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Medvedchuk: Ukraine Becoming Totally Dependent on U.S. Coal Supplies

Viktor Medvedchuk

Viktor Medvedchuk

head of pro-Russian political organization Ukrainian Choice

“Perhaps for the U.S. this is indeed a ‘golden era,’ but for Ukraine, where ‘reformers’ shut down coal mines en masse and destroy the coal sector, this is a period of decline and total dependence on Washington.”

Russia, in fact, is Ukraine's largest coal supplier.

On July 5, the Russian state news agency Tass quoted Viktor Medvedchuk, leader of Ukrainian Choice, a pro-Russian political organization, as saying that Ukraine was falling into “total dependence” on the United States for coal imports as a result of the freeze Kyiv imposed on rail and road cargo links with the parts of eastern Ukraine controlled by Russia-backed separatists.

Mevedchuk, who is believed to maintain close links with the Kremlin, did not mention the fact that in 2017, Russia remained the largest coal supplier for Ukraine, which was looking to countries other than the United States to reduce its excessive dependence on Russian coal imports. An increase in coal supplies from the U.S. would threaten those Russian imports.

“Ukraine lost coal from Donbas due to the blockade,” TASS quoted Medvedchuk as saying in a Facebook post “This is a period of decline and total dependence on Washington.”

Kyiv imposed the blockade on Ukraine’s Donbas region after local separatists seized enterprises, including coal plants, in the region.

Late last month, emphasizing that a “golden era of American energy is now underway,” U.S. President Donald Trump’s said that Ukraine had raised the need for “millions and millions of metric tons” of coal.

Commenting on the statement, Medvedchuk said: “Perhaps for the U.S. this is indeed a ‘golden era,’ but for Ukraine, where ‘reformers’ shut down coal mines en masse and destroy the coal sector, this is a period of decline and total dependence on Washington.”

While faulty, Medvedchuk’s logic is nonetheless revealing and is as much about geopolitics as it is about business. The numbers prove the claim of Ukraine’s “total dependence” on the United States for coal to be bogus.

In January and February 2017, Ukraine imported $247.24 million worth of coal from Russia (69.1%), $65.4 million (18.3%) from the United States, $20.45 million (5.7%) from Kazakhstan, and $24.51 million (6.9%) from others. The conflict in eastern Ukraine has undermined coal and general production, raising the need for more imports.

Notably, the share of Ukraine’s coal imports from Russia actually increased by 14% year on year during the same period, in part contributing to almost a doubling of the amount Ukraine spent on coal imports since 2016.

Interestingly, RIA Novosti, another Russian state news agency that also quoted Medvedchuk’s comments, admitted that Russia remains “the largest coal suppler for Ukraine.”

The numbers support this conclusion. But, in the context of Medvedchuk’s comments and his alleged pro-Russia lobbying, they also point to Russia’s interest in retaining its geo-economic position vis-à-vis Ukraine and ensuring it has economic leverage over Kyiv. One source of such leverage are the Russia-backed separatists, who seized numerous enterprises, including coal mines, in Donbas.

Meanwhile, some observers, including Ukraine’s energy minister, suspect that Russia may be planning to resell Donbas coal to Ukraine at higher prices.

All of these circumstances have prompted Kyiv to seek alternatives to Russian coal, including coal imports from the United States. Just days after President Trump said Kyiv had told Washington it needed “millions and millions of metric tons” of coal, Ukrainian President Petro Poroshenko announced that Ukraine would buy two million tons of coal from the state of Pennsylvania with the first delivery of 120,000 tons set for August.

Those numbers will hardly tip the scales vis-à-vis Russia: indeed, according to the Russian energy ministry, Russia plans to supply Ukraine with about 10 million ton of coal in 2017.

Still, the expected delivery of U.S. coal is viewed as an important step for Ukraine as it seeks to reduce its dependence on Russian coal imports while the coal-producing Donbas remains under the control of Moscow-backed separatists. Besides the United States and South Africa, Ukraine is also looking to import coal from Australia and seeking to increase the share of renewables in its energy mix, as it needs to phase out “extremely old and inefficient” coal mines and plants.