent weeks, does not seem to be the case.
In terms of the war effort, the west is reported to be running low on its proxy war munitions. Not only that, but soviet era compatible ammunition is particularly hard to come by to meet the sheer scale of consumption by Ukranian soviet weapons.
The problem with different countries providing all their different artillery and weapons systems is that they all are not inter compatible with one another, which represents a logistical nightmare for commanders in Ukraine. What they really need is stock standard equipment across the board, either supplied directly with US standard military gear or establish new infrastructure to meet requirements.
The point of all this is that it will be extremely energy intensive. Both thermal and coking coal will be required along with steel than will be manufactured as a result, and oil for propulsion and intricate machining. With the war only increasing in intensity, and the US sending ever more military personnel and equipment to Europe, it is becoming more likely that an economic shift will occur in some places from a civil to military production focus.
With energy already tight and the market squeezed on all fronts, increased manufacturing of military equipment would only increase demand and rise prices along the way while war would gradually disrupt supply operations. Coal is at the forefront of energy needed to maintain a military force, second only to oil.
On Russia's energy front, they would reduce exports of all fossil fuels to drive their own war machine. So, we would have a simultaneous increase in demand and reduction in supply which would force India and China (the main buyers of Russian fossil fuels) to look elsewhere to meet their demand. That would directly add pressure on ICE coal prices.
(20min delay)