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.
WHC Price at posting:
$7.43 Sentiment: Hold Disclosure: Held
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