Indonesia and Australia, among the world's largest coal exporters, have reached their production limits and are unlikely to be able to meet Europe's need for additional supplies if the European Union bans Russian coal imports. This was stated by the heads of mining companies.
The European Commission has proposed new sanctions against Russia, including a ban on the purchase of Russian coal and a ban on Russian ships from entering EU ports.
The EU imports about 45% of coal from Russia.
Prior to the EU proposal, some European buyers were already in talks with Indonesian companies seeking to replace Russian supplies, said a senior Indonesian Coal Miners' Association (ICMA) executive.
The miners can't ramp up production that quickly, it's difficult, and capacity is already very limited, ICMA chairman Pandu Sjahrir told Reuters.
The Indonesian government has targeted production at 663 million tonnes this year, a target that miners are already struggling to achieve as unexpected export restrictions in January and prolonged rainy weather impacted productivity.
The country has also tightened oversight of its mandatory domestic sales after stockpiles of local power plants fell to a critical low.
According to the Ministry of Energy, Indonesia's coal exports in January-March amounted to 37.64 million tons, compared with 53.77 million tons in the same period last year.
Indonesia's monthly benchmark coal price has already risen to a record $288.40 per tonne in April due to strong global demand.
In Australia, producers have responded to calls from buyers dependent on Russian coal and have been asked by the government to help coal buyers in allied countries such as Poland replace Russian supplies.
Australian miners are benefiting from rising prices for metallurgical coal used in steel mills as well as thermal coal used for power generation.
Production in Australia was hit by flooding in New South Wales and Queensland, outbreaks of COVID-19 and labor shortages, leaving production below full capacity.
Total steam coal exports for the year to June 2022 are expected to rise by about 7% from a year earlier, when production was hit by China's unofficial ban on Australian coal, to 206 million tons before falling to 204 million tons in 2023.
Mining companies have also been unable to expand production in the near future as they face severe regulatory barriers to new mines, resistance from the public and farmers to build new mines, and a lack of capital.