War in Ukraine Could Wreak Havoc on Mined Commodity Supplies, Particularly Coal

The outbreak of war in Ukraine, and the subsequent sanctions levied on Russia, has sent shockwaves through commodity markets. As we saw with Vale’s tailings dam failure in 2019, supply shocks can materially affect the outlook for prices and valuations. But the impact of supply shocks is not always intuitive. There’s one major difference between the current largely sanctions-driven supply disruptions and Vale’s tragedy. The supply capacity being disrupted is still intact in Russia. An outbreak of peace and a political agreement could see Russian commodity supplies return to the global market relatively quickly. Given that, there is considerable uncertainty as to how long any potential supply disruption will last.