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EU’s full ban on Russian coal delayed to mid-August, sources say

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European Union envoys are set to approve on Thursday a ban on Russian coal that would take full effect from mid-August, a month later than initially planned, two EU sources told Reuters, following pressure from Germany to delay the measure.

The phase-out of EU imports of Russian coal is the cornerstone measure in a fifth package of sanctions against Russia that the EU Commission proposed this week, as a reaction to civilian killings in the Ukrainian town of Bucha.

Read more: EU diplomats fail to agree on coal ban, new Russia sanctions: sources

Once approved, it will be the EU’s first ban on any import of energy from Russia since the start of what the Kremlin calls its “special military operation” in Ukraine on Feb. 24.

Oil and gas, which represent far bigger imports from Moscow, are still untouched.

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The EU Commission had initially proposed a wind-down period of three months for existing contracts, meaning that Russia could effectively still export coal to the EU for 90 days after sanctions were imposed, according to a document seen by Reuters.

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But that period has been extended to four months, the sources who are familiar with the discussions told Reuters on condition of anonymity.

That followed pressure mostly from Germany, the EU’s main importer of Russian coal.

With sanctions expected to take effect later this week, or early next, after publication in the EU official journal, Russian companies will effectively be able to export coal to the EU until mid-August under existing contracts.

Diplomats had held two meetings on Thursday to sort out other technical issues, including the enforcement of an entry ban for Russian vessels at EU ports, which has caused concerns mostly in countries with big shipping sectors, such as Cyprus, sources said. However, approval of the whole package was not in doubt.

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SHORT-TERM CONTRACTS

One diplomat said most coal contracts were short term, and a wind-down period of 90 days would have allowed most of them to be concluded without the need for cancellation, avoiding legal risks.

Some contracts however last longer than one year.

Much of Europe’s buying of Russian coal is in the spot market, rather than long-term contracts. Those spot purchases would be halted immediately after sanctions are imposed.

Read more: UN votes Russia out of human rights council citing Bucha killings

Despite being slightly watered down from the initial proposal, the EU’s planned ban on Russian coal is more ambitious than Britain’s, which has said it planned to ban coal imports from Russia by the end of the year.

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The EU Commission has estimated the coal ban could cost Russia 4 billion euros (US$4.36 billion) a year in lost revenue.

The Commission declined to comment.

The EU ban is expected to boost global imports of non-Russian coal, with prices potentially going up, although non-EU importers may benefit from lower prices for Russian coal.

(Reporting by Francesco Guarascio @fraguarascio; Additional reporting by Kate Abnett, John Chalmers and Marek Strzelecki; Editing by Clarence Fernandez and David Evans)

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