Demand for coal in Europe has significantly increased, leading to higher coal prices. However, rising prices have provoked India and China to refuse to buy coal on a mass scale. Europe is trying to provide its plants with the energy that coal produces. This can be called an alternative to Russian gas, but the development of reserves and the mass purchase of coal are causing the rise of energy prices.
The effects of this crisis have been reflected in Indian industry, both in the public and private sectors. The Indian company Tata Steel will stop importing Russian coal. This decision is due to the steel company’s unwillingness to fall under Western sanctions. The Financial Times reported that the Indian company decided to refuse, even despite the acute shortage of coal in the country. It is known that Tata Steel managed to import 617 thousand tons of Russian coal before the start of a special military operation. Now coal prices have risen.
Interestingly, back at the end of March 2022, Indian Minister of Steel Industry Ramchandra Prasad Singh stated that India plans to double the supply of Russian coal to the country, as it is an important resource used in the Indian steel industry. But the authorities and commercial companies may have different views on the same problem. Tata Steel says it has found alternative sources of raw materials (the company received 617,000 tons of coal from Russia in the first quarter, and another 246,000 tons in April). It is not reported where the Indians found such volumes.
It should be noted that Indian Prime Minister Modi promised to make the country the world center of the semiconductor industry in one of his recent statements. How to realize this without sufficient power, the prime minister did not explain.
However, India is now facing problems of increasing pressure on the power supply system due to the increase in electricity consumption. There is a risk of accidents and increased consumption of energy, primarily cheap coal. Also, cogeneration plants in India have stopped working due to a shortage of coal. In conjunction with energy problems, the country has recently recorded abnormally high temperatures of about 50 degrees, which threatens the agricultural sector, forests, and the population.
China will most likely rely on Russian gas instead of coal, especially since China decided long ago to switch from coal to gas. Gazprom has reported an increase in gas supplies to China and a decrease in supplies to non-CIS countries. According to the official website of the oil and gas company, the export of gas to China via the Power of Siberia gas pipeline within the framework of a bilateral long-term contract between Gazprom and CNPC is growing. The volume of deliveries in the first four months of 2022 exceeds the same figure of the previous year by almost 60%. Although some of China’s industry is still based on coal, it is hard to say how much of a hit China will get from higher coal prices, but China will have to bear some economic costs.
Europe’s desire to buy up coal has also harmed Pakistan. In addition to the abnormal heat in Pakistan, power plants, half of which ran on coal, stopped working. Pakistanis have even started importing coal from Afghanistan.
The future energy crisis will hit the economies of various countries. Large countries, like small ones, will suffer losses. The size of the losses will vary and will encourage countries to look for alternative energy sources or to use their reserves more ergonomically until the situation stabilizes.
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