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The coal market includes sales of bituminous and sub-bituminous coal, lignite, and anthracite coal by entities (corporations, sole traders, and partnerships) that mine using underground, strip, culm bank, and other surface mining methods. Coal is a combustible rock that contains macerals, minerals, and water and is made up of lithified plant remnants.

The initial peat is sequentially converted by coalification from brown coals and sub-bituminous coal to black coals or hard coals and anthracite when the temperature rises owing to increasing depth of burial. Around 20 countries, including nine in Africa, three in Central America, two in the Middle East, and three in Asia, are relying on coal for power generation. More than 65 coal-fired power stations with a combined capacity of 50 GW could be operational in these nations by 2025.

Rystad Energy, an Oslo-based energy research firm, stated that coal prices could reach USD 500 per tonne in 2022, owing to rising gas prices, which may lead European countries to shift to coal.

Leaders of the European Union met on Thursday to discuss how to respond to Russia's invasion of Ukraine, with varying opinions on how far to go with economic penalties, how quickly to reduce Russian energy supplies, and whether to allow Ukraine to join the union shortly.

Russia is Europe's largest thermal coal supplier. According to Eurostat, Russia supplied 36 million tonnes of thermal coal to EU member states last year, accounting for 70% of total thermal coal imports. While volumes have remained roughly constant, a decade ago, Russian coal imports were only half of that, at 35 percent.

The skyrocketing price is the result of already scarce global coal supplies becoming even scarcer as Western sanctions made it difficult to trade Russian coal. As per an analysis based on the Rotterdam benchmark by Rystad Energy, European thermal coal prices have more than doubled since the start of the war in Ukraine, from USD 186 per metric tonne on February 23 to USD 462 by March 10.

Prices have dropped since last week, but they are still twice as high as they were before the invasion. The Australian Newcastle futures contract, which serves as a benchmark for Asian prices, reached USD 440 per tonne on March 2 and remained above USD 400 last week.

If Russia's coal trade is sanctioned, or if Russian rail/port traffic is physically disrupted, then the coal price will rise steeply, says Rystad Energy. The report mentioned, that the market is being moved by the threat of increased demand and a lack of available supply. Russia supplies more than 40% of the EU's natural gas, nearly a quarter of its oil imports, and almost half its coal.

On Wednesday, Australia declared a national emergency in response to devastating floods along its east coast, which devastated coal-producing areas of the country and exacerbated supply issues. According to Plamen Natzkoff, a senior trade expert at VesselsValue, weather-related disruptions lowered total shipments from Port Kembla Coal Terminal by 15% in the first two months of 2022 compared to the same period last year.